Which State Law Applies?: Multijurisdictional Conduct and State Employment Law Statutes

In the practice of employment law, it is increasingly rare that a set of events and actors are isolated to a single jurisdiction.  Consider, for example, the following set:  a matter “arising from the termination of plaintiff’s employment where the decision to terminate was made in [New York], and the call to the employee was made from [New York], but the employee worked out of an office located in [Georgia], resided in [Georgia], and received the call communicating his termination while in [West Virginia].”  Hoffman v. Parade Publ’ns, 2009 N.Y. App. LEXIS 3559 (N.Y. App. Div. May 7, 2009). 

Which begs our general question:  which state law applies when an allegedly discriminatory employment-related decision or activity occurs in one state, the effects of which are only felt in another state?  Is it, under the above fact pattern, as the employee in Hoffman argued, the applicable state human rights statute(s) of New York, where the alleged discriminatory firing decision occurred?  Or is it, as the Hoffman employer argued, not the law of New York, but rather the law of another state—e.g., Georgia or West Virginia—where the impact of the alleged misconduct was felt? 

Authority on point is split, with courts either applying or refusing to apply, for varying reasons, state human rights and other employment law statutes when an employment-related decision or activity occurring within a state has effects only outside the state. 

There follows a collection of cases—organized by courts—confronting this “Which state law applies?” issue:

U.S. Court of Appeals

·         Schuler v. Pricewaterhouse-Coopers [PwC], LLP, 514 F.3d 1365 (D.C. Cir. 2008).

o   Plaintiff brought an age discrimination, failure to promote claim against PwC, which is headquartered in New York City.

o   Plaintiff, who was based in PwC’s D.C. office, alleged that PwC maintained a discriminatory partnership policy, originating from its NYC office, under which the company refused to promote older qualified employees.

o   The Court held that nothing in the text of the New York Human Rights Law (NYHRL) and no New York authority requires the impact of a discriminatory act to be felt in New York for the NYHRL to apply.  Thus, the plaintiff’s case could proceed although the plaintiff worked in the Washington, D.C. branch office.

o   In so holding, the court distinguished and declined to adopt a string of New York federal district court cases construing the NYSHRL to include an “in-state impact requirement.”  See, e.g.:

§  Pearce v. Manhattan Ensemble Theater, Inc., 528 F. Supp. 2d 175 (S.D.N.Y. 2007) (recognizing a split of authority regarding whether the NYSHRL, like the New York City Human Rights Law [(NYCHRL)], includes an in-state “impact requirement” and holding that it does);

§  Lucas v. Pathfinder’s Personnel, Inc., 2002 U.S. Dist. LEXIS 8529, at *3 (S.D.N.Y. May 13, 2002) (“[T]he fact that the decision to terminate Plaintiff was made in New York State is not sufficient to establish a violation of the [NYSHRL].”);

§  Wahlstrom v. Metro-North Commuter R.R. Co., 89 F. Supp. 2d 506, 527-28 (S.D.N.Y. 1999) (finding that “the NYCHRL only applies where the actual impact of the discriminatory conduct or decision is felt within the five boroughs, even if a discriminatory decision was made by an employer’s New York City office);

§  Salvatore v. KLM Royal Dutch Airlines, 1999 U.S. Dist. LEXIS 15551, at *16 (S.D.N.Y. Sept. 30, 1999) (“The fact that certain acts leading to discrimination may occur in New York City will not necessarily give rise to a claim under the City HRL.  To determine the location of the discrimination, courts have looked to the location of the impact of the offensive conduct.”);

§  Duffy v. Drake Beam Morin, Harcourt Gen., Inc., 1998 U.S. Dist. LEXIS 7215,at *32-34 (S.D.N.Y. May 19, 1998) (“[T]he [NYSHRL] affords no remedy to a non-New York resident who suffers discrimination outside New York State.”)).

U.S. District Courts

·         Rohn Padmore, Inc. v. LC Play Inc., 679 F. Supp. 2d 454 (S.D.N.Y. 2010).

o   In a case where the New York City-based company-defendant terminated from its New York City headquarters, via email, the Los Angeles-based employee-plaintiff; plaintiff asserted that he was unlawfully terminated under the New York State Human Rights Law (NYSHRL) and New York City Human Rights Law (NYCHRL) due to the perception that he was homosexual.

o   The court found subject matter jurisdiction proper under both statutes, and adopted Hoffman (infra) and Schuler (supra) for the proposition that:

“[L]ogic and common sense alone [] dictate that if an employer located in New York made discriminatory hiring or firing decisions, those decision would be properly viewed as discriminatory acts occurring with the boundaries of New York. . . . [Further], it would be contrary to the purpose of both [statutes] to leave it to the courts of other jurisdictions to appropriately respond to acts of discrimination that occurred here.”

