Three's Company: 2011 Yields Three Employment Law Decisions from the U.S. Supreme Court

May 10, 2011

Content originally posted on MGLAW.net

In just the first three months of 2011, the United States Supreme Court has issued three different decisions that will significantly affect the landscape of federal employment law. These decisions clarify a number of important issues that arise in workplace litigation - and in the workplace itself - including the availability of "associational" retaliation claims, the true standard for "cat's paw" liability, and the coverage of oral complaints under the FLSA's anti-retaliation provision. In each of these recent cases, the Supreme Court ruled in favor of the employee and took an expansive view of the protections provided by a number of our nation's employment laws. Given the Court's "conservative" reputation, these decisions reveal an interesting trend for the development of the law in this field going forward, and both employers and employees alike would be wise to pay careful attention.

I. Thompson v. North American Stainless - "Associational" Retaliation Claims Are Actionable

Until early 2003, Miriam Regaldo and her fiancé, Eric Thompson, both worked for the same employer, North American Stainless ("NAS"). In February of that year, Ms. Regaldo filed an EEOC charge against the company alleging that she was subject to sex discrimination during her employment. Three weeks after the company received a copy of her charge, her fiancé Mr. Thompson, conveniently (and suspiciously) lost his job. Thompson v. No. Amer. Stainless, LP, 131 S.Ct. 863, 867 (2011). He accordingly filed an EEOC charge of his own and later sued in federal court, claiming that NAS terminated his employment in retaliation for his fiancé's original charge of sex discrimination.

The Eastern District of Kentucky dismissed Mr. Thompson's case at summary judgment, holding that Title VII "does not permit third party retaliation claims." 435 F.Supp.2d 633, 639 (E.D. Ky. 2006). The Sixth Circuit agreed with the District Court's ruling and affirmed summary judgment, reiterating that Mr. Thompson did not engage "in any statutorily protected activity" and thus was not a member of the class of persons protected by Title VII's retaliation prohibition. 567 F.3d 804, 807-08 (6th Cir. 2009). The Supreme Court granted certiorari soon thereafter in 2010.

The primary issue to be decided by the Supreme Court was whether an individual who did not engage in any protected activity - but who was intimately related to someone who did - can bring an actionable claim for retaliation under Title VII? In an 8-0* decision, the Supreme Court answered that question with a resounding "yes."

First, the Court rather easily concluded that, under Burlington No. & S.F.R. Co v. White, 548 U.S. 53 (2006), NAS' conduct constituted an actionable adverse employment action. The Court relied on its own language from that decision to point out that Title VII's anti-retaliation provision "must be construed to cover a broad range of employer conduct," given its contrast with the more narrowly-tailored "terms and conditions" language found in the act's anti-discrimination section. Accordingly, under Burlington's more generous standard, the Court held that it was "obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired." Thompson, 131 S.Ct. at 868 (emphasis added). Assuming the truth of Mr. Thompson's allegations, therefore, NAS' decision to fire him was an act of retaliation actionable under Title VII. Id.

Second, the Court also ruled that Mr. Thompson was sufficiently within the "zone of interest" protected by Title VII to constitute an "aggrieved person" under the statute, and thus, he had standing to sue. Id. at 870. As the opinion states, even though Mr. Thompson did not engage in the underlying protected activity, "hurting him was the unlawful act by which the employer punished [Ms. Regaldo, and] in those circumstances, we think [Mr.] Thompson well within the zone of interest protected by Title VII." Id. Being "well within" that zone, Mr. Thompson was free to sue.

Interestingly, the Court did not go on to specify what relationships were sufficient to satisfy this new "associational" retaliation claim. "We must ... decline to identify a fixed class of relationships for which third-party reprisals are unlawful." Id. at 868. The Court did, however, provide some additional guidance: "[w]e expect that firing a close family member will almost always meet the ... standard, and inflicting a milder reprisal on a mere acquaintance will almost never do ... ." Id. But "beyond that," the Court was "reluctant to generalize." Id.

