September 30, 2013

KEEPING CURRENT: Nassar and Vance: Supreme Court Limits Scope of Title VII of the 1964 Civil Rights Act

Jon D. Bible

In June, the U. S. Supreme Court handed down two important decisions involving Title VII of the 1964 Civil Rights Act, which prohibits employers with at least 15 employees from discriminating against their employees because of their race, color, religion, national origin, or sex. In University of Texas Southwestern Medical Center v. Nassar, the Court held 5–4 (Roberts, Scalia, Kennedy, Thomas, and Alito) that a plaintiff in a retaliation case must prove that a retaliatory motive was the but-for cause of, not just a motivating factor in, an adverse employment action taken against him or her. This means that the action would not have occurred absent (but for) the retaliatory motive. In Vance v. Ball State University, the same majority adopted a narrow definition of “supervisor” for Title VII purposes. If an employer’s agent who sexually harasses an employee was the latter’s supervisor, the employer may be strictly liable for the harassment, whereas a negligence standard is applied if the agent is the employee’s co-worker. 

Predictably, the majority and the dissenters were poles apart in terms of what the Court actually did in these two cases. According to the majority, it was merely being faithful to the text of Title VII as amended by the 1991 Civil Rights Act. In the dissenters’ eyes, by contrast, the rulings are the latest in a series of decisions that have gutted federal discrimination laws and thereby thwarted the will of Congress. In 2007, for example, the same majority held in Ledbetter v. Goodyear Tire & Rubber Co. that a suit by an employee alleging that she was underpaid for 19 years because of her sex was time-barred because she did not complain to the Equal Employment Opportunity Commission (EEOC) within 300 days of receiving her first allegedly discriminatory paycheck. Congress overturned that decision in 2008 in the Lilly Ledbetter Fair Pay Act; now, the 300-day clock is reset on the employee’s receipt of each such paycheck. In 2009, that majority held in Gross v. FBL Financial Services, Inc. that the but-for standard applies in cases arising under the Age Discrimination in Employment Act of 1967. 

Turning first to Vance, the Court held in Burlington Industries v. Ellerth and Faragher v. City of Boca Raton (1998) that if the sexual harassment of an employee by a supervisor culminates in a tangible employment action, e.g., dismissal, failure to promote, or a pay decrease, the employer is strictly liable for the harassment. In a hostile environment case, by contrast, the employer has a two-part defense: (1) it acted promptly to prevent or correct the harassing behavior, and (2) the employee unreasonably failed to invoke any available complaint mechanism. In a case involving harassment by the plaintiff’s co-worker, the employer is liable only if it was negligent, that is, it knew or should have known of the harassment and failed to stop it. 

The issue in Vance was how to define “supervisor.” Vance, an African-American woman, worked for several years in Dining Services at Ball State University (BSU). During her employment she lodged numerous complaints of racial discrimination and retaliation against Davis, a white woman also employed in dining services. Although at trial the parties disputed the precise nature of Davis’s duties, they agreed that she could not hire, fire, demote, promote, transfer, or discipline Vance. Despite BSU’s attempts to resolve the problem, the workplace strife persisted and Vance eventually sued, claiming that she had been subjected to a racially hostile work environment in violation of Title VII. 

The lower court held that BSU could not be held vicariously liable for Davis’s alleged harassment because she lacked the authority to take any tangible employment action against Vance and, therefore, was not Vance’s supervisor. As well, BSU could not be liable in negligence because it had reasonably responded to the incidents of which it was aware. The Seventh Circuit Court of Appeals affirmed. 

The Supreme Court, speaking through Justice Alito, noted that while some federal circuits agreed with the Seventh Circuit, others followed the more open-ended approach advocated by the EEOC’s Enforcement Guidance and adopted by many state and lower federal courts, which tied supervisor status to the ability to exercise significant direction over another’s daily work. The Court, however, rejected the latter approach. While it conceded that its research showed that the term “supervisor” has varying meanings colloquially and in the law, it concluded that the law most often contemplates that the ability to supervise includes the power to take tangible employment actions. Along this line, the Court observed that Title VII does not refer to supervisors; instead, that term was adopted in Ellerth and Faragher to signify the class of agents whose misconduct may give rise to vicarious employer liability. This meant that the Court should now choose the interpretation that best fits, and because the employer’s agents who committed sexual harassment in those cases had the ability to take tangible employment actions against the employees whom they oversaw, the Seventh Circuit’s interpretation of the term made the most sense. 