·         Turnley v. Banc of Am. Inv. Servs., Inc., 576 F. Supp. 2d 204 (D. Mass. Sept. 17, 2008).

o   The plaintiffs alleged under the Massachusetts human rights statute, that the company discriminatorily arranged business partnerships, opportunities, and resources on the basis of race.

o   While the company was headquartered in North Carolina, the alleged discriminatory actions originated from the company’s office in Massachusetts; the employees were African Americans based in the company’s Georgia office.

o   The court held that the action was properly brought in Massachusetts, finding that “courts have applied [the Massachusetts human rights statute] in situations where the employment decisions at issue were made in Massachusetts, though their effects were felt in another state.”

o   The court favorably cited Cormier v. Pezrow New England, Inc., 771 N.E.2d 158 (Mass. 2002), in which that court found “no question of jurisdiction” where employee, a Massachusetts citizen, received notice of his termination in the Connecticut office of his employer, a Massachusetts company .

·         Judkins v. Saint Joseph’s Coll. of Maine, 483 F. Supp. 2d 60 (D. Me. 2007).

o   The defendant-college made allegedly discriminatory decisions at its main campus in Maine, which affected the plaintiff-professor at the college’s satellite campus in the Cayman Islands.

o   The court held:  (1) as to the plaintiff’s claims under Title VII and the ADEA, any discrimination against plaintiff, a non-resident of Maine, occurred in the Cayman Islands, not Maine, and that (2) as to the plaintiff’s claims under the Maine Human Rights Act, that Act’s lack of clear and explicit language providing for extraterritorial application created for the plaintiff an insurmountable presumption against extraterritorial application, a presumption that “guards against possible conflicts with other states’ laws and violations of the Commerce Clause.”

·         Arnold v. Cargill, 2002 U.S. Dist. LEXIS 13045 (D. Minn. July 15, 2002).

o   The plaintiffs-employees alleged a claim of disparate treatment under the Minnesota Human Rights Act, that the defendant-company’s policies emanating from its headquarters in Minnesota unlawfully affected the plaintiffs, who did not work or reside in Minnesota.

o   The court held that, absent a “specific provision extending the application of the statute to persons outside the borders of the state . . . [t]he fact that [defendant’s] headquarters are located in and the contested company-wide policies emanated from Minnesota is insufficient to justify extraterritorial application.”

·         Hanan v. Corso, 1999 U.S. Dist. LEXIS 23160 (D.D.C. May 19, 1999) (Facciola, M.J.).

o   Under the DCHRA, the plaintiff, based in the defendant’s D.C. office, asserted age discrimination claims—failure to hire and unlawful dismissal—against employer.

o   The plaintiff alleged that the defendant discriminatorily failed to hire him for a position in Virginia, to which employer argued that the DCHRA could have no application as the prospective position was in Virginia and as the alleged discriminatory termination decision was made by persons employed by employer in Virginia.

o   The court held that the DCHRA applied to the claims, stating:

If, as was unquestionably true of [the plaintiff], the headquarters of the corporation they work for is in Virginia, but their duties take them to the District of Columbia on a daily basis to perform their responsibilities, and they spend a substantial part of their day in the District, surely the District’s employer discrimination laws reach a claim that they were subject to discrimination when they were terminated from the jobs they performed.

o   The Hanan court cited with approval Green v. Kinney Shoe Corp., 704 F. Supp. 259 (D.D.C. 1988) (“The broad language of the [DCHRA] leads the Court to understand that the [DCHRA] was intended to cover all discrimination concerning jobs located in the District of Columbia, even if the application and decision to discriminate were made outside the District.”), and Holt Life Care Servs. Corp., 121 Daily Washington L. Rptr. 1497, 1513-1514 (Sup. Ct. July 23, 1993) (DCHRA applies where a black employee who works in the District of Columbia was told that she would not be promoted to a position in Maryland because of her race).

State Courts

·         Hoffman v. Parade Publ’ns, N.Y. App. LEXIS 3559 (N.Y. App. Div. May 7, 2009).

o   In an action brought under the NYSHRL and NYCHRL, the plaintiff asserted claims of age discrimination, where the employer’s decision to terminate the plaintiff’s employment was made in New York, and the call to the employee was made from New York, but the employee worked out of an office located in Georgia, resided in Georgia, and received the call communicating his termination while in West Virginia.

o   The Court held that “nothing in the cited federal cases [cited supra, in Schuler] [] convince us that an out-of-jurisdiction plaintiff is precluded from interposing claims under the NYSHRL and NYCHRL when the New York employer is alleged to have made its employment decisions in a discriminatory manner [in New York].”

·         Monteilh v. AFSCME, AFL-CIO, 982 A.2d 301 (D.C. 2009).

o   The plaintiff alleged that the defendant made discriminatory decisions in its D.C. headquarters, which affected the plaintiff in California or Georgia.

o   The court preliminary found that because the D.C. Human Rights Act’s (DCHRA) prohibition against discrimination is to be construed broadly, the court held that “recognizing jurisdiction under the DCHRA where actual discriminatory (and/or retaliatory) decisions by an employer are alleged to have taken place in the District is most faithful to the statutory language and purpose.”

o   The court did not, however, touch the question of whether its interpretation of the DCHRA amounted to an extraterritorial application of the statute.

o   The court’s relied heavily upon Matthews v. Automated Bus. Sys. & Servs., Inc., 558 A.2d 1175, 1180 (D.C. 1989) (finding that “[i]f the events alleged in [plaintiff’s] complaint occurred in the District of Columbia, they are subject to scrutiny under [the DCHRA], regardless of whether [plaintiff’s] ‘actual place of employment’ was in Maryland, the District, or both . . . [t]hus the critical factual issue bearing on jurisdiction is whether these events took place in the District”).  The Matthews court also did not consider whether its holding amounted to an extraterritorial application of the DCHRA.  Id. at 1180 n.8 (“We assume, without deciding, that the [DCHRA] does not apply to acts occurring outside the District.  Whether it has extraterritorial application is ultimately a question of legislative intent, which is not before us in this appeal.”).

