2007-2008 Term Will Examine Important Issues
The U.S. Supreme Court’s 2007-2008 term is currently well underway. Several of the key pending labor and employment cases are summarized below.
Federal Express Corp. v. Holowecki (No. 06-1322)
On November 6, 2007, the justices heard oral argument on whether submitting an “intake questionnaire” and a sworn and notarized affidavit to the Equal Employment Opportunity Commission (EEOC) is equivalent to filing a charge for purposes of the Age Discrimination in Employment Act’s (ADEA) exhaustion of administrative remedies requirement.
A group of FedEx couriers, all of whom were over the age of 40, alleged that the company used its performance standards to force out older workers. The trial judge dismissed the lawsuit, but the Second Circuit Court of Appeals reversed this decision.
The court held that the EEOC intake questionnaire and affidavit, which was filed by Patricia Kennedy within 300 days of the most recent alleged discriminatory action, constituted a timely charge – even though the EEOC neither properly notified FedEx nor investigated the charge. The questionnaire and affidavit (filed in December 2001) alleged systematic bias against older couriers. Kennedy filed a formal charge using EEOC Form 5 one month after the suit was filed in late April 2002. The ADEA permits a person to file suit 60 days after filing a charge and does not require the charging party to wait for a right-to-sue letter.
The ADEA does not define the word “charge.” However, the Second Circuit noted, the EEOC’s regulations interpreting the ADEA provide that a charge is sufficient when “[the] EEOC receives a `writing’ (or information that an EEOC employee reduces to a writing) from the person making the charge that names the employer and generally describes the allegedly discriminatory acts.” The court further held that the writing must show that the person “seeks to activate the administrative investigatory and conciliatory process.”
Six circuit courts have addressed whether an intake questionnaire may constitute a charge under the ADEA. The Second and Eleventh Circuits reached different conclusions in nearly identical ADEA suits seeking class status for older FedEx employees. The Third and Sixth Circuits have found that an intake questionnaire does not constitute a charge for purposes of the ADEA. The Seventh, Eighth and Eleventh Circuits have held that an intake questionnaire can substitute for a charge in limited circumstances.
CBOCS West Inc. v. Humphries (No. 05-4047)
On September 25, 2007, the Supreme Court agreed to consider whether 42 U.S.C. § 1981, as amended by the Civil Rights Act of 1991, allows an employee alleging race discrimination to also bring a retaliation claim.
Hedrick Humphries, an African American associate manager at Cracker Barrel in Illinois, alleged that he was fired because he complained that his supervisor was subjecting him to unlawful discrimination based on his race. The trial judge granted summary judgment to Cracker Barrel on both the discrimination and retaliation claims.
The Seventh Circuit Court of Appeals affirmed summary judgment on the discrimination claim but reversed on the retaliation claim, finding that Humphries established a prima facie case that he was treated less favorably than a similarly situated employee in a non-protected class.
In 2005, the Supreme Court held in Jackson v. Birmingham Board of Education that Title IX of the Education Amendments of 1972 prohibits retaliation even though the statute does not include a retaliation provision. The Seventh Circuit relied upon this decision for its reversal of the trial judge in the Cracker Barrel case.
The Seventh Circuit joined a number of other circuits that have recognized claims for retaliation for opposing race discrimination under Section 1981. Specifically, the Seventh Circuit found that the 1991 amendment of Section 1981 was intended to counter the Supreme Court’s decision in Patterson v. McLean Credit Union, which held that Section 1981 could not be used to challenge an employer’s conduct after the employment relationship had been established.
Judge Frank Easterbrook’s dissent in Cracker Barrel rejects the majority’s application of the Supreme Court’s Title IX analysis in Jackson to Section 1981. Easterbrook found that the Supreme Court’s Patterson decision rejected a statutory interpretation that includes retaliation under Section 1981.
Sprint/United Management Co. v. Mendelsohn (No. 05-3150)
On December 3, 2007, the Supreme Court heard oral argument in an ADEA suit brought by an employee who was laid off in a reduction in force (RIF). The question is whether the trial judge should have allowed the testimony of other laid off employees who worked for different supervisors and perceived that they were discriminated against on the basis of age.
Ellen Mendelsohn was employed by Sprint at its headquarters in Overland Park, Kansas. She was terminated as part of a RIF in November 2002. At the time, Mendelsohn was 51 years old, the oldest manager in her unit, and rated by her supervisor as the weakest performer. Sprint laid off 15,000 employees during this 18-month RIF.
At trial, Mendelsohn had planned to present the testimony of five other employees who were over the age of 40 and also selected for layoff, but none of them had the same supervisor as she did. However, the trial judge limited the testimony about the company’s alleged discriminatory treatment to “Sprint employees who are similarly situated,” which was defined as those who were supervised by the same boss as Mendelsohn and who were terminated at or about the same time as she was. Sprint successfully defended the claim at trial.
