Katz Banks Kumin partners Lisa J. Banks and Debra S. Katz published an article in The National Law Journal entitled “Surprisingly Pro-Worker.” The article, published on August 6, 2008, discussed a variety of recent employment-related decisions made by the Supreme Court.  The full-text of the article is available below.

The National Law Journal

By Lisa J. Banks and Debra S. Katz

High court rules in two age discrimination cases

As the U.S. Supreme Court was preparing to decide an unusually high number of employment cases during its 2007-08 term, advocates for employees braced themselves for the worst — still feeling the sting of the Roberts court’s unexpected decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162 (2007), which greatly restricted employees’ rights to claim pay discrimination and led to immediate congressional action to deal with the aftermath. What emerged from the 2007-08 term, however, was surprisingly positive for employees. Most notably, the court recognized that the Civil War era statute, 42 U.S.C. 1981, which prohibits race discrimination in the making and enforcement of contracts, and the federal sector provision of the Age Discrimination in Employment Act of 1967 (ADEA), both protect against retaliation, despite the lack of explicit language in the statutes providing such protection.

The court also supported employees by ruling that defendants bear the burden of proving the “reasonable factors other than age” defense under the ADEA; by confirming that Equal Employment Opportunity Commission (EEOC) charges are to be broadly construed; and by declining to issue a per se ban on the admissibility of “me too” evidence. Although employers were given a boost by several of the court’s decisions this term — rejecting claims of age discrimination in pension plans that rely on age as a factor in determining benefits, and rejecting a “class of one” theory of equal protection in the public employment context — employees’ predictions of disaster at the hands of the Roberts court this term proved to be largely unfounded.

The retaliation cases

In CBOCS West Inc. v. Humphries, 128 S. Ct. 1951 (2008), the court continued its strong support for protection against retaliation in the workplace, which began with its 2006 decision in Burlington Northern & Santa Fe Railway Co. v. White, 126 S. Ct. 2405. In Burlington Northern, the court made clear that effective enforcement of anti-discrimination statutes depends upon employees being free to file complaints and act as witnesses without fear of retribution. This goal of accomplishing a remedial act’s primary objective also seems to have driven the court’s most recent retaliation decisions. In Humphries, the court addressed the scope of § 1981, which provides that all persons in the United States “shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens.” Although the statute makes no mention of retaliation, the court nonetheless determined that a former assistant manager of a Cracker Barrel restaurant could sue his employer based on his claim that he was terminated in retaliation for complaining to managers that another black employee was dismissed for race-based reasons.

In holding that § 1981 encompasses retaliation claims, the majority, in a 7-2 decision authored by Justice Stephen G. Breyer, relied on principles of stare decisis and looked to its own interpretive history, noting that it had previously recognized that retaliation actions are encompassed by 42 U.S.C. 982, another Civil War era statute, which provides that “[a]ll citizens . . . shall have the same right, . . . as is enjoyed by white citizens . . . to inherit, purchase, lease, sell, hold, and convey real and personal property.”

The court recognized that it has long interpreted §§ 1981 and 1982 alike because they were enacted together, have common language and serve the same purpose in providing black citizens with the same legal rights as enjoyed by other citizens. For these and other reasons, and notwithstanding CBOCS’s arguments to the contrary based on the plain text, congressional intent and legislative overlap, the court ruled that retaliation claims under § 1981 are “well embedded under in the law,” and stare decisis considerations dictate its adherence to that view.

Using a similar analysis, the court in Gómez-Pérez v. Potter, 128 S. Ct. 1931 (2008), held that § 633a(a) of the ADEA prohibits retaliation against a federal employee, despite the lack of explicit language to that effect in the text of the statute. Section 633a(a) provides that “[a]ll personnel actions affecting employees . . . at least 40 years of age . . . be made free from any discrimination based on age.” The court, in a 6-3 decision authored by Justice Samuel A. Alito Jr., concluded that Myrna Gómez-Pérez could assert a claim based on her allegations that the Postal Service retaliated against her for filing an internal complaint of age discrimination. In ruling that such a claim existed, the court followed its reasoning in two prior decisions where it had ruled that retaliation is covered by similar language in other anti-discrimination statutes.

