2007-19

Statute Of Limitations For Filing A Discrimination Charge with the EEOC Applies To Each Discrete Pay Decision

 In Ledbetter v. Goodyear Tire & Rubber Co., the United States Supreme Court held that employees must file a discriminatory pay claim under Title VII of the Civil Rights Act of 1964 within 180 days (or 300 days in so-called ?deferral? states such as California) after each allegedly discriminatory pay decision or lose the claim forever. The Court found that each paycheck is not a separate act of discrimination that restarts the filing period and that the statute of limitations for filing a discrimination charge with the Equal Employment Opportunity Commission (?EEOC?) is triggered when a discrete unlawful employment practice takes place. Further, the Court stated that a new violation does not occur upon the occurrence of subsequent nondiscriminatory acts that involve adverse effects resulting from past discrimination.

 Lilly Ledbetter was an area manager for Goodyear Tire & Rubber Co. (?Goodyear?) at its tire production plant in Gadsden, Alabama. Ledbetter had started working for Goodyear in 1979 and presented evidence that all of the women in her position were paid less than their male counterparts, and that the plant manager had made comments indicating that he did not want women working in the plant. During her employment, Ledbetter claimed that she had been given poor evaluations because of her sex and thus was paid progressively less than men in the same position. In 1995 a supervisor recognized that she was being paid less than the minimum for her position and gave her a 7.85% raise. However, by 1997, the men her in position were being paid 15% to 40% more than Ledbetter.

 In 1998, Ledbetter submitted a questionnaire to the EEOC, and then filed a formal EEOC charge before taking early retirement to avoid being terminated. In 1999, Ledbetter filed a suit against Goodyear claiming sex discrimination under Title VII. The district court allowed her Title VII claim to go to trial. To support her claim, Ledbetter introduced evidence of sex discrimination in pay throughout her 19 years with Goodyear. The jury ruled in her favor, awarding her $223,775 in back-pay, $4,662 in compensatory damages and $3,285,979 in punitive damages. The district court applied the $300,000 statutory damages cap and reduced the back-pay to $60,000.

 On appeal, Goodyear argued that the pay discrimination claim was time barred with regard to all pay decisions made before September 26, 1997, 180 days before Ledbetter filed her EEOC questionnaire, and that no discriminatory act had occurred after that date. The Eleventh Circuit U.S. Court of Appeals reversed, finding that the operative act of discrimination was the decision about what to pay Ledbetter, which occurred before the charging period, not the act of issuing paychecks. Thus, the court looked only at Goodyear?s decisions not to give Ledbetter raises in 1997 and 1998 and found insufficient evidence to prove that Goodyear had acted with discriminatory intent.

 The Court affirmed the Eleventh Circuit?s decision, finding that the EEOC charging period is triggered when a discrete unlawful employment practice takes place, and not when adverse effects occur later. The Court stated that Ledbetter should have filed an EEOC charge within 180 days after each allegedly discriminatory pay decision was made and communicated to her. Ledbetter did not claim that Goodyear had acted with discriminatory intent when it issued her checks during the EEOC charging period, or when it denied her a raise in 1998. Instead, Ledbetter claimed that the paychecks were unlawfully discriminatory because they would have been larger if she had been evaluated in a nondiscriminatory manner prior to the charging period. The Court rejected this argument, finding that such a decision would ?shift intent from one act (the act that consummates the discriminatory employment practice) to a later act that was not performed with bias or discriminatory motive.?

 The Court explained that its prior cases established the rule that when a new violation does not occur, a new charging period is not triggered simply because of the occurrence of subsequent nondiscriminatory acts with adverse effects due to past discrimination. ?[C]urrent effects alone cannot breathe life into prior, uncharged discrimination.?

 The Court further explained that adopting Ledbetter?s argument would go against the intent of Congress in establishing a process for prompt resolution of such issues. ?The EEOC filing deadline ?protect[s] employers from the burden of defending claims arising from employment decisions that are long past?.... This short deadline reflects Congress? strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation.?

Employers Are Required To Provide A Safe And Secure Workplace Against Threats Of Violence

 In Franklin v. The Monadnock Co., the California Court of Appeal found that an employee?s allegations that public policies require employers to provide a safe and secure workplace and encourage employees to report credible threats of violence in the workplace were sufficient to state a claim for wrongful termination in violation of public policy.

