The United States Supreme Court decided several significant employment law cases in the last term. The Court’s opinions address a number of topics, from retaliation to proof of race discrimination to wage and hour violations, and include decisions applicable to public and private sector employers. At least one important employment law case remains on the Supreme Court’s docket (more will be coming as the new term approaches in October). These cases are summarized below.

Cases Decided

Burlington Northern v. White (June 22, 2006)

Sheila White was the only woman working in the Maintenance of Way department at Burlington Northern’s Tennessee Yard. In 1997, the roadmaster, Marvin Brown, assigned White to operate a forklift as her primary responsibility. Subsequently, White claimed her direct supervisor told her women should not be working in the Maintenance of Way department, and made insulting and inappropriate remarks to her in front of male colleagues. The company investigated White’s complaints and suspended the supervisor for 10 days. He also was ordered to attend a sexual harassment prevention training session.

Within days of the decision to suspend White’s supervisor, Brown informed White he was removing her from forklift duty and assigning her other functions. Brown told White this decision was based in part on co-workers’ complaints that a “more senior man” should have the “less arduous and cleaner” job of forklift operator.

White then filed a complaint with the Equal Employment Opportunity Commission (“EEOC”), claiming that the reassignment of her duties constituted gender discrimination and retaliation for complaining about her supervisor. She subsequently filed two additional complaints claiming that Brown had placed her under surveillance and was monitoring her daily activities, and that she had been unfairly suspended for 37 days without pay after a workplace dispute.

The issue before the Court was whether changing White’s job responsibilities and suspending her without pay for 37 days constituted retaliation under Title VII (even though White ultimately was paid for the 37 days after she filed a grievance). In reaching its decision, the Court resolved a disagreement among the Circuits as to whether the alleged adverse action must be employment or workplace related to constitute retaliation under Title VII. The Court ruled that the anti-retaliation provision of the statute is not limited to actions directly related to the workplace (i.e., “ultimate employment decisions”). To hold otherwise, in the Court’s view, would frustrate the purpose of the anti-retaliation provision.

The Court therefore adopted a standard of “material adversity” with respect to the definition of an adverse employment action. In other words, a plaintiff must show that a reasonable employee would have been dissuaded from making or supporting a charge of discrimination to proceed with a retaliation claim under Title VII. Significantly, the Court recognized that this “material adversity” standard does not immunize an employee from those “petty slights or minor annoyances” that often take place at work, and that all employees experience.

Arbaugh v. Y & H Corp. (February 22, 2006)

In this case, an employee sued her former employer in federal court, alleging sexual harassment in violation of Title VII and asserting various state law claims. The jury rendered a verdict in favor of the employee. Subsequently, the employer moved the court to dismiss the entire action for lack of federal subject matter jurisdiction arguing (for the first time) that it had fewer than 15 employees and therefore was not amenable to suit until Title VII. The lower court granted the motion, which was upheld by the Fifth Circuit Court of Appeals.

The Supreme Court reversed, holding that Title VII’s numerical threshold does not circumscribe federal court subject matter jurisdiction. Rather, “the employee-numerosity requirements relates to the substantive adequacy of the . . . Title VII claim,” and therefore should be raised as a defense prior to the close of the trial on the merits.

Ash v. Tyson Foods (February 21, 2006)

Anthony Ash and John Hithon were superintendents (both black males) at a poultry plant owned and operated by Tyson Foods. They applied for promotions to fill two open shift manager positions, but two white males were selected instead. The employees sued for race discrimination under Title VII (among other statutes). The jury found in their favor, but Tyson moved for judgment as a matter of law, and the lower court ordered a new trial as to both employees. On appeal, the Eleventh Circuit Court of Appeals ruled in part that there was insufficient evidence to show pretext (and therefore unlawful discrimination) as to Ash.

The Supreme Court held that the Court of Appeals erred regarding two issues. First, there was evidence that the plant manager who failed to promote Ash and Hithon referred to each of the employees as “boy” on certain occasions. Ash and Hithon argued below that this was evidence of discriminatory animus. The Court of Appeals disagreed, however, holding that “[w]hile the use of äóÖboy’ when modified by a racial classification like äóÖblack’ or äóÖwhite’ is evidence of discriminatory intent, the use of äóÖboy’ alone is not evidence of discrimination.” The Supreme Court ruled that although the term äóÖboy’ will not always be evidence of racial animus, such a term is not always benign, either. According to the Court, “[t]he speaker’s meaning may depend on various factors including context, inflection, tone of voice, local custom, and historical usage.”

