LaborSphere, Author at Laborsphere

Seventh Circuit Expands § 1981 Coverage to Include Individual Liability for Retaliation Under “Cat’s Paw” Theory

The Seventh Circuit has held that an employee with an unlawful retaliatory motive may be individually liable under § 1981 for causing an employer to retaliate against a co-worker. Section § 1981 prohibits racial discrimination in contractual relations and has been held applicable to employment matters.

In Smith v. Bray, the Seventh Circuit tackled this issue of first impression by looking to recent Supreme Court precedent endorsing the “cat’s paw” theory of employer liability under Title VII and the holdings of five circuits that the “cat’s paw” theory supports individual liability under § 1983, which provides redress for individuals whose federally protected rights have been violated. As such, the Court held that “recognizing cat’s paw liability under § 1981 is consistent with our parallel approaches to these [non-discrimination] statutes.”

The “cat’s paw” theory, which was recognized by the Supreme Court in Staub v. Proctor Hosp., 131 S. Ct. 1186 (2011), says that an employer may be liable for discrimination under Title VII where an adverse employment decision is based on a biased or improperly motivated recommendation by a subordinate or supervisor. “Cat’s paw” liability may be established where a plaintiff can show that an employee with a discriminatory purpose or bias provided information that may have affected an adverse action. The theory comes from a French fable wherein a monkey (the biased employee) convinces a cat (the employer) to pull chestnuts from a hot fire. The cat’s paw is then burned and the monkey enjoys the fruits of the cat’s labor. In holding that the “cat’s paw” theory can support individual liability under § 1981, the court inquired, “Why should the ‘hapless cat’ (or at least the employer) get burned but not the malicious ‘monkey’?”

This decision is noteworthy not just because it endorses individual liability under § 1981, but also because it provides an arrow in a plaintiff’s quiver which is not available under Title VII as most circuits have held that an individual cannot be liable under Title VII. As far as race discrimination is concerned, however, Smith v. Bray opens the door for suits against supervisors and co-workers under a “cat’s paw” theory.

Sixth Circuit Joins Seventh Circuit in Holding that Pre-2008 ADA Cases Requires “But-for” Showing of Discrimination

Reversing 17 years of circuit court precedent, the Sixth Circuit Court of Appeals, in an en banc decision, held that the Americans with Disabilities Act (“ADA”) requires a plaintiff to show that his or her claimed disability was a “but-for” cause for the employer’s adverse employment decision. The decision in Lewis v. Humboldt Acquisition Corp., Case No. 09-6381 (6^th Cir., May 25, 2012), marks the Sixth Circuit’s first decision analyzing the ADA’s causation standard since the Supreme Court’s decision in Gross v. FBL Financial Services Inc., 557 U.S. 167 (2009). In that case, the Supreme Court held that a plaintiff must show that age was a “but-for” cause for the adverse action, pursuant to the Age Discrimination in Employment Act’s (“ADEA”) “because of” language, and further, the court repudiated the application of a “mixed-motives” analysis under the ADEA. In holding that the ADA requires a “but-for” showing based on the ADA’s pre-2008 language that prohibited discrimination “because of” an employee’s disability, the Sixth Circuit agreed with the Seventh Circuit’s decision in Serwatka v. Rockwell Automation Inc., 591 F.3d 957 (7^th Cir. 2010), the only other circuit court decision addressing the issue since Gross v. FBL.

In so holding, the Sixth Circuit overruled its precedent requiring a plaintiff to show that his or her disability was the “sole reason” for the adverse employment action. The court had previously held that such a standard applied under the ADA based on its interpretation of the Rehabilitation Act of 1973. While holding that a “but-for” analysis applies under the ADA, the Sixth Circuit also addressed the plaintiff’s arguments in favor of a “motivating factor” analysis applicable under Title VII. Holding that each federal anti-discrimination statute must be analyzed based upon its own text, the court held that the statutory texts and histories of Title VII and the ADA did not justify borrowing Title VII’s “mixed-motives” analysis for ADA purposes.

The Sixth Circuit’s decision is based upon the ADA’s pre-ADA Amendments Act of 2008 (“ADAAA”) language. The ADAAA now prohibits discrimination “on the basis of disability.” As such, the Sixth Circuit’s holding is limited to cases governed by the pre-2008 statute and any statements regarding the causation standard under the ADA are dicta for cases brought under the ADAAA.

Report Confirms Large Increase in ADA Employment Litigation in Federal Courts

A Syracuse University report provides confirmation for what employment litigators already suspected — the number of ADA employment lawsuits filed in federal court are way up, nearly 90% higher than five years ago and 12% from a year ago. To read the full report click here.

The report by Syracuse U.’s Transactional Records Access Clearinghouse found 183 lawsuits were filed in April 2012 in the 90 federal district courts around the country compared to less than 100 five years ago. The report also documents the steady increase in ADA employment litigation over the last five years.

The vast expansion of the definition of “disability” under the ADA Amendments Act of 2008 (Pub. L. 110-325), which became effective January 1, 2009, is likely the biggest culprit, along with the general aging of the population and the continued economic downturn.

The report also details the 10 biggest hotbeds for ADA employment litigation, measured by lawsuits per capita in those judicial districts. Not surprisingly, federal courts based in Tulsa, Pensacola and Manhattan took the top three spots, with the courts based in Chicago, Las Vegas and Philadelphia occupying three other spots in the top 10.