·         Himes Assoc., Ltd. v. Anderson, 943 A.2d 30 (Md. Ct. Spec. App. 2008), cert. denied, 950 A.2d 829 (Md. 2008).

o    Himes, a Virginia corporation with its principal place of business in Fairfax, Virginia, was deemed an “employer” under the Maryland Wage Payment and Collection Act (MWPCL), even though its former employee (Anderson) was assigned to work from its Fairfax, Virginia office, and even though the work that he performed in Maryland was extremely limited in scope (e.g., participating in an initial presentation to manage a multi-million dollar construction project for a Maryland corporation in Virginia, and attending bi-monthly meetings in Baltimore concerning the Virginia construction project).

o   In concluding that Himes was an “employer,” the Maryland Court of Appeals relied upon the plain language of section 3-501 of the MWPCL, which defines "employer" to "include any person who employs an individual in the State," and reasoned that because section 3-101 defines the term "employs" to include: "(i) allowing an individual to work; and (ii) instructing an individual to be present at a work site,” that the situation in which a company outside of Maryland directs its employee to go to a work site in Maryland is clearly encompassed therein.

o   The Court rejected the argument that because Himes' former employee was not "regularly employed" in Maryland (which is the standard the Court employs when construing the meaning of the term "employer" under the Maryland's Workers' Compensation Act (Md. Code Ann., Lab & Empl. §§ 9-101 et seq.)), it should not be deemed an employer under the MWPCL.

o   The Court explained that the "regularly employed" test employed a more rigid standard than what the Maryland General Assembly intended the term "employer" to mean under the MWPCL, stating as follows:  “If the legislature had intended the MWPCL to apply only to employers of those individuals who are ‘regularly employed’ in Maryland, it could have said so.”

o   Cf. Martinez v. Holloway, No. Civ. A. DKC-03-2118 (D. Md. 2005) (holding that where an employer hired employees in Maryland, but the employees’ work was performed in Pennsylvania, employer was not liable under the MWPCL (relying upon Hodgson v. Flippo Constr. Co., Inc., 883 A.2d 211 (Md. Ct. Spec. App. 2005), for its analysis of a similar issue under the Maryland Workers’ Compensation Act)).

·         Runyon v. Kubota Tractor Corp., 653 N.W.2d 582 (Iowa 2002).

o   The plaintiff-employee brought a collection action for unpaid wages under the Iowa Wage Payment Collection Law (IWPCL),

o   The plaintiff resided in Missouri but transacted business and performed services in Iowa on behalf of defendant-employer.

o   The employer argued that the IWPCL did not apply, as the employer was not located in Iowa and the employee did not reside in nor was he paid in Iowa.

o   The court held that application of the IWPCL was proper, as the statute’s use of the phrase “employed in this state” governed the plaintiff’s transaction of “substantial business” and routine performance of services on behalf of the employer “within Iowa’s borders.”

·         Union Underwear Co., Inc. v. Barhnhart, 50 S.W.3d 188 (Ky. 2001).

o   The plaintiff-employee, employed in either Alabama or South Carolina at all relevant times, brought a claim of unlawful dismissal on the basis of his age against Fruit of the Loom under the Kentucky Civil Rights Act (KCRA).  Fruit of the Loom was headquartered in Kentucky and incorporated in New York.

o   The court held that “upon the facts of this case, allowing [the plaintiff] to obtain relief under the KCRA is an extraterritorial application of the Act,” and the state did not make the “policy decision” to provide for extraterritorial application of the KCRA.

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The FMLA Meets Professor Prosser

As I have previously posted (click here), there is an open question as to whether the “but for” causation standard in ADEA cases, as set forth in the Supreme Court’s opinion in Gross v. FBL Financial Services, Inc., also applies in the context of FMLA litigation.  (See also my other previous posts on Gross here, here, here, here, and here, and my paper on Gross here.)  Those post-Gross FMLA decisions that we have been able to identify reflect a Circuit split, with the 6^th Circuit adhering to its position that mixed-motive analysis remains viable in FMLA retaliation cases (See Hunter v. Valley View Local Schools, 579 F.3d 688 (6th Cir. 2009)); whereas the 7^th Circuit arrived at a contrary result, finding that Gross but-for analysis applies (See Serafinn v. Local 722, Int’l Bhd. Of Teamsters, 2010 U.S. App. LEXIS 5279 (7th Cir. 2010); Rasic v. City of Northlake, 2009 U.S. Dist. LEXIS 88651 (N.D. Ill. 2009)).