 The plaintiff, Calvin Franklin, was hired by Monadnock (?Company?) as a ?heat-treater? on or about June 1, 2004. When a co-worker, Richard Ventura, threatened to have Franklin and three other co-workers killed, Franklin was elected by his co-workers to go to the Company?s human resources department and complain about threats to their physical safety and the safety of everyone in the facility. However, the Company failed to respond to Franklin?s complaints and did not take any action. One week after he complained about the threats, Ventura attempted to stab Franklin with a metal screw driver and an unidentified weapon. Franklin then reported the incident to the police department and was terminated by the Company shortly thereafter.

 Franklin filed his first amended complaint that included allegations that Ventura had threatened Franklin and his co-workers, and assaulted Franklin with a screwdriver. The defendants responded by filing a demurrer, arguing that the complaint was a ?sham.? The trial court sustained the demurrer without leave to amend, and dismissed the complaint with prejudice, on the basis that Franklin had not stated, and could not state, facts sufficient to constitute a cause of action. The Court of Appeal reversed.

 On appeal, the court found that Franklin could maintain a wrongful termination claim because the law clearly establishes a fundamental public policy that an employer has a legal responsibility to provide a safe place of employment for their employees, including protection against workplace violence. The court rejected the defendants? assertion that there is no explicit public policy regarding workplace violence and that the Labor Code provisions only place requirements on employers regarding foreseeable occupational injuries and illnesses. The court noted that the statutory provisions in Labor Code section 6400 et seq. and Code of Civil Procedure section 527.8, ?when read together, establish an explicit public policy requiring employers to provide a safe and secure workplace, including a requirement that an employer take reasonable steps to address credible threats of violence in the workplace. A credible threat is one that an employee reasonably believes will be carried out, so as to cause the employee to fear for his or her safety or that of his or her family.?

 The court also rejected the defendants? argument that Franklin?s complaint was not predicated on any duties that would serve the public at large and instead would only benefit Franklin and three co-workers. Stating that ?[t]hat is not a reasonable interpretation of plaintiff?s allegations,? the court explained that Franklin?s complaints to the Company and report to the police department served the public interest of promoting workplace safety and the interests of other co-workers who could have been harmed by Ventura. The court found that Franklin?s complaint served both the public interest in a safe workplace and the public interest in a crime-free workplace.

Evidence Of Discriminatory Motive Sufficient To Raise Genuine Issue of Material Fact For ?Reverse? Religious Discrimination Claim

 In Noyes v. Kelly Services, the Ninth Circuit reversed the district court?s order granting summary judgment in favor of the defendants and found that there were genuine issues of triable fact as to pretext in the context of plaintiff Lynn Noyes? claim of ?reverse? religious discrimination.

 Noyes, a software developer for Kelly Services temporary agency (?Kelly?), claimed that she had been passed over for promotion because she was not a member of the same religion as her supervisor. Noyes worked as a software developer for Kelly from October 1994 until May 2004, when she was terminated. She was passed over for a promotion to the position of Software Development Manager in 2001 and argued that she was passed over for the position because she did not adhere to the religious beliefs of a small religious group called the Fellowship of Friends (?Fellowship?), of which her supervisor was a member.

 The Fellowship is a religious organization founded in the 1970s. The group adheres to ?Fourth Way? principles and describes itself as focusing on ? an esoteric interpretation of religion associates with teachings of the Old and New Testaments, traceable also in Greek philosophy, and probably originating in Egypt and Asia.? The group characterizes itself as ?more than a philosophy or theory ... it comprises a system of ideas that, when fully embraced, is a way of life.? The Fellowship has approximately 2000 members, one-third of whom live near or on a Fellowship owned compound in Apollo, California. Fellowship members are required to donate at least 10 percent of their gross monthly income to the organization.

 Noyes? supervisor, William Heinz, was a top-level management employee and a member of the Fellowship. Heinz was in charge of filling the position of Software Development Manager in 2001 and worked with several other employees to evaluate and consider the candidates.

