En banc court reversed in private employer rebel flag case, finding no subject matter jurisdiction

In Dixon v. Coburg Dairy, Inc., the Fourth Circuit sitting en banc reversed the outcome in the district court and the outcome in the panel decision and directed the case be dismissed for lack of subject matter jurisdiction. Judge Williams wrote the opinion for the Court, joined by Chief Judge Wilkins and Judges Widener, Wilkinson, Niemeyer, Luttig, Traxler, Shedd, and Duncan. Judges Michael, King, and Gregory wrote separate opinions.

The panel was Judge Gregory plus Senior District Judge Michael of the W.D. Va., who agreed with Judge Gregory's opinion, and District Judge Goodwin of the S.D. W.Va., who dissented. I thought the panel decision was wrong when it was decided, as stated in this post, which says in part:

"Here, though, the claim is a creation of state law, and to say that the statute involves "a substantial question of federal law" is just not true, or if is true, the federal right applies only to state actors. In Kentucky, KRS 344.040 "mirrors Title VII of the Civil Rights Act of 1964" and therefore all the courts applying it, both state and federal, literally "use the federal standards for evaluating race discrimination claims." Smith v. Leggett Wire Co., 220 F.3d 752, 758 (6th Cir. 2000). Judge Goodwin (being from West Virginia) cites a similar West Virginia law in his dissent. By Judge Gregory's logic, all those claims are removable, but they're not. It might be good for employers if they were. Moreover, if there is some state law construct that applies the Bill of Rights to persons other than state actors, that's not federal law, whatever it is.

The South Carolina cases cited by the court are not all they're cracked up to be - the plaintiffs lost in Culler v. Blue Ridge Electric Co-op and Williams v. Strickland for lack of proof, and so the courts in those cases never really unraveled the state vs. federal aspect of rights protected by the South Carolina statute.

Finally, application of the First Amendment to private employers is a bad idea. As the majority notes, private employers can't afford to allow employees "free speech" that amounts to unlawful racial (or sexual) harassment of co-workers. As the dissent notes in a footnote, application of the First Amendment to private employers is likely at least in some circumstances to violate the First Amendment rights of the employers, in a way that could be actionable in federal court, I suspect."