In a recent opinion from the United States District Court for the District of Columbia, Breeden v. Novartis Pharmaceuticals Corp. (copy available here), Judge Robertson was confronted with not an issue of liability, the issue presented in Gross and its progeny, but rather he was presented with an issue of damages under the FMLA and the sufficiency of plaintiff’s evidence in light of the statutory language of the FMLA, which states: “[t]he employer is liable only for compensation and benefits lost ‘by reason of the violation,’ [or] for other monetary losses sustained ‘as a direct result of the violation’.” 29 U.S.C. § 2617(a)(1)(A)(i)(I).  Interestingly, in the briefing to the court on this issue, the defense relied entirely on post-Gross cases construing the phrase “for opposing any practice made unlawful” by the FMLA contained in § 2615(a)(2) (emphasis added).  None of the briefs focused on the phraseology “by reason of the violation” contained in § 2617(a)(1)(A)(i)(I).

Nonetheless, Judge Robertson instead focused on the remedial / damages language of the FMLA, and its particular phrase “by reason of”.  Focusing on that phrase, Judge Robertson was led to a series of cases under various other federal statutes with identical phraseology that have been construed to require not only so-called factual causation (but-for causation), but also legal causation (proximate causation).  See Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 265-68 (1992) (RICO civil suits); Associated Gen. Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 531-36 (1983) (Clayton Act § 4); Loeb v. Eastman Kodak Co., 183 F. 704, 709-10 (3rd Cir. 1910) (Sherman Act § 7); Rothstein v. UBS AG, 647 F. Supp. 2d 292, 295 (S.D.N.Y. 2009) (Anti-Terrorism Act); but see Boim v. Holy Land Found. for Relief & Development, 549 F.3d 689, 695-98 (7th Cir. 2008) (en banc) (adopting “relaxed” causation standard, based on policy considerations, for Anti-Terrorism Act).

Plaintiff (Breeden) was a sales rep for Novartis.  At the time in 2005 when Plaintiff went on an FMLA leave on account of a pregnancy, Novartis realigned her sales force and assigned a smaller territory to her.  She complained about the realignment, and a supervisor assured her that she would be “made whole” upon her return to work.  But, when she returned, there was no change in her diminished sales territory.  Despite that fact, her merit-based income was greater than it had been before the realignment, and her “sales rank” among her peers improved.  In 2008, there was yet another realignment, and Plaintiff’s territory was merged with that of another sales rep.  Plaintiff, whose territory was the smaller of the two, was declared redundant and terminated.

Plaintiff claimed that the unlawful acts were the 2005 realignment and the company’s failure to restore her pre-FMLA leave customer base.  She claimed that her termination, which occurred three years thereafter in 2008, was as a result of these violations.  Focusing on the statutory language “by reason of”, Judge Robertson found that Plaintiff’s evidence was not legally sufficient to satisfy that standard.  In his opinion of May 26^th, Judge Robertson briefly discussed two approaches to “proximate cause”, the ex-ante perspective, and the ex-post perspective, citing Prosser.  As the newer lawyers will vividly recall and the older lawyers will only vaguely recall, the ex-ante perspective asks whether the harm was reasonably foreseeable by the wrongdoer at the time of the wrongful act, and the ex-post perspective asks whether the harm was a direct result of the wrongful act.  Judge Robertson ruled as follows: “Regardless of which approach is taken, the record of this case does not contain legally sufficient evidentiary basis for a reasonable jury to find that Novartis’ 2005 realignment was the proximate cause of Breeden’s termination in 2008.”  Indeed, Judge Robertson goes on to state as follows: “If the record establishes anything, indeed, it is that the 2005 and 2008 realignments were completely disconnected from one another… there is no evidence that the 2008 realignment was foreseeable from 2005 (ex ante), and because the 2008 realignment was a substantial intervening cause, Breeden’s termination cannot be said to have been the direct result (ex post) of the 2005 realignment…” (footnote omitted).

A reading of the cases cited by Judge Robertson finds one catapulted back to the first year of law school.  For example, Holmes v. Sec. Investor Prot. Corp., a RICO opinion, authored by Justice Souter, has extended discussion of “proximate cause” with citation to Prosser.  Justice Stevens’ opinion in Associated Gen. Contractors also has extensive discussion of proximate cause even with citation to every law student’s nightmare – Palsgraf!  And, Judge Posner’s opinion in Boim discusses necessary causation, sufficient causation, the two fires hypothetical that every law student suffered through, and every law student’s favorite torts case, Summers v. Tice, 33 Cal. 2d 80, 199 P. 2d 1 (Cal. 1948).  In light of the extended discussion of proximate cause, it may be wise for counsel to call the trial courts’ attention to Justice Ginsburg’s recent admonition in her concurring opinion in Norfolk Southern Ry. V. Sorrell, 549 U.S. 158, 179 (Ginsburg, J. concurring):

If the term "proximate cause" is confounding to jurists, it is even more bewildering to jurors.  Nothing in today's opinion should encourage courts to use "proximate cause," or any term like it, in jury instructions. " [L]egal concepts such as 'proximate cause' and 'foreseeability' are best left to arguments between attorneys for consideration by judges or justices; they are not terms which are properly submitted to a lay jury, and when submitted can only serve to confuse jurors and distract them from deciding cases based on their merits." Busta v. Columbus Hospital Corp., 276 Mont. 342, 371, 916 P.2d 122, 139 (1996). Accord Mitchell v. Gonzales, 54 Cal.3d 1041, 1050, 1 Cal. Rptr. 2d 913, 819 P.2d 872, 877 (1991) ("It is reasonably likely that when jurors hear the term 'proximate cause' they may misunderstand its meaning.").²