Alito also said that while Ellerth and Faragher presuppose a clear distinction between co-workers and supervisors, there is nothing to indicate that the Court had in mind two categories of supervisors: those with the power to take a tangible employment action, and those who merely have the ability to direct a co-worker’s labor to some ill-defined degree. Finally, Alito observed that the EEOC approach would make the determination of supervisor status dependent on a case-specific, fact-intensive evaluation of numerous factors, which would likely frustrate judges and confound jurors. 

The dissent, by Justice Ginsburg, argued that the majority ignored the reality that, even if they cannot take tangible employment actions, employees with the power to control their subordinates’ work are aided by that authority in perpetuating a discriminatory work environment. Additionally, agents empowered to assign daily tasks performed by employees whom they oversee are often regarded as supervisors by other employees. She concluded by imploring Congress to overturn this decision, as it did the Ledbetter ruling, because it “disserves the objectives of Title VII to prevent discrimination from infecting the Nation’s workplaces.” 

The majority’s approach has the benefit of clarity. Courts that held that strict liability applies if the harasser merely directs the victim’s daily work had to decide how much and what kind of control was needed to trigger this standard; arguably, simply asking a subordinate to run an errand would be enough to do so. This task was exacerbated by the changing nature of organizational hierarchies, in which it can be increasingly difficult to tell who supervises whom. For their part, employers faced substantial challenges as they sought to identify the proper scope of managerial authority and anticipate which employees would be deemed supervisors in a dynamic labor force under an imprecise standard. Now, the relevant issue is the black-and-white one of whether the harasser can hire, fire, demote, reassign, alter pay and benefits, etc. 

That said, Justice Ginsburg is correct in arguing that people who merely have the authority to control their subordinates’ daily work can, and often do, use it to perpetuate a discriminatory work environment. Now, with these individuals in the co-worker category, their behavior will go unpunished unless the employer is found to be negligent. It is also reasonable to expect that fewer cases will be brought in the future for harassment victims, who often find it tough enough to proceed under the best of circumstances, may decide it is simply not worth the effort to do so. While one can never be certain, this may well have factored into the majority’s thinking. 

Nassar involved a medical center that was part of the University of Texas system. The center had an affiliation agreement with a hospital that required the hospital to offer vacant staff position posts to university faculty members. Nassar, a man of Middle Eastern descent who was both a university faculty member and a hospital staff physician, claimed that Levine, one of his supervisors at the university, was biased against him because of his religion and ethnicity. He complained to Fitz, Levine’s supervisor, but after the hospital agreed to let Nassar keep working there without also being on the university’s faculty, he resigned his teaching post and sent a letter to Fitz and others, stating that he was leaving because of Levine’s harassment. Fitz, upset at Levine’s public humiliation and wanting public exoneration for her, objected to the hospital’s job offer, which was then withdrawn. 

Nassar sued, alleging that he had been subjected to racial and religious harassment that resulted in his constructive discharge from the university. He also claimed that Fitz’s efforts to prevent the hospital from hiring him were in retaliation for complaining about Levine’s harassment, in violation of the Title VII ban on employer retaliation because an employee has opposed an unlawful employment practice or made a Title VII charge. Fitz countered that the hospital’s offer to employ Nassar without his being on the university faculty was at odds with the affiliation agreement’s requirement that all staff physicians be members of that faculty. The jury found for Nassar on both claims. The Fifth Circuit Court of Appeals vacated the ruling on the discrimination claim for lack of evidence to support the constructive discharge allegation but upheld the retaliation claim on the basis that Title VII only requires a showing that retaliation was a motivating factor in an adverse employment action. 