 Although Heinz received input from other employees, he had the final decision-making authority. Two of the employees who participated in the decision making process were Maya Bonhoff, a manager, and William Galvin. During the selection process, both Bonhoff and Galvin testified that Heinz had told them that Noyes was not interested in becoming a manager and thus she was essentially removed from consideration. With Noyes no longer considered, the position was offered to an employee named Donna Walker, who was not a member of the Fellowship. When Walker declined, Bonhoff recommended that another employee named Joep Jilesen be promoted to the position. Heinz expressed some reluctance to promote Jilesen, a Fellowship member, because there had been some issues raised about perceived favoritism for Fellowship members in the past, but eventually offered the Jilesen the position.

 Noyes argued that she had never told anyone at Kelly that she did not want to become a manager and had actually applied for a management position in 2000, which was given to another Fellowship member, Mario Fantoni. Further, Noyes claimed that she was more qualified for the position than Jilesen because she had worked for Kelly for six years longer and had an MBA, which Jilesen did not. Noyes made a verbal complaint of Heinz?s discriminatory practices with Kelly?s Human Resources department in May 2001 but the company did nothing in response. Noyes then filed an administrative charge of discrimination with the California Department of Fair Employment and Housing in August 2001.

 In December 2001, Noyes filed a lawsuit alleging employment discrimination, failure to promote in violation of public policy, breach of employment contract, breach of the covenant of good fath and fair dealing, and intentional infliction of emotional distress. The district court granted summary judgment to the defendants as to the Title VII claims and dismissed the state law claims for lack of subject matter jurisdiction.

 In overturning the district court?s decision granting summary judgment, the Ninth Circuit found that the district court had improperly imposed a heavier burden on Noyes at summary judgment by requiring Noyes to show both that Kelly?s proffered reason for hiring Jilesen was false and that discrimination was the actual reason. The court stated that such a burden was only proper for a finding on the ultimate fact of intentional discrimination, and not proper for the summary judgment stage of the case. Instead, the court stated that at summary judgment, ?a plaintiff may raise a genuine issue of material fact as to pretext via (1) direct evidence of the employer?s discriminatory motive or (2) indirect evidence that undermines the credibility of the employer?s articulated reasons.?

 The court found that Noyes had provided specific, substantial evidence that undermined the credibility of Kelly?s purported nondiscriminatory reasons for promoting Jilesen instead of Noyes. Kelly claimed that there was no discrimination because the position had first been offered to a non-Fellowship member and also that the decision to promote Jilesen had been made through a group consensus. The court found that the evidence that Noyes was more qualified for the job than Jilesen, and that Heinz?s actions deprived Noyes of fair and full consideration for the position, would allow a reasonable factfinder to conclude that a reverse religious discrimination was the reason for Jilesen?s promotion, and therefore Noyes raised a triable issue of fact. The court noted that Bonhoff testified that although several individuals had input their opinions as to who should be promoted, Heinz had the ultimate decision making authority. Further, Noyes had showed that Heinz had favored Jilesen in the past. When Jilesen was hired, he told Noyes that he wanted to pay him a higher salary than normal for the position so that he would have more money for his lifestyle. Thus, although Jilesen had less seniority than Noyes and did not have an MBA, when the two both held the position of Software Developer, Noyes was paid $59,000 and Jilesen was paid $63,800.

 Noyes also provided statistical evidence regarding Kelly?s favoritism towards members of the Fellowship. There was evidence that Heinz had repeatedly brought in Fellowship members as temporary contractors, and consistently appointed Fellowship members to management positions. For example, Noyes claimed that four of the five management level promotions made between 1997 and April 2001 were given to Fellowship members. The court stated that although statistical evidence standing alone is insufficient to raise a triable issue of fact, the statistics, coupled with Noyes? other evidence, bolstered Noyes? claims that the company?s proffered reasons for promoting Jilesen were a pretext for religious discrimination.

Summary Judgment On Retaliation Claim Proper Where Terminated Employee Fails to Submit Evidence of Pretext

 In Loggins v. Kaiser Permanente Int?l, the California Court of Appeal held that summary judgment was properly granted on the retaliation claim of plaintiff Diane Loggins because she failed to offer substantial evidence that her employer?s reason for terminating her was a pretext for retaliation.

 Loggins was employed by Kaiser Permanente for 24 years. During her employment at Kaiser she made several complaints of harassment and discrimination based on her race, including a January 2003 complaint with the Department of Fair Employment and Housing (?DFEH?) alleging denial of equal bonus pay.