[FN2] See also Stapleton, Legal Cause: Cause-in-Fact and the Scope of Liability for Consequences, 54 Vand. L. Rev. 941, 987 (2001) ("[T]he inadequacy and vagueness of jury instructions on 'proximate cause' is notorious."); Cork, A Better Orientation for Jury Instructions, 54 Mercer L. Rev. 1, 53-54 (2002) (criticizing Georgia's jury instruction on proximate cause as incomprehensible); Steele & Thornburg, Jury Instructions: A Persistent Failure to Communicate, 67 N. C. L. Rev. 77 (1988) (demonstrating juror confusion about proximate-cause instructions).

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If New York Is First to Pass Anti-Bullying in the Workplace Legislation, Will the Ghost of its Former Governor Teddy Roosevelt Be Heard to Say: “Bully! Bully!”

On May 12, 2010, the New York State Senate, by a 45-16 vote, passed legislation that would create a private cause of action for what the proposed legislation calls “an abusive work environment.” The legislation now goes to the New York State Assembly for consideration.

The proposed legislation defines “abusive conduct” as follows:

“Conduct, with malice, taken against an employee by an employer or another employee in the workplace that a reasonable person would find to be hostile, offensive and unrelated to the employer’s legitimate business interests. In considering whether such conduct is occurring, the trier of fact should weigh the severity, nature and frequency of the conduct. Abusive conduct shall include, but not be limited to, repeated infliction of verbal abuse, such as the use of derogatory remarks, insults and epithets; verbal or physical conduct that a reasonable person would find threatening, intimidating or humiliating; or the gratuitous sabotage or undermining of an employee’s work performance. A single act shall not constitute abusive conduct, unless the trier of fact finds such act to be especially server or egregious.”

Malice is defined as the “intent to cause another person to suffer psychological, physical, or economic harm, without legitimate cause or justification.” And, malice “may be inferred from the presence of factors such as outward expressions of hostility, harmful conduct inconsistent with an employer’s legitimate business interests, a continuation of harmful and illegitimate conduct after a complainant requests that it cease or attempts to exploit the complainant’s known psychological or physical vulnerability.” Both physical and psychological harm must be documented or supported by a competent physician or competent expert evidence.

The proposed legislation has an affirmative defense akin to the Faragher/Ellerth affirmative defense used in federal sex harassment cases. There is a one-year statute of limitations, running from the last abusive conduct which is the basis of the allegation of an abusive work environment.

Remedies include lost wages, medical expenses, compensation for emotional distress, punitive damages, and attorneys’ fees. If the employer’s abusive work environment did not result in a “negative employment decision,” defined as a termination, constructive discharge, demotion, unfavorable reassignment, refusal to promote, or disciplinary action, then the employer’s liability for damages for emotional distress is capped at $25,000 and it shall have no liability in such circumstances for punitive damages.

As of the latest from the Workplace Bullying Institute, 17 states have introduced similar legislation since 2003; to date no state has enacted such legislation. In addition to the pending New York legislation discussed above, the Illinois and New Jersey legislatures also have active anti-workplace bullying legislation in the hopper.

Court cases are already on the rise regarding appropriate behavior between employers and employees. Compare Alfano v. Costello, 294 F.3d 365, 377 (2d Cir. 2001) (“It is [] important in hostile work environment cases to exclude from consideration personnel decisions that lack a linkage or correlation to the claimed ground of discrimination. Otherwise, the federal courts will become a court of personnel appeals."), with Raess v. Doescher, 861 N.E.2d 1216 (Ind. Ct. App. 2007). In Raess, the Indiana Supreme Court, over the dissent of one judge, declined to decide whether it was error to admit the testimony of a so-called “bullying expert.” A cardiac surgeon who was accused of being a workplace bully because he yelled at a co-worker, was sued by the co-worker for intentional infliction of emotional distress, and the trial court permitted a so-called “bullying expert” to testify. The Supreme Court did state as follows: “The phrase ‘workplace bullying,’ like other general terms used to characterize a person’s behavior, is an entirely appropriate consideration in determining the issues before the jury. As evidenced by the trial court’s questions to counsel during pre-trial proceedings, workplace bullying could ‘be considered a form of intentional infliction of emotional distress.’”

For more information on bullying, see David Yamada, Workplace Bullying and the Law: Materials for Scholars and Practitioners, available here; David Yamada, Potential Legal Protections and Liabilities for Workplace Bullying (June 2007), available here; Tresa Baldas, States Take Aim by Taming ‘Bully Bosses, Nat’l L. J., Apr. 9, 2007; BullyBusters.org, State-By-State Legislative History of the Anti-Bullying Healthy Workplace Bill, available here (last visited May 9, 2007); Rebello, “States Weigh Anti-Bullying Laws,” Lawyers USA 3 (March 12, 2007).

Tip of the hat to the New York Labor and Employment Law Report for bringing this to our attention.

