50 for 50: Five Decades of the Most Important Discrimination Law Developments

Number 37: The Supreme Court Raises The Bar On Proving Retaliation

Throughout this series, we have discussed how common retaliation claims have become and how challenging the courts have found it to define “causation” in the context of Title VII cases.   Those two trends intersected recently when the U.S. Supreme Court was called upon to decide what level of proof was required for an employee to prove that an employer retaliated against him. Continue reading

50 for 50: Five Decades of the Most Important Discrimination Law Developments

Number 32: Understanding Retaliation Claims Under Title VII and the Employee’s Good Faith Belief Requirement

One of the plaintiffs’ bar’s perennial favorite claims is the amorphous and, hence, ubiquitous retaliation claim.  Over the years, the law under Title VII has made these claims more difficult for plaintiffs to bring.  At the same time the federal courts interpreting Title VII have made the plaintiffs’ burdens harder, California courts interpreting the Fair Employment and Housing Act have made them easier to bring.  So what does a plaintiff have to show in proving retaliation and what is the good faith belief requirement? Continue reading

U.S. Supreme Court Protects Employers Against Dubious Title VII Retaliation Claims: Employees Must Show “But For” Causation to Prevail

In California, a plaintiff alleging retaliation  can survive summary judgment, or prevail at trial, simply by showing that her protected activity was a “substantial motivating factor” in her adverse employment action.  But, does that same, relaxed standard apply to cases under Title VII?

That was the question addressed in University of Texas Southwestern Medical Center v. Nassar, which the Supreme Court decisively answered, “No.”

Dr. Naiel Nassar, a physician and faculty member of Middle Eastern descent, alleged that the University of Texas Southwestern Medical Center retaliated against him for complaining that his supervisor harassed him on the basis of his national origin.  The lower court instructed the jury that retaliation claims, like discrimination claims, require only a showing that retaliation was a motivating factor, rather than the “but-for” cause, of his adverse employment action.  The jury returned a verdict for Dr. Nassar, the Fifth Circuit affirmed, and the Supreme Court reversed.

The Court clarified that a plaintiff alleging retaliation under Title VII must show that his or her complaint of harassment or discrimination was the “but for” cause of an adverse employment action.  This means that a plaintiff must convince a jury that he or she would not have suffered the adverse employment action if he or she had not complained.  This is in line with the Court’s decision in Gross v. FBL Financial Services, Inc., which settled a plaintiff’s burden to prove age discrimination/retaliation claims under the ADEA.

With retaliation suits multiplying in frequency (they have nearly doubled in frequency since 1997), the Court’s decision strikes a balance between protecting employees’ rights and employers from frivolous claims.  As the Court noted, allowing a “lessened causation standard” for retaliation claims would “make it far more difficult to dismiss dubious claims at the summary judgment stage.” Slip Op. at 18. It is important to note that the “lessened causation standard” remains in effect in Title VII discrimination claims and under all discrimination and harassment claims under California’s Fair Employment and Housing Act.    Nevertheless, because a plaintiff cannot simply show that his or her protected activity was a motivating factor in the adverse employment action, the plaintiff will have to put in some work to survive summary judgment on his or her retaliation claim.  More importantly, this decision will hopefully lead to clearer jury instructions and less jury confusion on the plaintiff’s burden of proof.

- Ferry Lopez (Los Angeles)

A Busy Day In The World of Employment Law

In case you slept late this morning, you missed a flurry of activity in the world of employment law.  The U.S. Supreme Court issued a trio of decisions which affect workplace relations.  In Vance v. Ball State University, the Court held that a supervisor for purposes of vicarious liability under Title VII is a someone whom the employer empowers to take tangible employment actions against the victim.  In University of Texas Southwestern Medical Center v. Nassar, the Court found that retaliation claims under Title VII require proof of “but for” causation, rather than the lower standard of proof the plaintiff’s bar offered.  Finally, in Fisher v. University of Texas At Austin, the Court found that affirmative action in education was still permissible, but nonetheless remanded the case to the Fifth Circuit because the appeals court did not apply the appropriate test for strict scrutiny of race-based decisions.

In other significant news, the U.S. Supreme Court agreed to hear the Noel Canning decision from the D.C. Circuit which had found that the President’s recess appointments to the NLRB were invalid and that the Board did not have a proper quorum.   And, last week, the Court continued its assault against class actions in American Express Co. v. Italian Colors Restaurant, finding that contractual waivers of class arbitration continue to be enforceable, even if the plaintiff’s cost of litigation exceed her potential recovery.