Second, the employees submitted evidence that their qualifications were better than the two white employees who were promoted. This evidence was offered to prove pretext as part of their discrimination claims. In the Eleventh Circuit, pretext can be established through comparing qualifications only when “the disparity in qualifications is so apparent as virtually to jump off the page and slap you in the face.” In rejecting this standard, the Supreme Court stated that such a visual image “is unhelpful and imprecise.” Unfortunately, however, the Court did not suggest what the appropriate standard should be in such cases.

IBP, Inc v. Alvarez (November 8, 2005)

In this case, several employees filed a class action seeking compensation for time spent “donning and doffing” required protective gear and walking from the locker rooms to the production floor of a meat processing facility. The employees presented evidence that their daily routine consisted of: (1) waiting to don the protective clothing; (2) donning the clothing; (3) walking to their individual work stations; (4) working; (5) walking back to where they started; (6) waiting to doff the clothing; and (7) doffing the clothing.

The issue before the Supreme Court was whether the walking and waiting time was compensable time under the Fair Labor Standards Act (“FLSA”) and the Portal-to Portal Act. After reviewing the relevant statutory language, the Court concluded that the donning of protective gear prior to an employee’s shift commences the workday, and that time spent walking to employees’ workstations is encompassed within the compensable workday.

The Court also addressed whether time spent removing protective gear at the end of the workday must be paid. The Court ruled that such time is compensable and any preceding time spent walking from a workstation to a locker room or other location for removing gear also is compensable. With respect to time spent waiting during the process of donning and doffing protective garments or gear, in the Court’s view that time generally is not compensable under the FLSA, if the waiting time occurs before the donning activity which signals the beginning of the compensable workday, or follows the compensable doffing activity.

Garcetti v. Ceballos (May 30, 2006)

Richard Ceballos, a deputy District Attorney, sued the Los Angeles County District Attorney’s Office claiming retaliation in violation of the First and Fourteenth Amendments to the U.S. Constitution. The lawsuit stemmed from a memorandum Ceballos wrote to his supervisor in which Ceballos claimed a deputy sheriff lied in an application for a search warrant. Ceballos alleged he was subsequently demoted and subjected to a series of other retaliatory employment actions.

The district court granted summary judgment in favor of the D.A.’s office, concluding Ceballos was not entitled to First Amendment protection, and even if his speech was constitutionally protected, the D.A.’s office had qualified immunity because the rights Ceballos asserted were not “clearly established.”

The Ninth Circuit Court of Appeals reversed, holding that Ceballos’ allegations of wrongdoing in the memorandum were protected speech under the First Amendment, in part because the memorandum related to a matter of public concern. The Ninth Circuit also ruled that Ceballos’ right to express his opinions was clearly established and qualified immunity therefore was not available to the employer.

The Supreme Court reversed. First, the Court recognized the long-standing principle that public employees do not surrender their First Amendment rights by virtue of their employment. Rather, the First Amendment protects a public employee’s right, in certain circumstances, to speak as a citizen regarding matters of public concern. Applying this standard, the Court held Ceballos was not speaking “as a citizen” in the memorandum, and his statement therefore was not entitled to constitutional protection. “The controlling factor in Ceballos’ case is that his expressions were made pursuant to his duties.” “We hold that when public employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes, and the Constitution does not insulate their communications from employer discipline.”

Rumsfeld v. Forum for Academic and Institutional Rights (March 6, 2006)

In this case, the Forum for Academic and Institutional Rights (“FAIR”), a group of law schools and professors, sued the Secretary of Defense, seeking to prevent the enforcement of the most recent version of Solomon Amendment, a federal law that requires schools receiving federal funding to give access to military representatives for recruiting purposes.

Congress originally passed the amendment in 1994, in response to universities which, citing their non-discrimination policies, prohibited military representatives from recruiting on campus because of the military’s policy of excluding homosexuals. Prior to September 11, 2001, the Department of Defense (“DOD”) interpreted the Amendment as merely requiring schools to give recruiters access to the campus, but not requiring schools to affirmatively assist the recruiters. After September 11, however, the DOD indicated that it interpreted the Amendment to require schools to treat military recruiters in the same way that they treat all other employment recruiters. In 2004, Congress amended the Solomon Amendment to reflect the DOD policy.