Please be sure to visit our website at http://RobertBFitzpatrick.com

Disparate-Impact Claims Get a Boost in Unanimous Supreme Court Opinion Written by Justice Scalia

In Lewis v. City of Chicago, 2010 U.S. LEXIS 4165 (May 24, 2010), Justice Scalia, writing for a unanimous Court, held that plaintiffs had timely filed their charges of discrimination with EEOC when they filed more than 300 days after the adoption of the allegedly unlawful practice, but within 300 days of the City’s use of that practice, a use which plaintiffs contend causes a disparate impact on one of the bases prohibited by Title VII. 

In July 1995, after taking some years to develop the examination, the City administered for the first, and only, time the examination to some 26,000 applicants.  The City scored the tests, listed applicants from highest to lowest score, and divided the list into three categories.  The first category included those scoring 89 or above, who were deemed “well qualified”; the second included those scoring 88 to 65, who were deemed “qualified”; and the third included those scoring 64 or below, who were deemed “not qualified.”  In January 1996, after the hiring list was adopted, the City advised the “well qualified” that they would be called in random order to continue the hiring process, which included a physical abilities test, background check, medical evaluation, and drug test.  The “qualified” were told that it was “not likely that they would ever be called due to the large number of applicants who had received “well qualified” scores.  The “qualified” were also told that they would remain on the eligibility list for so long as the list was used. 

Also, in January 1996, the City’s Mayor publicly announced the results, noting that 6.8% (1,782) of the 26,000 applicants were deemed “well qualified”; and that of those “well qualified” candidates, 75.8% were white and 11.5% African American. 

The City used the eligibility list for the first time in May 1996; the second time in October 1996; and eight more times until November 2001, each time selecting at random from the “well qualified” category.  Not until March 31, 1997 did a charge of discrimination get filed with the EEOC. 

Eight “qualified” applicants, as well as the African American Fire Fighters League of Chicago, filed suit against the City, and the District Court, Judge Joan Gottschall, certified a class of about 6,000 African-Americans in the “qualified” category. 

The City admitted adverse impact, and thus the liability phase of the trial focused on issues of job relatedness and whether the examination’s use was consistent with business necessity.  The district court rejected the City’s defense and found the City liable under Title VII. 

On appeal, the City challenged the district court’s holding that the plaintiffs had timely filed a charge with the EEOC.  The Seventh Circuit, Judge Posner writing for the panel, reversed the district court on the timeliness issue, finding that plaintiffs had failed to file an EEOC charge within 300 days after the unlawful practice occurred, which it found to be when the list was adopted and announced.

Justice Scalia, in reversing the Seventh Circuit, held that disparate impact cases are different than disparate treatment cases with respect to the time within which a charge must be filed.  Noting that the language of Title VII’s disparate impact provision talks in terms of an employer’s use of an employment practice that causes a disparate impact, he held that the time within which to file ran from the utilization of the list generated from the test scores.  Thus, in this disparate impact case, the charges were held to be timely filed. 

The opinion rejects the defense argument relying on United Air Lines, Inc. v. Evans, 431 U.S. 553 (1977), that the present effects of prior actions cannot lead to Title VII liability.  The Court in rejecting that argument states: 

“As relevant here, those cases establish only that a Title VII plaintiff must show a ‘present violation’ within the limitations.  What that requires depends on the claim asserted.  For disparate-treatment claims—and others for which discriminatory intent is required—that means the plaintiff must demonstrate deliberate discrimination within the limitations period.  But for claims that do not require discriminatory intent, no such demonstration is needed.  Our opinions, it is true, describe the harms of which the unsuccessful plaintiffs in those cases complained as ‘present effect[s]’ of past discrimination.  But the reasons they could not be the present effects of present discrimination was that the charged discrimination required proof of discriminatory intent which had not even been alleged.  That reasoning has no application when, as here, the charge is disparate impact, which does not require discriminatory intent.”  (citations omitted)

In addition to the good news for plaintiffs with respect to disparate impact claims and charge filing, Justice Scalia, in a pithy sentence, summarizes how easy it is to establish a prima facie claim of disparate impact discrimination.  Citing Ricci, he states that “a plaintiff establishes a prima facie disparate impact claim, by showing that the employer ‘uses a particular employment practice that causes a disparate impact’ on one of the prohibited bases.”

While the City stated yesterday that the case is not over yet, assuming that the Seventh Circuit upholds the district court’s liability ruling, the City will now apparently distribute millions of dollars in back pay to “132 undifferentiated” individuals.  At oral argument before the Supreme Court, Chief Justice Roberts in a colloquy with the Deputy Solicitor General arguing as amicus for the United States, asked:  “So everybody gets 132 over 6,000 times whatever the number of people who would have been hired?”  To which the Deputy Solicitor stated that the Chief’s math was correct.

What seems clearly to have driven the Court to this unanimous result is the fact, which was underscored over and over during oral argument, that if someone had not challenged the announcement of the test results within 300 days, under the City’s interpretation of Title VII’s limitations periods, the City would have “a get-out-of-jail-free card to use for all time.”  Oral argument of Neal Katyal, Esq., Deputy Solicitor General, at p. 18. 

