Second Circuit Issues Landmark Decision that Title VII Prohibits Sexual Orientation Discrimination

Overruling its own precedent, the United States Court of Appeals for the Second Circuit became the second federal appeals court to hold that Title VII of the Civil Rights Act of 1964 prohibits workplace discrimination on the basis of sexual orientation.

Zarda v. Altitude Express, Inc., decided on February 26, 2018, arose from the claims of a Long Island sky-diving instructor, Donald Zarda.  Zarda was fired after revealing to a female client, whose boyfriend then revealed to Zarda’s boss, that Zarda was gay.  Zarda alleged that his termination was discriminatory on the basis of his sexual orientation and sex in violation of Title VII, whereas the company attributed it to his behavior.  Title VII expressly prohibits workplace discrimination “because of . . . sex.”  The Second Circuit had previously declined to recognize that sexual orientation is inherently a sex-based consideration and, thus, it held that sexual orientation discrimination claims were not cognizable under Title VII.  Applying that precedent, the federal trial court dismissed Zarda’s case on summary judgment, concluding that Zarda had failed to show he had been discriminated against on the basis of his sex and declining to recognize sexual orientation discrimination as a cognizable claim under Title VII.  Zarda appealed, and the Second Circuit affirmed.  Thereafter, the Second Circuit granted rehearing en banc, which is a mechanism allowing judges to rehear a case upon a majority vote.  This is significant because en banc review rarely happens and is often saved for cases that present a “question of exceptional importance.”

Years after the Second Circuit originally ruled that sexual orientation is not covered by Title VII, the U.S. Equal Employment Opportunity Commission and the Seventh Circuit oppositely held that discrimination on the basis of sexual orientation is a form of sex discrimination barred by Title VII.  Emphasizing the evolving nature of Title VII, the Second Circuit in Zarda overruled its prior caselaw to hold that Title VII prohibits discrimination on the basis of sexual orientation as discrimination “because of . . . sex.”

In dispensing with its prior rulings, the Second Circuit reasoned that sexual orientation is defined by one’s sex in relation to the sex of those to whom he/she is attracted.  Discriminating against an employee because he/she is homosexual means discriminating against him/her because of a) his/her sex, and b) his/her sexual attraction to those of the same sex.  Thus, “because sexual orientation is a function of sex and sex is a protected characteristic under Title VII, it follows that sexual orientation is also protected.”

The Second Circuit disagreed with the United States Justice Department, which argued in a friend-of-the court brief, that Title VII does not cover sexual orientation discrimination.

For now, the ruling that Title VII bars employers from discriminating based on sexual orientation applies to those in the Second Circuit, which includes New York, Connecticut, and Vermont.  However, this decision sharpens the divide among courts, setting the stage for a potential fight in the United States Supreme Court.  The Supreme Court could reverse the Second Circuit, or it could affirm, thereby extending Title VII’s prohibition on sexual orientation discrimination to the rest of the country.

For more information about the potential impacts of this Second Circuit ruling or what steps your company can take to effectively prevent and address complaints of sexual orientation discrimination, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

The Monkey and the Cat: Second Circuit Adopts “Cat’s Paw” Theory of Liability for the Acts of a Non-Supervisory Employee in Title VII Retaliation Cases

On August 29, 2016, a unanimous panel of the United States Court of Appeals for the Second Circuit revived a retaliation lawsuit under Title VII of the Civil Rights Act of 1964 under the “cat’s paw” theory of liability. In Vasquez v. Empress Ambulance Service, Inc., et al. (Case No. 15-3239), the Second Circuit held that an employer may be held liable under a cat’s paw theory of liability for an employee’s animus, regardless of the employee’s role within the organization, if the employer’s own negligence gives effect to that animus and causes the victim to suffer an adverse employment action. The decision brings the Second Circuit in line with several of its sister circuits in Fapplying the cat’s paw theory of liability in Title VII retaliation claims, including the Third, Fifth, Sixth, Seventh, and Eighth Circuit Courts of Appeals.

The cat’s paw theory of liability derives its name from one of Aesop’s fables, where a monkey persuades a cat to pull chestnuts from a fire where they are being roasted, promising him a share. As the cat removes the chestnuts – and in the process burning his paw – the monkey eats the nuts, leaving the cat with no food and a burnt paw. The cat was duped by the monkey, who benefited from the pains suffered by the cat. Cat’s paw liability now refers “to a situation in which an employee is fired or subjected to some other adverse employment action by a supervisor who himself has no discriminatory motive and intended to bring about the adverse employment action.” Because the supervisor, acting as an agent of the employer, has allowed themselves to be used “as the conduit of [the subordinate’s] prejudice,” the prejudice may be imputed to the employer.