The district court denied FAIR’s motion. On appeal, the Third Circuit Court of Appeals reversed, issuing a preliminary injunction against enforcement of the Solomon Amendment. The Third Circuit held that the Amendment violated the First Amendment by restricting the schools’ right of expressive association and by compelling the law schools to assist in the expressive act of recruiting. Even though the law schools have the option of refusing federal funding to further their non-discrimination policies, the court stated that, under the doctrine of unconstitutional conditions, Congress could not require the forfeiture of a constitutional right — especially, the right of free speech — as the basis for receiving federal funds.

The Supreme Court reversed, and held that because Congress could require law schools to provide equal access to military recruiters without violating the schools’ freedoms of speech and association, the Solomon Amendment does not violate the First Amendment.

Domino’s Pizza v. McDonald (February 22, 2006)

John McDonald, a black man, entered into a contract though his company, JWM Investments, with Domino’s to build four restaurants in the Las Vegas area, which would be leased to Domino’s. After various disputes, Domino’s allegedly refused to perform on the contracts.

McDonald sued Domino’s under 42 U.S.C. section 1981 (which protects the rights of all persons to “make and enforce contracts” without respect to race), claiming Domino’s broke the contracts with JWM Investments because of racial animus toward McDonald. Domino’s filed a motion to dismiss, arguing that McDonald could not bring a section 1981 claim against Domino’s because he was not a party to the contracts with McDonald (the contracts were with JWM Investments). The district court granted the motion.

The Ninth Circuit Court of Appeals reversed, finding that when there are “injuries distinct from that of the corporation,” a non-party (e.g., McDonald) may bring suit under section 1981. The court acknowledged its position in this regard was inconsistent with several other Circuits.

The Supreme Court disagreed with the Ninth Circuit, and held that a plaintiff cannot state a claim under section 1981 unless he has (or would have) rights under the existing (or proposed) contract he wishes to “make and enforce.” “Section 1981 plaintiffs must identify injuries flowing from a racially motivated breach of their own contractual relationship, not of someone else’s.”

Pending Case

Ledbetter v. Goodyear Tire & Rubber

In this case, the Supreme Court will decided the appropriate legal formula to be used in calculating the timing of unequal pay decisions by employers for purposes of Title VII lawsuits. The employee at issue, Lilly Ledbetter, claimed that Goodyear paid her a smaller salary than it paid her male co-workers at Goodyear’s Gadsden, Alabama, tire plant because of her sex. Goodyear’s position, in addition to denying that sex played any role in the setting of her salary, was that Ledbetter could prevail only if she could prove unlawful discrimination tainted an annual review of her salary made within 180 days of her filling a charge of discrimination with the EEOC.

The Eleventh Circuit Court of Appeals was faced with deciding how Title VII’s timely-filing requirement applies in cases involving an employer that annually reviews and re-establishes employee salary levels. In ruling for Goodyear, the court held that “in the search for an improperly motivated, affirmative decision directly affecting the employee’s pay, the employee may reach outside the limitations period created by her EEOC charge no further that the last such decision immediately preceding the start of the limitations period. We do not hold that an employee may reach back even that far; what we hold is that she may reach no further . . . .”

The Supreme Court will determine whether this is an appropriate formula in such cases. One of the Court’s prior decisions, National Railroad Passenger Corp. v. Morgan, 536 U.S. 101 (2002), seems to suggest that employment discrimination claims are divided into two mutually exclusive categories for purposes of determining timeliness of claims: (1) discrete acts of discrimination, such as termination and demotion; and (2) hostile environment claims, whose very nature involves repeated conduct.

In pay disparity cases, the unlawful employment practice can be said to occur on particular days (as opposed to over a series of days or years). Therefore, the Court may conclude that a Title VII plaintiff must raise a discrete discriminatory act claim within the applicable time period (180 days for EEOC claims).

Conclusion

The decisions of the United States Supreme Court often have far-reaching consequences for California employers. This column will provide analyses of the most significant employment-related cases as they are decided.