One interesting footnote is that consistently throughout the litigation, the City trumpeted the fact that it had developed the test in consultation with “a prominent African American industrial psychologist” (Oral Argument at p. 38). 

There is an interesting “Cf.” in Justice Scalia’s opinion where he cites Connecticut v. Teal, 457 U.S. 440, 445-51 (1982), after stating the following:  “It may be true that the City’s January 1996 decision to adopt the cutoff score (and to create a list of the applicants above it) gave rise to a freestanding disparate impact claim.”  The Bluebook says that the “Cf.” signal means that one is citing an authority that “supports a proposition different from the main proposition but sufficiently analogous to lend support.”  Having read and re-read the preceding sentence and the “Cf.” to Teal, one can only guess as to what Justice Scalia’s obscure reference means.  I assume that the Justice is relying upon Teal for the proposition that the development and administration of a test, the results of which contain adverse racial impact, is a violation of 703(a)(2) of Title VII and possibly suggesting that Teal’s ultimate holding is still good law, that is, the Teal majority’s rejection of the so-called “bottom-line” defense where an employer argues that it has no disparate-impact liability for a test if the “bottom-line” results of the promotional process was an appropriate racial balance.  All of this is about as obscure as the Greeks reading the entrails of animals (known as “hepatoscopy”—$25 word of the day).  I do note that Teal was a 5-4 decision with Justice Powell writing a dissent on behalf of then Chief Justice Burger and Justices Rehnquist and O’Connor. 

As we have reported in an earlier post, there appears to be a significant uptick in disparate-impact claims, and certainly Lewis will not discourage plaintiffs and EEOC from pursuing such claims.  Presumably, we will increasingly see disparate-impact challenges to background checks that incorporate reliance on criminal history (see Arroyo v. Accenture LLP, Civ. No. 10-03013 (S.D.N.Y.); Michael A. Stoll, Ex-Offenders, Criminal Background Checks, and Racial Consequences in the Labor Market, 2009 U. Chi. Legal F. 381 (2009)); background checks that rely upon an applicant’s credit rating and credit report (see EEOC v. Freeman, Civ. No. 09-02573 (D. Md.); EEOC Advisory Letter, Title VII:  Employer Use of Credit Checks, Mar. 9, 2009, available here)); reliance on educational qualifications for new hires and promotions (see EEOC Advisory Letter, Title VII:  Disparate Impact of Education Requirements, Feb. 19, 2010, available here (in response to an EEOC inquiry as to whether requiring a master’s degree as a hiring requirement would violate Title VII, the letter responded that if a disproportionate exclusion of racial minorities could be proven, then adopting the requirement could subject the employer to liability for disparate impact discrimination unless the employer could show a business necessity for the requirement, and unless the plaintiff failed to show an equally effective less discriminatory requirement)); pencil and paper written tests; prior performance evaluations; and other practices that arguably have a disparate-impact on the bases of criteria, like race, gender, national origin, and age, that are prohibited by federal law.  See also, e.g., Equal Employment For All Act, H.R. 3149, 111th Con. (2009); Testimony of Adam T. Klein, Esq., EEOC Commission Meeting (May 17, 2007), available here.  In addition, state and local courts are interpreting their statutes to recognize disparate-impact claims.  See, e.g., Estenos v. PAHO/WHO Fed. Credit Union, 952 A.2d 878 (D.C. 2008) (“. . . the [D.C. Human Rights Act] also offers protection against unintentional discrimination under the Effects Clause, in which case the employer may defend based only on the narrowly-drawn exceptions in the DCHRA . . .”).

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Social Network Discovery and Discovery Regarding Past Employers

On May 11, 2010, Magistrate Judge Lynch of the Southern District of Indiana entered an order in EEOC v. Simply Storage Mgmt., LLC, No. 09-1223 (S.D. Ind. May 11, 2010) (relying heavily on Canadian law), in which she permitted broad discovery by the defense of plaintiff’s social network sites. The EEOC brought suit on behalf of two female employees of a self-storage firm, the property manager and the associate manager, contending that the two and other similarly situated female employees were subjected to unwelcome sexual groping, sexual assault, and sexual comments by a male property manager. The two females alleged that the sex harassment resulted in severe emotional distress. Judge Lynch ordered them to disclose to the defense extensive information from their MySpace and Facebook accounts, including all profiles, status updates, wall posts, groups joined, causes supported, photos, applications, and the like that “reveal, refer, or relate to any emotion, feeling, or mental state, as well as communications that reveal, refer, or relate to events that could reasonably be expected to produce a significant emotion, feeling, or mental state.”

Judge Lynch held that any privacy concerns were overridden by the fact that plaintiffs had already shared the information “with at least one person.” In support thereof, Judge Lynch cited two Canadian cases—Leduc v. Roman, 2009 CanLII 6838, at ¶31 (ON S.C.) (“Facebook is not used as a means by which account holders carry on monologues with themselves.”), available here, and Murphy v. Perger, [2007] O.J. No. 5511 (S.C.J.) (Ontario Superior Court of Justice)—as well as Mackelprang v. Fidelity Nat’l Title Agency of Nevada, Inc., 2007 U.S. Dist. LEXIS 2379 (D. Nev. 2007), for the proposition that “merely locking a profile from public access does not prevent discovery” under the auspices of privacy.