The Supreme Court spoke through Justice Kennedy. Observing that traditional tort law requires a plaintiff to prove that whatever harm he or she suffered would not have occurred but for the defendant’s conduct, he concluded that this is the default rule that Congress presumably adopted in enacting Title VII, absent an indication to the contrary in the statute itself. He went on to note that Title VII prohibits employers from discriminating against their employees on any of seven criteria: five, which he termed status-based, are the personal characteristics of race, religion, sex, national origin, and color, while the two remaining categories involve an employee’s opposition to employment discrimination and his or her submission of or support for a complaint that alleges such discrimination. Retaliation cases involve employees who have allegedly been punished for doing either of these two things. 

In Price Waterhouse v. Hopkins (1989), Kennedy said, the Court ruled that if an employee could show that status-based discrimination was a motivating factor in an adverse employment action taken against him or her, the employer could escape liability only if it could prove that it would have taken the same action absent consideration of a protected trait. In 1991, Congress enacted the Civil Rights Act (CRA), one part of which partially overruled this aspect of Price Waterhouse by providing that the same-decision defense could not relieve an employer of liability, but instead would preclude the awarding of damages and leave a plaintiff with the remedies of injunctive or declarative relief. This CRA section explicitly left the motivating factor standard intact. 

Kennedy then asserted that this section only applies to status-based discrimination, not retaliation, which is dealt with in a part of Title VII other than the one the CRA amended. This, in turn, led him to conclude that retaliation cases are governed by the default but-for standard. Kennedy bolstered his claim by referring to the Gross decision, where the Court used essentially the same textual argument to justify its conclusion that age discrimination cases are different from status-based Title VII discrimination cases, were not affected by the CRA, and must therefore be governed by the but-for standard. 

The dissenters, again speaking through Justice Ginsburg, essentially made two arguments. First, they asserted that it is, at best, facetious to conclude that the 1991 Congress meant to split hairs in the manner asserted by the majority. On the contrary, Congress’s intent was to overrule Price Waterhouse insofar as it held that the same-decision defense would relieve an employer of liability for discrimination, and there is no reason to conclude that it wanted cases involving discrimination other than the status-based variety to be governed by a stricter standard than “motivating factor.” The dissent also argued that retaliation for complaining about discrimination is “tightly bonded” to the core prohibition of Title VII and cannot be disassociated from it, and that in subjecting retaliation claims to a different proof standard, the Court was undermining the intent of the 1964 and 1991 Congresses. 

Ironically, Kennedy argued for the but-for causation standard in Price Waterhouse, but his approach garnered only two other votes. In Nassar, however, he attracted two more votes, and that was enough for his position to become law, at least insofar as non-status-based discrimination cases are concerned. It is submitted, however, that it is a stretch to argue that an act (i.e., CRA) designed to make that case less employer-friendly as regards status-based discrimination cases was somehow intended to adopt a more employer-friendly standard of causation in non-status-based cases. 

Nasser puts another roadblock in front of Title VII plaintiffs, for proving that an action would not have occurred but for X is a far cry from proving that X was a motivating factor in the decision to take the action. Its likely effect will be that fewer retaliation cases are filed and that in those that are, summary judgment for the employer is more likely. Given that the EEOC and the courts have seen an upsurge in retaliation cases in recent years – retaliation complaints to the EEOC have doubled in the last decade and a half – it is easy to applaud the notion of cutting down on frivolous litigation. The difficulty, however, is that a fair number of meritorious claims will likely be the victim of the new causation standard as well, and it is hard to argue that this was the intent of the Congresses that enacted Title VII and the CRA. 

These decisions clearly continue the pro-employer trend of the Roberts Court, although it remains to be seen whether they will have the draconian effect predicted by the dissenters. Two points must be stressed, however. First, while employees will have a tougher row to hoe in these kinds of Title VII cases, they can still prevail. Second, the law in a given state or city may be more employee-friendly. Employers should not, therefore, infer that, from a managerial perspective, they can afford to become more lax. On the contrary, it remains necessary to have well-thought-out, clear anti-discrimination policies, which deal specifically with retaliation; to properly train employees; to have clear and reasonable reporting procedures; to carefully and immediately investigate employee complaints; and to take appropriate corrective action when necessary.

Jon D. Bible

Jon D. Bible is a professor of business law at Texas State University-San Marcos.