The impact that this decision will have on workplace litigation, and workplace management, is immense. Protected activity by an employee is no longer protected activity for that employee alone; rather, it is also protected activity for any and every other employee whose discharge (or discipline) might reasonably dissuade the complaining employee from making the complaint in the first place. That's not an altogether clear standard, but as Thompson relays, it is clearly an objective one that falls somewhere beyond "mere acquaintance[s]." See id. at 868-69. Close friends and family, therefore, seem to be the most likely qualifiers, which drastically expands the scope of people who presumably can sue based on the same instance of protected activity. Many employers will accordingly (re)consider anti-nepotism policies to protect against this new kind of exposure, and all employers will have to thoroughly and impartially evaluate their employment actions to ensure they are devoid of these new sources of potential retaliation. Indeed, if Thompson promises anything, it is that we can expect the already increasing rate of retaliation claims to increase all the more.

II. Staub v. Proctor Hospital - "Cat's Paw" Liability Is Proven by Proximate Cause, Not Simply "Blind Reliance"

On March 1, 2011, the Supreme Court released Staub v. Proctor Hospital, 131 S.Ct. 1186 (2011), a decision that made proving the "cat's paw" theory of liability significantly easier for employees. "Cat's paw" claims exist where a plaintiff seeks to hold the employer accountable for the intentional discrimination of an employee (usually a supervisor) who did not make - but influenced - the ultimate employment decision in question. Prior to Proctor Hospital, many federal circuits, including the Seventh Circuit where this case arose, held that a plaintiff could prove "cat's paw" liability only where the non-decisionmaker exercised "such singular influence" over the employee who made the decision to render it a mere "product of 'blind reliance.'" See generally, 560 F.3d 647, 659. That standard, as you might expect, was fairly difficult for employees to satisfy.

In Proctor Hospital, the Seventh Circuit reversed a jury verdict holding the employer liable for plaintiff's claims under USERRA. While there was evidence that the HR director who terminated the plaintiff relied on falsified reports from discriminatory supervisors, there was also evidence that he relied on his own investigation and review of the employee's personnel file. Under those facts, the Seventh Circuit could not conclude that the hospital's decision to terminate was "blindly reliant" on the supervisors' false and discriminatory reports. Id. Thus, the jury award was reversed and judgment as a matter of law granted in favor of the employer.

In another 8-0* decision, the Supreme Court disagreed with - and overturned - the Seventh Circuit's ruling. After citing statutory language from USERRA that the employer's anti-military bias must only be "a motivating factor" in the underlying decision, the Court held "that if a supervisor performs an act motivated by anti-military animus that is intended to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA." 131 S.Ct. at 1194 (emphasis in original). This standard departs from the previous standard because it does not require proof of "blind reliance" or a "rubber stamp;" rather, it requires only that the discriminating employee's influence had "some direct relation between the injury asserted and the injurious conduct alleged." Id. at 1192 (citing Hemi Group, LLC v. City of New York, 130 S.Ct. 983, 989 (2010)). Such is enough to establish a causal relationship under long-standing principles of tort law, and such is now sufficient to establish liability under the "cat's paw" theory of intentional discrimination.

While the Court's decision in Proctor Hospital construed only the plaintiff's claims under USERRA, it will almost certainly be applied to most federal discrimination claims, as those statutes use the same "motivating factor" language that the Court relied upon in its ruling. One exception, however, will be age discrimination claims, as Gross v. FBL Financ. Servs., Inc., 120 S.Ct. 2343 (2009) established that a "but-for" causation standard applies to all complaints filed under the ADEA. Nevertheless, employers need to be more careful than ever to conduct thorough and independent investigations before making employment decisions, and the importance of proper documentation during that process cannot be understated. Proctor Hospital clarified that liability can still be avoided if the "employer's investigation results in an adverse action unrelated to the supervisor's original biased action," 131 S.Ct. at 1193 (emphasis added), and the key to making that showing will almost always be adequate and thorough documentation. Without it, employers risk losing any chance at summary judgment and may fare no better in front of a jury of the employee's peers.

In essence, Proctor Hospital teaches employers and employees alike that simply passing a decision through an uninvolved manager does not absolve the employer of liability. Claims exist, and can grow into damages awards, when the recommendation of a supervisor is simply rubber-stamped without further inquiry. The law requires more from an employer when its supervisor is accused of discrimination, and failing to take those additional steps can unintentionally put an employer on the hook for intentional discrimination.