Interestingly, three of the bottom 10 spots are held by federal courts in California, primarily because California disability discrimination laws and California’s state courts are, by far, the strong preference of the plaintiffs’ employment bar. I would love to see a similar report on disability in employment claims filed in California’s state court, but my experience tells me that we’d see a similar increase that we see in the federal statistics reported above.

Sadly, I’m afraid that these trends will continue for quite some time.

9th Circuit Says ADA Does Not Protect Medpot Users and California Court of Appeals Rules California Law Applies to Wrongful Discharge Claim of Corporate Officer

Reflecting on the employer’s perspective on two decisions with national ramifications emanating from California last week, you have an unexpected victory from the Ninth Circuit on medical marijuana and an expected loss from the California Court of Appeal on the application of California law to a California-based officer of a Delaware corporation.

James v. City of Costa Mesa, 10-55769 (9th Cir. May 21, 2012) — The ADA Does Not Protect Medpot Users

The first of these decisions from the Ninth Circuit means that California employers are now free under state and federal law to prohibit marijuana use or possession in the workplace and working while under the influence. See also Ross v. Ragingwire Telecomms., Inc., 174 P.3d 200 (Cal. 2008) (no right to use or be under the influence of medical marijuana in the workplace under California disability discrimination laws).

In hearing a challenge to two California cities’ decisions to bar med-pot dispensaries within their borders, the Ninth Circuit in James held in a 2-1 vote that plaintiffs using medical marijuana under California law were not “individuals with disabilities” under the ADA and thus not entitled to its protections. Although the lawsuit was not an employment case, it nonetheless addressed the same definition of “individuals with disabilities” used in Title I of the ADA, the act’s employment provisions. Given a strong and reasoned dissenting opinion, one can expect a request for the Ninth Circuit to decide the matter en banc (through an 11-judge panel).

To read the full opinion of the court click this link: James v. City of Costa Mesa

Lidow v. Superior Court (International Rectifier Corp.), B239042 (Cal. Ct. of App. May 23, 1012) — California Law Applies to Wrongful Discharge Claim of Corporate Officer

The second decision was far less surprising. There, a California court held that California law applied to the discharge of a Delaware corporation’s California-based CEO, despite the so-called “internal affairs” doctrine. Under that doctrine, matters involving a corporation’s “internal affairs” are governed by the law of the state of incorporation. In an acknowledged case of first impression, the Court of Appeal held that an employer’s discharge of its CEO for complaining about the company’s harmful or unethical policies was not an “internal” corporate matter and should be governed by California law. While it left open the possibility that another basis for discharge may invoke application of the doctrine, it is hard to imagine a circumstance where a California-based CEO or other corporate officer/employee would not be able to claim protection under California’s highly-protective, employee-friendly laws. The Court also rejected, on summary adjudication, the claim that the CEO was not an “employee” and merely an “officer.”

Corporations with California-based officers who may also be seen as employees should consider taking steps to prevent their identification of these officers as employees.

To read the opinion of the court click this link: Lidow v. Superior Court

DOJ Extends Compliance Deadline for Means of Entry and Exit to Swimming Pools at Hotels and Other Public Accommodations

On the disability access front, on May 21, 2012, the DOJ issued the following regulations applicable to swimming pools at public accommodations (including hotels). Cutting through the regulatory jargon, the DOJ’S action extended to January 31, 2013, a compliance deadline that had been March 15, 2012 and was then extended to May 21, 2012. To read the final rule in its entirety click the below link.

http://www.ada.gov//regs2010/ADAregs2012/finalrule_existingpools_FR_may21.htm

The compliance deadline applies to rules passed in the Fall of 2010 that require hotels and other public accommodations to install pool lifts for entry and exit in new construction and alterations. Hotels with existing pools must consider whether it is “readily achievable” to install lifts.

For more information on the substance of the rules, the DOJ recently issued guidance, which can be viewed by clicking the below link.

http://www.ada.gov//pools_2010.htm

7th Circuit Finds Pharmaceutical Sales Reps Exempt Under FLSA Administrative Exemption

In consolidated cases decided on May 9, 2012, the U.S. Court of Appeals for the Seventh Circuit (which covers employers in Illinois, Indiana and Wisconsin) held that pharmaceutical sales representatives employed by Abbott Laboratories, Inc. and Eli Lilly & Co. are exempt from overtime pay requirements under the Fair Labor Standards Act’s “administrative” exemption. In so holding, the Seventh Circuit joins the Third Circuit, which similarly held in February 2010 that Johnson & Johnson sales representatives were covered by the administrative exemption. On the other hand, the Second Circuit ruled in July 2010 that the administrative exemption did not apply to sales reps of Novartis Pharmaceutical Corp.

The Seventh Circuit’s ruling on the administrative exemption comes at a time when the U.S. Supreme Court has heard arguments, and expects to rule next month, in a case addressing whether the FLSA’s separate “outside sales” exemption applies to pharmaceutical sales reps employed by GlaxoSmithKline PLC. Depending on the Supreme Court’s ruling and the particular circumstances of the employees involved, employers in the Seventh Circuit may soon have a double-barreled argument that their outside sales employees are exempt from FLSA overtime pay requirements under both the administrative and outside sales exemptions. The consolidated Seventh Circuit cases are Schaefer-LaRose v. Eli Lilly & Co., No. 10-3855, and Jirak, et al. v. Abbott Laboratories, Inc., Nos. 11-1980 and 11-2131.