As in Humphries, the court first looked to its interpretation of 42 U.S.C. 1982, which intends to protect against discrimination based on race, and its determination as early as 1969 that § 1982 encompasses retaliation, despite the lack of any specific mention of it in that statute. Similarly, the court noted that it had more recently ruled that Title IX of the Educational Amendments of 1972, which prohibits discrimination on the basis of sex in educational programs receiving federal aid, protects against retaliation, despite the lack of any mention of it in the statute. Thus, the court rejected the respondent’s arguments rooted in plain text, congressional intent and sovereign immunity, and determined that a federal employee who is the victim of retaliation for complaining of age discrimination may assert a claim under the federal sector provision of the ADEA.

The court handed plaintiffs wins in two additional cases brought under the ADEA, which requires that “[n]o civil action . . . be commenced by an individual . . . until 60 days after a charge alleging unlawful discrimination has been filed with the [EEOC].” The ADEA, however, does not define the term “charge.” In Federal Express Corp. v. Holowecki, 128 S. Ct. 1147 (2008), a FedEx Corp. courier filled out an EEOC intake questionnaire and submitted a detailed affidavit supporting her allegations that FedEx’s programs discriminated against couriers older than 40. The district court dismissed her subsequent suit, concluding that she had failed to submit a valid charge. The 2d U.S. Circuit Court of Appeals reversed.

In a 7-2 decision by Justice Anthony M. Kennedy affirming the 2d Circuit, the court accepted the EEOC’s position that to constitute a “charge,” a filing must be reasonably construed as a request for the agency to take remedial action to protect the employee’s rights or otherwise settle a dispute between the employer and employee. Noting that in the administrative context, pro se filings “may be the rule, not the exception,” and that the ADEA sets up a “remedial scheme in which laypersons rather than lawyers, are expected to initiate the process,” the court concluded that the procedure for filing an EEOC charge must be accessible to individuals. Id. at 1160.

In Meacham v. Knolls Atomic Power Laboratory, 128 S. Ct. 2395 (2008), the court considered whether an employer facing a disparate impact claim under the ADEA and planning to utilize the ADEA’s exemption for “reasonable factors other than age” (RFOA) has the burden of both production and persuasion to make out such a defense. Knolls laid off more than 31 workers, 30 of whom were older than 40. The employees sued under the ADEA, alleging that the mechanism used in carrying out the reduction-in-force was “designed and implemented . . . to eliminate older employees and that, regardless of intent, the process had a discriminatory impact on ADEA-protected employees.” Id. at 2398-99. At trial, the jury found in favor of the plaintiffs on their disparate impact claim, and the 2d Circuit affirmed. In 2005, the Supreme Court vacated the judgment and remanded for reconsideration in light of Smith v. City of Jackson, 544 U.S. 228 (2005), a case that confirmed the availability of disparate impact claims under the ADEA and that held that the issue of whether an employer’s practice violates the ADEA requires a “reasonableness” inquiry. On remand, the 2d Circuit ruled in favor of Knolls, holding that the burden of persuasion over whether an employer’s justification is reasonable lies with the plaintiff.

The Supreme Court, in an 8-1 decision by Justice David H. Souter, reversed and concluded that the RFOA exemption is an affirmative defense for which the employer bears the burden of both production and persuasion. Setting aside arguments from the management bar that placing the burden of persuasion on employers would encourage more plaintiffs to file suit, make it costlier to defend cases and affect the way business is conducted, the court underscored that in enacting the RFOA clause, Congress clearly created it as an affirmative defense. Recognizing the “distinctive nature of age discrimination, and the need to preserve a fair degree of leeway for employment decisions with effects that correlate with age,” and offering assurances that “certain employment criteria that are routinely used may be reasonable despite their adverse impact on older workers as a group,” the court still ruled that the employer bears the burden to prove the RFOA affirmative defense. Id. at 2406.