 On August 8, 2003, Kaiser received an anonymous telephone call that Loggins was using office facilities and resources for her privately owned business. On August 19, Loggins was placed on administrative leave, pending further investigation. Loggins claimed that on August 11, a week prior to her suspension, she called Kaiser?s hotline to complain of harassment and discrimination against her because of her race. However, Kaiser had no record of her complaint, and as a normal business practice it transcribed such complaints.

 Kaiser?s investigation revealed that Loggins had, among other things, used her Kaiser work number as the number for her private business, worked on her business while on the clock for Kaiser, and used language from one of Kaiser internal policies for her private business. After initially denying working on her private business, Loggins later agreed that her activities violated Kaiser policies. Loggins was terminated on November 10, 2003.

 Loggins filed a DFEH complaint on November 10, 2003, alleging retaliation based on her January 2003 DFEH complaint. She later amended her DFEH complaint to allege retaliation based on her August 11 complaint. The trial court granted summary judgment in favor of Kaiser, ruling that Loggins could not establish a prima facie case of retaliation because there was no triable issue on whether she engaged in protected activity or whether there was a causal link between the protected activity and adverse employment action. Loggins argued that the trial court erred because it was undisputed that she engaged in protected activity by her January 2003 DFEH complaint and she raised a triable issue of fact as to whether she engaged in protected activity by her August 11, 2003 hotline complaint. She also argued that a causal link could be inferred from the proximity in time between the August 11 hotline complaint and her administrative leave.

 The Court of Appeal affirmed the grant of summary judgment, finding that the record contained sufficient evidence that Kaiser terminated Loggins?s employment for legitimate nonretaliatory reasons, which shifted the burden to Loggins to provide substantial responsive evidence from which a trier of fact could conclude Kaiser?s proffered reasons were pretextual. Loggins argued that because there were issues of fact whether Kaiser fairly administered the procedure by which the conduct was investigated and her employment terminated, Kaiser did not satisfy its burden of producing evidence that there was a legitimate nonretaliatory reason for the adverse employment action. However, the court disagreed with the assertion that an employer must prove the objective fairness of the employment termination procedures as part of its burden, in addition to asserting a nonretaliatory reason for the termination. While an employee may show the employer unfairly administered its procedures as evidence of pretext, an employer does not have the burden to prove the legitimacy of its termination procedures to negate a discrimination presumption.

 The court concluded Kaiser produced sufficient evidence to show a legitimate reason for Loggins? termination, shifting the burden to her to produce responsive evidence of pretext. The only evidence of pretext offered by Loggins was evidence of the temporal proximity between her termination and her alleged telephone to the hotline. The court determined that temporal proximity alone, although sufficient to shift the burden to the employer to articulate a non-discriminatory reason, did not suffice to show a triable issue of fact on whether the employer?s articulated reason was pretextual.

Employee Provided Sufficient Notice of the Need for CFRA Qualifying Leave

 In Faust v. California Portland Cement Co., the California Court of Appeal held that plaintiff Michael Faust provided sufficient information to inform his former employer, California Portland Cement Company (?Portland?), of his need for medical leave under the California Family Rights Act (?CFRA?), and that such notice triggered the employer?s duty to inform the employee of his CFRA rights. Moreover, the employee?s subsequent failure to follow up directly with the employer concerning his medical condition did not abrogate his CFRA claims.

 Faust was terminated while on leave for severe back pain. His treating chiropractor provided a note recommending treatment and stating that he was ?unable to perform regular job duties? for one month. Faust gave the note to Portland, whose human resources manager requested to speak with him regarding the note. Faust stated that the human resources manager could speak to his wife, chiropractor, or workers compensation attorney, but Portland insisted on speaking directly with Faust. Faust did not reply to a subsequent letter from Portland explaining the defects in the chiropractor?s note. Portland later discharged Faust, stating that his paperwork was ?insufficient to sustain an approved absence.?

 Faust alleged several causes of action against Portland, including discharge in violation of his right to medical leave under the California Family Rights Act (?CFRA?). The trial court granted summary judgment in favor of Portland, but the Court of Appeal reversed.