In this case, the plaintiff, Andrea Vasquez, was employed by Empress Ambulance Service, Inc., as an EMT on an ambulance crew. Another Empress employee, Tyrell Gray, a dispatcher, frequently made romantic gestures and overtures to Vasquez, which she rejected. Gray also sent Vasquez a sexually explicit image via text message on work time. When Vasquez returned to the office from her shift, she notified her supervisor and began to prepare a formal complaint. Before Vasquez was able to finalize her complaint and meet with her supervisor and union representative, Gray began fabricating evidence that he and Vasquez had been involved in a consensual sexual relationship, asking a fellow co-worker to lie and doctoring text messages, which he provided to Empress to corroborate his fabricated story.

When Vasquez met with Empress and her union representative, a member of Human Resources stated that Empress had already reviewed Gray’s “evidence” and had concluded that she was having “an inappropriate sexual relationship” with him. Vasquez denied the allegations and asked to see the “evidence,” but she was not permitted to do so. Vasquez offered to show Empress her own cell phone to disprove the doctored text message history provided by Gray, but Empress declined the opportunity and terminated Vasquez for engaging in sexual harassment.

In reversing the District Court’s dismissal of the Complaint, the Second Circuit expressly adopted the cat’s paw theory of liability and addressed a second issue left open by prior case law: whether the cat’s paw approach would render an employer responsible for the animus of a co-worker, rather than a supervisor. The Second Circuit answered the question in the affirmative, applying general principles of agency law, and found that Vasquez could recover against Empress if she can show that Empress itself was negligent in relying on the discriminatory or retaliatory animus of a low-level, non-supervisory co-worker’s false allegations in making its decision to terminate her. Thus, the employer’s own negligence would provide an “independent basis” to treat the non-supervisory co-worker as an agent and hold the employer liable. The Court also cautioned that this approach will not make an employer liable “simply because it acts on information provided by a biased co-worker.” Rather, it is only when the employer “in effect adopts an employee’s unlawful animus by acting negligently with respect to the information provided by the employee [. . .]” that the animus could be imputed to the employer.

Following the Second Circuit’s decision, employers must be vigilant in how they handle accusations and information received by employees, regardless of their level within the organization and evaluate whether or not the employee has a retaliatory motive or other animus against their co-worker. Once an accusation has been made, employers must conduct a thorough and good faith investigation into the allegations to ensure that the employer is not acting on false or misleading information provided by an employee with an agenda. Employers must keep an open mind and maintain impartiality. Failure to do so will impute an employee’s retaliatory intent to the employer to support a claim under Title VII under the cat’s paw doctrine. Employers should consult with counsel to evaluate their employment and investigation policies to ensure conformity with this ruling.

For more information, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Second Circuit Rules Court Approval or USDOL Supervision of Settlements Required in FLSA Suits

On August 7, 2015, the Second Circuit ruled that suits brought under the Fair Labor Standards Act (“FLSA”) cannot be resolved privately and require approval of a federal court or supervision by the U.S. Department of Labor (“DOL”).

In Cheeks v. Freeport Pancakes House, Inc., 2d Cir., No. 14-299, 8/7/15, the plaintiff sued his former employer seeking to recover unpaid overtime wages, liquidated damages and attorneys’ fees under the FLSA and New York labor laws.  After engaging in some discovery, the parties reached a private settlement to dismiss the employee’s claims with prejudice and, pursuant to Rule 41 of the Federal Rules of Civil Procedure (“Rule 41”), filed a joint stipulation and order to dismiss the lawsuit.  Under Rule 41, parties may voluntarily agree to dismiss an action without court order unless there is a federal statute prohibiting such agreement.  The District Court denied the parties’ application to dismiss the lawsuit.

As part of its ruling, the District Court directed the parties to file a copy of the settlement agreement on the public docket and to “show cause why the proposed settlement reflects a reasonable compromise of disputed issues rather than a mere waiver of statutory rights brought by an employer’s overreaching.”  The parties jointly sought certification of an appeal to the Second Circuit instead, seeking a ruling on whether the parties could stipulate to dismissal of the action without court approval.

In affirming the lower court’s decision to deny the stipulation of settlement, the Second Circuit decided, given the unique policy considerations underlying the FLSA, that the FLSA fell within Rule 41’s “applicable federal statute” exception, thus making district court or DOL approval a requirement to dismiss an FLSA cause of action with prejudice via private settlement.  The Court reasoned that “the FLSA is a uniquely protective statute … with a strong remedial purpose: to prevent abuses by unscrupulous employers and remedy the disparate bargaining power between employers and employees.”  Accordingly, the Second Circuit held that judicial or DOL approval will protect susceptible employees from feeling coerced into accepting unreasonable or discounted settlement offers quickly.

The Cheeks ruling makes it clear that, at least in the Second Circuit, a privately negotiated settlement agreement requires court or DOL approval in order to extinguish FLSA claims in a lawsuit. This means the settlement agreement must be filed in open court.  Failure to do so in New York, Connecticut and Vermont puts the employer at risk that it will be sued again by the same claimants.

For more information regarding this decision and best practices, please contact John Vreeland, Esq., Director of the Wage & Hour Compliance Practice Group, at jvreeland@nullgenovaburns.com or 973-533-0777.