The Tenth Circuit panel reversed the trial judge’s decision stating: “Because direct testimony as to the employer’s mental processes seldom exists, . . . evidence of the employer’s general discriminatory propensities may be relevant and admissible to prove discrimination.” The court further held that “the evidence [Mendelsohn] sought to introduce is relevant to Sprint’s discriminatory animus toward older workers, and the exclusion of that evidence unfairly inhibited Mendelsohn from presenting her case to the jury.”
The dissent argued that the probative value of the co-workers’ testimony was outweighed by the danger of unfair prejudice to Sprint. The dissent further noted that the testimony of other laid off employees who did not share the same supervisor was inadmissible because Mendelsohn had made no “independent showing” of a company-wide policy of discrimination.
Sprint argues that the Tenth Circuit’s decision conflicts with the Second, Third, Fifth and Sixth Circuits regarding the admissibility of testimony by other employees that claim they also were discriminated against by the employer. According to Sprint, the “me too” evidence was properly excluded under Federal Rule of Evidence 403 because it was irrelevant to whether Mendelsohn’s supervisor was motivated by age when he selected her to be laid off. Rule 403 provides that district courts may exclude evidence “if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.”
LaRue v. DeWolff, Boberg & Associates, Inc. (No. 05-1756)
On November 26, 2007, the high court reviewed the Fourth Circuit’s decision that a participant in a 401(k) plan is prohibited from using the Employee Retirement Income Security Act (ERISA) to recover losses allegedly caused by his employer’s failure to carry out his investment instructions.
James LaRue is a participant in the 401(k) plan sponsored and administered by his employer, DeWolff, Boberg & Associates. The plan allows participants to choose from several investment options and to allocate certain percentages to selected options. LaRue alleged that, in 2001 and 2002, DeWolff failed to follow his investment directions, resulting in a loss of $150,000.
Section 502(a)(2) of ERISA provides that a “civil action may be brought . . . by a participant . . . for appropriate relief under section 1109 of this title.” Section 1109 states that “a fiduciary with respect to a plan who breaches any . . . duties imposed upon fiduciaries . . . shall be personally liable to make good to such plan any losses to the plan resulting from each such breach.” Section 502(a)(3) of ERISA provides that a “civil action may be brought . . . by a participant . . . to obtain other appropriate equitable relief . . . to redress . . . violations of the statute.”
The Fourth Circuit held that Section 502(a)(2) does not permit a 401(k) plan participant to sue for plan losses caused by a breach of fiduciary duty when the losses only affected the individual participant and that Section 502(a)(3) does not permit a plan participant to recover such losses because they do not constitute “equitable relief.” LaRue argues that the court’s interpretation of Sec-tion 502(a)(2) is inconsistent with decisions by other circuits.
Kentucky Retirement Systems v. EEOC (No. 03-6437)
On September 25, 2007, the justices agreed to review the Sixth Circuit’s holding that the EEOC established a prima facie case of age discrimination in an important case.
Charles Lickteig was a deputy sheriff with the Jefferson County (Kentucky) Sheriff’s Department. At age 61, Lickteig applied for disability retirement benefits. His application was denied because he had become eligible for regular retirement benefits at age 55. Lickteig filed a charge with the EEOC alleging age bias. The EEOC then sued, challenging the retirement plan’s treatment of employees such as Lickteig who held hazardous jobs.
The retirement plan includes normal and disability retirement benefits. A member who is eligible for normal retirement benefits (based on age plus a minimum service requirement or based on service alone) is not eligible for disability retirement benefits. Because age may be a factor in determining eligibility for normal retirement, it is an indirect factor in determining eligibility for disability retirement. The calculation of disability retirement benefits is based upon actual years of service plus the number of years remaining before the member reaches retirement age or eligibility based on years of service alone; age may be an indirect factor in determining the amount of disability retirement benefits.
The EEOC presented charts showing that the amount of disability retirement benefits paid to an employee at a younger age frequently exceeds the amount paid to an employee who qualified for disability retirement at an older age. The federal agency also asserted that a worker who receives disability retirement benefits will receive a higher amount than an older employee who held the same job and has the same disabling condition, years of service, and final pay but who became disabled after reaching normal retirement age and was only entitled to normal retirement benefits. The trial judge granted summary judgment for Kentucky Retirement Systems, the state, and the Jefferson County Sheriff’s Department.
The en banc Sixth Circuit reversed, finding that the plan is facially discriminatory because it disqualifies employees from receiving disability retirement benefits if they become disabled after reaching age 55 if they hold hazardous jobs, such as Lickteig, or age 65 if they have non-hazardous jobs. The court also found that the plan calculates disability retirement benefits in a manner that results in an older employee receiving lower payments than a younger employee who is similar in every relevant factor other than age.
Note: This article was published in the August – December 2007 “Double Issue” of The Employment Law Authority.