 The court noted that employers subject to the CFRA are required to provide notice to their employees of the right to request CFRA leave. With respect to the requirements for requesting leave, an employer ?may require? medical certification of a serious health condition by a health care provider. The certification is sufficient as long as it includes the date the health condition began, the probable cause of the condition, and a statement that due to the condition the employee is unable to perform a function of his position. Moreover, if the employer doubts the validity of the certification, another certification may be requested at the expense of the employer, by a second health care provider designated or approved by the employer.

 The implementing regulations for the CFRA also impose an obligation on the employer to inform employees of its notice and medical certification requirements. Pursuant to the regulations, an employer must give its employees notice of any notice requirements it adopts. Moreover, ?[f]ailure of the employer to give or post such notice shall preclude the employer from taking any adverse action against the employee, including denying CFRA leave for failing to furnish the employer with advance notice of a need to take CFRA leave.?

 Portland?s summary judgment papers failed to address the issue of whether it met its obligations under the CFRA and the implementing regulations. Rather, Portland?s arguments focused on Faust?s unauthorized leave and his failure to respond to company phone calls. Portland made no showing to indicate Faust was given notice of his CFRA rights or that notice of employees? CFRA rights was posted.

 The court noted that Portland: (1) admitted that Faust ?provided verbal notice sufficient to make [the employer] aware that he needed leave pursuant to CFRA?; and (2) admitted the note from Faust?s chiropractor contained the stated reasons for the CFRA leave. The court thus concluded that the undisputed evidence demonstrated that Faust provided sufficient information to his employer to give notice of his need for CFRA leave, and upon being given notice the employer did not advise Faust of his right to take CFRA leave as required.

 Portland argued that Faust unreasonably failed to respond to follow up inquiries about his condition. The court, however, found Portland unreasonably failed to communicate with Faust. The evidence presented showed that Faust?s psychiatrist advised him to stay away from stressful situations and that he felt ?too stressed out? to speak with the employer?s representative about his condition. Thus, Faust?s wife left several messages for the employer to respond on his behalf. Faust?s wife explained to the employer that Faust?s workers compensation attorney or his chiropractor could be contacted. The court did not find a compelling reason why the employer would not have contacted, at minimum, Faust?s workers? compensation attorney. Therefore, the court concluded that Faust, as a matter of law, did not unreasonably refuse to respond to the employer?s questions seeking information that would have assisted in determining if Faust was seeking a CFRA qualifying leave.

 Finally, Portland argued that Faust was not entitled to CFRA leave for his back condition because he did not certify he had a serious health condition. The court noted that no evidence was provided that the employer ever advised Faust of the notice and certification requirements the employer adopted for CFRA leaves, and the employer was placed on notice that Faust?s leave might be CFRA qualifying. Thus, the court explained that whether the certification was proper by the employer?s standards was irrelevant since an employer ?may require? medical certification only if employees are given proper notice of this requirement. Portland nonetheless argued the certification was defective because a chiropractor is not a health care provider as required by the CFRA and x-rays were not taken to establish that a serious health condition existed. The court explained that a chiropractor is a health care provider for purposes of the CFRA, and could certify a serious health condition with regards to a back injury. Further, Portland did not seek additional certification as required by the CFRA, but rejected the note immediately. The court thus rejected the contention that the chiropractor did not certify that Faust had a serious health condition.

Law Firm?s Own Arbitration Policy Found Unconscionable

 In Davis v. O?Melveny & Myers LLP, the Ninth Circuit Court of Appeals held that a law firm?s arbitration program covering all employees of the firm is unenforceable under California law because it is procedurally and substantively unconscionable.

 In 2002, the law firm of O?Melveny & Myers adopted and distributed to its employees a Dispute Resolution Program (?DRP?), which provided that most of the employment related claims by and against its employees would be subject to mandatory binding arbitration. The program covered employment-related disputes, except for claims for workers? compensation or unemployment benefits, and claims by the firm for injunctive and or equitable relief for violations of the attorney-client privilege, work product doctrine, or the disclosure of ?other confidential information.? The program required employees to give written notice to the firm of any claims within one year after the basis for the claim arose, along with a written demand for mediation. The program also contained a confidentiality agreement which prohibited disclosure of the claims, defenses, and proceedings to third parties, except as necessary to enter judgment upon an arbitration award. Finally, the program prohibited either party from filing administrative actions, other than with federal or state job bias agencies.