In yet another ADEA case, employers scored a victory. In Kentucky Retirement Systems v. EEOC, 128 S. Ct. 2361 (2008), the court considered whether the use of age as a factor in the distribution of retirement benefits to disabled workers establishes a prima facie case of discrimination. The Kentucky disability retirement plan at issue awards benefits to state employees who become disabled before they are eligible for normal retirement, based in part on how close a disabled worker is to reaching normal retirement. It therefore affects older workers more adversely than it affects younger workers. The EEOC filed suit, alleging that the plan was facially discriminatory under the ADEA because of its use of age-based criteria to pay benefits in a way that disadvantages some older disabled workers. The district court granted summary judgment, holding that the EEOC could not establish age discrimination, but the 6th Circuit reversed, holding that the plan violated the ADEA.

In a 5-4 decision authored by Breyer, the court ruled that Kentucky’s disability retirement system does not violate the ADEA even though age is an explicit factor in calculating benefits for some workers. The court held that when a plan uses age as a condition of benefits, but then uses pension status as a basis for allocating benefits, an ADEA plaintiff must show that the disparate treatment was “actually motivated” by age rather than pension status. The court held that the system was not actually motivated by age bias but was based on the pension status of the plan participants. It noted that its decision “in no way unsettles the rule that a statute or policy that facially discriminates based on age suffices to show disparate treatment under the ADEA.”

ERISA conflicts issue

In another Breyer opinion concerning disability plans, but this time favoring employees, the court was asked to decide whether an Employee Retirement Income Security Act (ERISA) plan administrator that both evaluates and pays claims operates under a conflict of interest that must be weighed upon judicial review of benefit determinations. In Metropolitan Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008), the petitioner insurance company withdrew long-term disability benefits from Wanda Glenn, who had a heart condition, concluding she was no longer totally disabled. Glenn sued under ERISA to recover her benefits. The district court upheld MetLife’s denial of benefits, but the 6th Circuit reversed. The high court, 6-3, affirmed, holding that the potential conflict of interest that may occur when a plan administrator is also an insurance company must be considered in evaluating the administrator’s decision to deny benefits.

In Engquist v. Oregon Dep’t of Agric., 128 S. Ct. 2146 (2008), Anup Engquist, an Oregon public employee, filed suit under the equal protection clause, asserting that she had been discriminated against based on her race, sex and national origin. She also brought a “class of one” claim, alleging that she was fired not because she was a member of any identified class, but for arbitrary, vindictive and malicious reasons. A jury rejected Engquist’s class-based equal protection claims but found for her on her class-of-one claim. The 9th Circuit reversed, concluding that extending the class-of-one theory to the public-employment context would lead to judicial interference in state employment practices and would invalidate public at-will employment.

In a 6-3 decision by Chief Justice G. Roberts Jr., the court held that the class-of-one theory does not apply in the public employment context. It reasoned that if class-of-one claims were recognized in this context, any personnel action in which a wronged employee could conjure up a claim of differential treatment would automatically become the basis for a federal constitutional claim. The court noted that government has significantly greater leeway acting as an employer, which by its nature involves discretionary decision-making, than it does acting as a regulator, when the court has recognized such class-of-one claims previously.

Last, in Sprint United Mgmt. Co. v. Mendelsohn, 128 S. Ct. 1140 (2008), the question was whether a plaintiff can bolster her claim of discrimination by introducing testimony from employees who suffered similar discrimination by other supervisors at the same company. Ellen Mendelsohn was terminated as a part of a companywide reduction-in-force and filed suit under the ADEA alleging that she was targeted because of her age. At trial, she sought to introduce testimony from five older Sprint employees, each of whom was also laid off during the RIF, to show that age discrimination was pervasive at Sprint. The district court barred this testimony. Mendelsohn lost at trial, and appealed to the 10th Circuit, which concluded that a per se rule that evidence from employees of other supervisors is irrelevant is an abuse of discretion. In a 9-0 opinion by Justice Clarence Thomas, the court concluded that such evidence — often referred to by the defense bar as “me too” evidence — is neither per se admissible nor per se inadmissible. Rather, whether such evidence is relevant “is fact based and depends on many factors, including how closely related it is to plaintiff’s circumstances and theories.” The court noted that principles of relevance and prejudice under the Federal Rules of Evidence are “generally not amenable to broad per se rules” and remanded the case to the district court to clarify the basis for its evidentiary rulings. Id. at 1147.

Lisa J. Banks and Debra S. Katz are partners at Washington’s Katz Banks Kumin, which specializes in employment law, sexual harassment and whistleblower claims.