Stay tuned to the blog for updates on these recent developments in the upcoming days.

- Dan Handman



U.S. Supreme Court To Decide Whether SOX Whistleblower Provisions Extend To Employees Of Privately Held Companies

On May 20, 2013, the U.S. Supreme Court announced its decision to hear its first-ever Sarbanes-Oxley Act whistleblower case in Lawson v. FMR LLC et al.  The lower court’s controversial decision centered on whether SOX’s whistleblower protections apply to employees of privately held companies that are contractors to public companies.

Plaintiffs Jackie Lawson and Jonathan Zang brought suit against their former employer, FMR, LLC, which is a privately held company that advises the Fidelity family of mutual funds.  The Fidelity mutual funds are public investment companies registered with the SEC and are required to file quarterly reports, but, as is common with investment companies, the Fidelity funds have no employees of their own.  Lawson and Zang alleged that FMR terminated them in retaliation for raising concerns about its inaccurate and fraudulent reporting practices.

On appeal, the First Circuit found that SOX does not apply to employees of privately held contractors of public companies.  Unlike two other federal whistleblower statutes which expressly included these broad protections, the plain language of SOX encompassed only employees of publicly traded companies.

Interestingly, the Lawson decision is in stark contrast to a decision from the Administrative Relations Board, the administrative body which initially adjudicates SOX claims, in Spinner v. David Landau & Associates.  In that case, the ARB found that SOX applies to employees of privately held companies that are contractors to public companies.

Although it is notable that the Supreme Court is going to decide a SOX case, there is reason to think that the Supreme Court has other, potentially more important  reasons for agreeing to hear the Lawson case.  In particular, the Supreme Court generally agrees to hear cases in two situations: (1) where there is a split between different circuit courts of appeal; or (2) where an important policy or political issue is presented.  Here, however, there is no split among the circuits, so one might reasonably ask what important issue Lawson  presents.

The First Circuit’s opinion in Lawson provides a good clue.  The court found that neither the SEC’s or DOL’s interpretation of the term “employee” as it relates to SOX was entitled to deference.  Is this a sign that the Supreme Court intends to push back on two federal agencies that have taken broad views of their jurisdictional powers?  Is it possible that the Supreme Court will force the DOL to reconsider regulations it has issued on other statutes it enforces, like the Fair Labor Standards Act or the Family and Medical Leave Act?  Only time will tell.  We will keep you informed of developments.

- Ferry Lopez

Kitchen-Sink Guidance On Harassment, Retaliation and Joint Employment Issues

A recent case from the Court of Appeal for the Second Appellate District is a veritable  grab bag of issues for employers.  You name it – the court gave guidance on harassment, retaliation, and joint employer issues in McCoy v. Pacific Maritime Association.

McCoy worked for over a decade as clerk for terminal operator Yusen when she and several coworkers filed a federal discrimination lawsuit against their employer.  The lawsuit led to a confidential settlement between the parties.  Under the settlement, Yusen was required to train McCoy to be a vessel planner, a more prestigious position.

McCoy subsequently sued PMA, an organization that serves as a bargaining agent for Yusen, the employer, alleging that she was sexually harassed and suffered emotional distress during the vessel planner training, and that she was retaliated against due to the filing of the previous lawsuit.  Apparently, the harassment consisted of a co-worker’s comment about the buttocks of other female employees and his crude gestures toward a woman when her back was turned.  None of the sexual comments were directed at her.

The Court of Appeal affirmed the dismissal of McCoy’s sexual harassment claim, reasoning that although the comments were crude and offensive, the conduct, which occurred only five to nine times over a four-month period, did not create a work environment “permeated” with sexual harassment.  Moreover, the employee making the offensive remarks was not McCoy’s supervisor, and McCoy admitted she never mentioned the remarks or anything about sexual harassment to management.  Thus, there was no evidence that PMA knew or should have known of the alleged harassment and failed to take appropriate action.

On the retaliation claim, however, a jury awarded McCoy $1.2 million in damages, but the trial court granted PMA’s motion for judgment notwithstanding the verdict.  On appeal, the court ruled that the trial court had erred in excluding McCoy’s “me-too” evidence by other coworkers who complained they were retaliated against due to their participation in the same lawsuit as McCoy and who received the same training as McCoy as a result of the settlement.  Because the consideration of “me-too” evidence is fact intensive, the Court opined that the trial court should have at minimum conducted a hearing to ascertain the details of the evidence and similarity to McCoy’s claims before subjecting it to blanket exclusion.