 The DRP was distributed through interoffice mail and posted on the firm?s intranet cite. A cover memorandum stated: ?Please read the attached and direct any questions you may have to a member of the Human Resources Department, the Legal Personnel Department, the Associate Advisory Committee, or the Office of the Chair.?

 Jacquelin Davis, a former O?Melveny paralegal, sued the law firm in federal court, alleging claims under state and federal labor statutes for failure to pay overtime and missed lunch and break periods. Davis had received the DRP when it was first implemented in 2002, but did nothing to question the policy. O?Melveny filed a motion to compel arbitration pursuant to the DRP, and the district court granted the motion. On appeal, Davis argued that the DRP was unconscionable and therefore unenforceable. The Ninth Circuit agreed and reversed the order granting the motion to compel arbitration.

 In California, a contractual clause is unenforceable if it is both procedurally and substantively unconscionable. Both procedural and substantive unconscionability must be present, although on a sliding scale. As the court explained, procedural unconscionability depends on whether the contract was imposed as a condition of employment with no opportunity to negotiate and whether the circumstances involve oppression and malice, while substantive unconscionability depends on whether the contract as a whole or certain provisions are unfairly one-sided.

 The court first addressed the procedural side of the scale and concluded that the DRP was procedurally unconscionable because O?Melveny, a sophisticated national and international law firm, did not give Davis an opportunity to opt out of the DRP. In holding the DRP was procedurally unconscionable, the court rejected O?Melveny?s argument that because Davis had three months notice prior to the date the DRP became effective she was able to make a meaningful choice. The court held that the fact Davis had three months to consider whether to take it or leave it was irrelevant since she did not have the option to opt out. O?Melveny further argued that if Davis did not want to be bound by the DRP she was free to work elsewhere, and this constituted meaningful choice. The court rejected this argument, and held that the availability of other employment alone does not defeat a claim of procedural unconscionability when an employee is faced with a ?take it or leave it? condition of employment. The court concluded that because Davis, as a paralegal in an international law firm, was facing an employer with overwhelming bargaining power that drafted the contract, and presented it to her on a take it or leave it basis, the DRP was procedurally unconscionable.

 In determining that the DRP was substantively unconscionable, the court relied on four specific provisions: (1) the Notice Provision that according to the court established a one year statute of limitations period; (2) the Confidentiality Provision, which the court held was overbroad; (3) an exemption from the DRP that permitted O?Melveny to seek injunctive relief for violations of the attorney-client privilege or the disclosure of other confidential information; and (4) a provision limiting administrative actions that would preclude Davis from filing complaints with the Department of Labor.

 The court explained that the Notice Provision functions as a statute of limitations period which is ?oppressive in a mandatory arbitration contact? because it forces employees to comply with a strict one year limitations period for employment-related statutory claims from the time an employee knows or should reasonably know of his or her claim. Moreover, the court held that the Notice Provision also unfairly deprives employees from invoking the continuing violations theory.

 In examining the Confidentiality Provision, the Court criticized an employee?s inability ?to mention even the existence of a claim to current or former O?Melveny employees? as it ?would handicap if not stifle an employee?s ability to investigate and engage in discovery.? The court also found that the restrictions clearly favored O?Melveny since they ?prevented plaintiffs from accessing precedent while allowing O?Melveny to learn how to negotiate and litigate contracts in the future.? The court further noted that the Confidentially Provision could ?chill enforcement? of California law if employees could not discuss their working conditions with one another.

 The court found the provision exempting the law firm from arbitrating certain claims for injunctive and equitable relief substantively unconscionable, but acknowledged that a law firm may have a legitimate need to seek a ?quick court order or injunction? to protect clients? rights. However, the court found the provision in this instance to be overbroad since it allowed O?Melveny to seek court relief merely for ?the disclosure of other confidential information,? which the Ninth Circuit previously has held is not sufficient justification for avoiding arbitration.

 Finally, the court held that the prohibition against filing administrative actions other than with federal or state job bias agencies was void as against public policy. Both the U.S. Supreme Court and the California Supreme Court have ruled that arbitration agreements may not prohibit filing employment discrimination charges with federal or state agencies.

 The court found that these four provisions could not be ?stricken or excised without gutting the agreement.? The court concluded that ?[g]iven the scope of procedural and substantive unconscionability, the [arbitration program] is unenforceable? under California law.

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