III. Kasten v. Saint-Gobain Performance Plastics - the FLSA's Anti-Retaliation Provision Protects Oral, as well as Written, Complaints

In Kasten v. Saint-Gobain Perf. Plastics Corp., 131 S.Ct. 1325 (2011), the Supreme Court resolved a split of authority among federal appellate circuits as to whether the FLSA's retaliation prohibition protects employees who make oral - not just written - complaints about violations of the act. In a 6-2* decision, the Court held affirmatively that it did. Id. at 1330-36.

The facts in Kasten are quite simple. During his employment the plaintiff orally complained about the location of the company's time clocks, which were in an area that prevented employees from receiving credit for the time they spent donning and doffing the protective gear required for their jobs. Id. at 1327. Shortly after making these complaints, the plaintiff was fired.

Both the District Court and the Seventh Circuit dismissed the plaintiff's retaliation claim, holding that the FLSA's anti-retaliation provision did not cover oral complaints. See 619 F.Supp.2d 608, 610 (W.D. Wis. 2008); 570 F.3d 834, 838-40 (7th Cir. 2009). This result was consistent with the law in some federal circuits, but not consistent with others. Compare Hagan v. Exchostar Satellite, LLC, 529 F.3d 617, 625-26 (5th Cir. 2008)(holding oral complaints are covered) with Lamber v. Genesee Hosp., 10 F.3d 46, 55-56 (2nd Cir. 1993)(holding they are not). The Supreme Court granted certiorari in order to resolve the conflict.

The Court began by examining the text of the statute, which makes it unlawful to:

[D]ischarge or in any manner discriminate against any employee because such employee filed any complaint or instituted or caused to be instituted any proceeding under or related to [the FLSA] ... .

29 U.S.C. § 215(a)(3)(emphasis added). The focus of the Court's analysis was the "file any complaint" language highlighted above. After noting that, "considered in isolation, [the phrase] may be open to competing interpretations," the Court looked to dictionary definitions and concluded that the word "file" is used in both oral and written contexts. 131 S.Ct. at 1330-33. Because other portions of the FLSA did not clarify for which context it was intended, the opinion resolved to "look further" at certain "functional considerations." Id. at 1333.

First, the Court observed "that limit[ing] the provision's coverage to written complaints would undermine the [FLSA]'s basic objectives." Id. Indeed, the act is intended to protect "overworked" employees who are often "less educated" and sometimes "illiterate." Requiring a formal written submission, therefore, just didn't make sense. Id. Second, the Court also looked to the interpretation of the NLRA and to administrative guidance from the EEOC and Department of Labor, all of which counseled toward coverage of oral, as well as written, complaints. Id. at 1334-36. These considerations led the Court to hold accordingly.

The effect of Kasten will be to open up the scope of protected activity that employers must respond to in the course of everyday business and also navigate in making adverse employment decisions with respect to particular workers. The Supreme Court did, however, clarify that the employer is due "fair notice" from the employee that he or she is complaining under the FLSA, whether the complaint is oral or written. "To fall within the scope of the anti-retaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection." Id. at 1335. This puts a clear burden on the employee to be specific and to request a remedy, but also imparts a responsibility for the employer to know what the FLSA covers and to identify the kind of complaints that may touch upon it. Reporting mechanisms and response protocols should accordingly be modified to comply with this notice standard, and supervisors must be trained to understand it. In addition, both employers and employees need to remember that Thompson has enlarged the class of people who are protected by a particular complaint, so be sure to incorporate those considerations into any response taken.

IV. Conclusion

These three decisions - Thompson, Proctor Hospital, and Kasten - evidence a trend from our nation's highest court to resolve ambiguities concerning the coverage of federal employment laws in favor of the employee. Perhaps this trend is the result of an ongoing economic recession and near record levels of unemployment, and perhaps it is a mere coincidence. Regardless, employers and employees alike should sit up and take notice. If the first four months of 2011 are any indication, the degree of protection provided to workers under the law is increasing. More care will accordingly be required from employers in matters of day-to-day management.

* Justice Kagan did not participate in the decisions discussed in this article.