In Murphy, the Ontario Superior Court of Justice ordered a plaintiff in a motor vehicle suit to produce copies of her Facebook pages. The defendant successfully argued that the pages were likely to contain photographs relevant to the plaintiff’s damages claim, and was buttressed by the fact that the plaintiff had served photographs showing herself participating in various forms of activities pre-accident. The court concluded:

“Having considered these competing interests, I have concluded than any invasion of privacy is minimal and outweighed by the defendant’s need to have the photographs in order to assess the case. The plaintiff could not have a serious expectation of privacy given that 366 people have been granted access to the private site.” [Thanks to Dan Michaulk for the preceding synopsis and quotation.]

In Leduc, the Ontario Superior Court of Justice overturned the trial court’s holding that the existence of the plaintiff’s Facebook was not reason to believe it contained relevant evidence about his lifestyle. In so doing, the court stated:

“With respect, I do not regard the defendant’s request as a fishing expedition, Mr. Leduc exercised control over a social networking and information site to which he allowed designated ‘friends’ access. It is reasonable to infer that his social networking site likely contains some content relevant to the issue of how Mr. Leduc has been able to lead his life since the accident . . . a court can infer, from the nature of the Facebook service, the likely existence of relevant documents on a limited-access Facebook profile.” Leduc, 2009 CanLII 6838, at ¶¶ 32 & 36.

The Simply Storage court also ruled, following the rationale articulated several years ago in Woods v. Fresenius Med. Care Grp. of N. America, 2008 U.S. Dist. LEXIS 3756 (S.D. Ind. Jan. 16, 2008), that the past work history of the two plaintiffs need not be produced as the defense had failed to demonstrate its relevance to the particular claims and defenses in this case.

A number of courts have held as a “general rule” that plaintiff’s prior job performance is irrelevant in employment cases. See Laffey v. Janssen, 2006 U.S. Dist. LEXIS 14833 (M.D. Fla. 2005) (excluding evidence of prior performance for the same employer). See also Neuren v. Adduci, Mastriani, Meeks & Schill, 43 F.3d 1507, 1511 (D.C. Cir. 1995) (holding that because plaintiff’s difficulties with interpersonal relationships at her prior job was irrelevant, the district court improperly admitted such evidence); Zenian v. District of Columbia, 283 F. Supp. 2d 36 (D.D.C. 2003) (holding that evidence of prior employment cannot be introduced in the attempt to prove that plaintiff acted consistently with his prior conduct); Fyock v. American Public Gas Ass’n, Civ. No. 2008 CA 006454 B (D.C. Sup. Ct. Apr. 24, 2009) (finding that defendant’s proffered justification for the discovery of plaintiff’s employment records—including that it is “standard practice” and that such discovery would "shed light on Plaintiff’s termination of previous employment” and “lead to discovery of admissible evidence"—failed to demonstrate how plaintiff’s employment records were relevant or discoverable).

Courts have consistently prevented discovery of employees’ character. See Neuren, 43 F.3d at 1511 (holding that the district court improperly admitted evidence of plaintiff’s difficulties with interpersonal relationships at her prior job); Zubulake v. UBS Warburg, LLC, 382 F. Supp. 2d 536 (S.D.N.Y. 2005) (holding that using plaintiff’s prior job performance to show plaintiff was insubordinate and uncooperative at the job he was terminated from was inadmissible propensity evidence); Fyock, Civ. No. 2008 CA 006454, at p. 9-10 (“As to Plaintiff’s employment with [his former employers], this Court finds that even if the Plaintiff’s employment records did contain evidence suggesting that Plaintiff had a problem with his emotional behavior during his employment with [his former employers], such information is irrelevant to Plaintiff’s claims of age discrimination, breach of contract and promissory estoppel.”). Such evidence would not be admissible at trial as its only purpose would be an attempt to prove that the employee acted consistently with his character as evidenced by his prior employment. See Neuren, 43 F.3d at 1511 (holding that the district court improperly admitted evidence of plaintiff’s difficulties with interpersonal relationships at her prior job); Zenian, 283 F. Supp. 2d at 40 (D.D.C. 2003) (“If the District is offering the [prior employment] evidence to show that plaintiff has always been a bad employee, it is doing exactly what it cannot do: introduce evidence of a person’s character to prove that his behavior on one or more occasions was consistent with that character. Fed.R.Evid. 404(a). … That, of course, is exactly what a litigant cannot do.”). Moreover, character evidence is generally considered not to be an element of any claim or defense in employment cases. See Zubulake, 382 F. Supp. 2d at 539 n.1 (“Plaintiff’s character is not an essential element of any claim or defense in an employment discrimination case. The prohibitions of Rule 404(b) therefore apply.”). See also EEOC v. HBE Corp., 135 F.3d 543, 553 (8th Cir. 1998) (plaintiff's character was not an essential element of his retaliatory discharge claim).

Thanks to the Baker & Daniels “News & Events,” Robert Iafolla of Civilian Review, and Cath Everett of HRZone for calling Judge Lynch’s opinion to our attention.

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