The Court of Appeal also held that, aside from the “me too” evidence, there was substantial evidence from which a jury could find retaliation.  Yusen did four things that could support a retaliation verdict: (1) it exposed details of the confidential settlement agreement to McCoy’s supervisor; (2) it tolerated the offensive remarks by McCoy’s co-workers; (3) it denied her needed assistance; and (4)  it gave her substandard training compared to the other trainees.   

As for PMA, the court found it was not an employer under the FEHA.  Although PMA negotiated labor contracts on Yusen’s behalf, Yusen paid McCoy, supervised her and employed the co-workers who allegedly retaliated against her. 

This case is a reminder that even when an employer is not held liable for sexual harassment, employers can steal defeat from the jaws of victory by retaliating against employees.

Amy Durgan

Did You Know That ObamaCare Also Protects Whistleblowers?

Another whistleblower regulation has hit the books that may snare the unwary employer.  The federal Occupational Safety and Health Administration (OSHA) recently published an interim final rule governing the handling of whistleblower retaliation complaints under the Affordable Care Act, President Obama’s signature health care law (which some call ObamaCare).   

Many employers are likely unaware that the ACA includes a provision that allows employees to bring retaliation and whistleblower claims against their employers.  While the ACA is primarily aimed at decreasing the number of uninsured Americans and reducing health care costs, it also contains protections for whistleblowing employees who report to their employer, the federal government, or state attorney generals any alleged consumer protection violations of the ACA and are thereafter subjected to an unfavorable employment action.  Employers cannot retaliate against employees who receive a federal tax credit to buy insurance through their employer or who participate in a future health insurance exchange to offset health care costs.  And, employers cannot take an unfavorable employment action against employees who complain about the denial of health coverage to those with pre-existing conditions or the imposition of lifetime limits on insurance coverage.  Prohibited unfavorable employment actions include termination, reducing pay or hours, demotion, denial of benefits, denial of overtime, failure to promote, and making threats.  Those assisting with any proceeding under this law, such as witnesses or those interviewed by OSHA, are also protected by the retaliation provisions. 

An aggrieved employee must file a retaliation charge with OSHA within 180 days.  Once OSHA receives a charge of retaliation, it will determine if the employee reasonably believed that his employer violated the law when the employee blew the whistle.  OSHA will require that the complaining employee acted in good faith and actually believed that the conduct at issue violates the ACA.  The agency will examine if the employee acted in good faith by considering the knowledge available to a reasonable person in the same factual circumstances with the same training and experience as the aggrieved employee.  As is the case with whistleblowing cases under comparable employment laws, an employee does not need to demonstrate that the conduct complained of actually constitutes a violation of the law. 

OSHA will dismiss a whistleblower complaint in the preliminary investigation process if (1) the employee fails to show that the protected activity (either the complaint or the employee’s exercise of the ACA’s means to control healthcare costs) was a contributing factor in the unfavorable employment action; or (2) the employer rebuts the employee’s claim through clear and convincing evidence that it would have taken the same adverse action absent the protected activity.  The clear and convincing standard is a high burden to meet.   If OSHA pursues the case beyond its initial investigation, the employee must prove that the alleged protected activity was a contributing factor (or, any factor, alone or in connection with other factors tends to affect in any way the outcome of the decision) in the alleged adverse action.  Once the employee meets this burden, the employer must prove by clear and convincing evidence that it would have taken the same action in the absence of the protected activity in order to avoid liability.   Should OSHA find a violation, the employer must make the employee whole, including back pay, reinstatement, or other relief the administration finds necessary.  If a party disagrees with OSHA’s findings, they may appeal to the Department of Labor for a hearing before an administrative judge.   Litigation in federal courts is still feasible, however, as the ACA gives the employee the right to file a complaint in United States District Court if OSHA does not issue a final agency order within 210 days from the date the complaint is filed or 90 days after the employee receives OSHA’s findings. 

OSHA’s rule is effective now, but may be revised following a 60-day window for public comments.  This regulation only adds to the numerous protections already afforded whistleblowers under discrimination, safety, and wage and hour laws, to name a few.  Employers should be mindful of this addition and be certain that any adverse employment action does not stem from an employee’s complaint about violations of the ACA, or their use of the insurance credits afforded by ObamaCare.

- Kristin Oliveira