Butler Williams & Skilling Blog

Race Discrimination Class Action Lawsuit Wins Key Ruling on Certification at Fourth Circuit Court of Appeals.

The generally conservative Fourth Circuit Court of Appeals recently issued a ruling effectively granting class action status to a racial discrimination lawsuit originating out of South Carolina. The case involves alleged racial discrimination at a Nucor Steel plant. The Plaintiffs in the case claim, among other things, that African Americans were improperly denied promotions. They further allege that far more blatant incidents of racism took place at the plant as well. For example, the Plaintiffs contend that paraphernalia exhibiting the Confederate flag was available at the plant gift shop and that certain Caucasian employees openly used racial epithets while on the job.

 

Class status means that not only the named plaintiffs can be a party to a suit and that the interests of many, many affected people can be represented all at once. In this case, class status had been denied at the lower court level and was appealed to the Fourth Circuit. There, it was ultimately determined that the District Court Judge abused his discretion in refusing to certify the class.

 

The decision in Brown v. Nucor was just published on August 7, 2009 and can be found at Brown v. Nucor Corp., 2009 U.S. App. LEXIS 17643. For a number of reasons, the opinion may be significant. For starters, it gives a clear roadmap on when and how a race class can win certification in the Fourth Circuit. Secondly, the opinion may signal a shift in how the Fourth Circuit Court of Appeals will treat similar cases going forward.

 

It is important to recognize that while this opinion marks a clear and decisive victory for the Plaintiffs, it says little about the merits of the case itself. The Court did not pass judgment on any facts or liability; it merely allowed the case to proceed as a class action. In laymen’s terms, the Plaintiffs won a big battle, but they have not yet won the war. It remains to be seen what happens next. Nevertheless, the precedential value of the Court’s opinion is undeniable as it will almost certainly play a prominent role in future discrimination actions where class status is sought.

Lilly Ledbetter Fair Pay Act Passes Senate!

On Thursday, January 22nd, the U.S. Senate passed S. 181, the Lilly Ledbetter Fair Pay Act.  Swift action is expected in the House to pass the bill and present it to President Obama, who is expected to sign it into law.  In fact, this may be the first law signed by President Obama, who campaigned in favor of this legislation.  The law, when enacted, will restore the 'paycheck accrual rule' making every instance of pay discrimination, every paycheck, actionable discrimination.  

When it decided Lilly Ledbetter v. Goodyear Tire and Rubber Company in 2007, the U.S. Supreme Court had reversed years of decisions which had followed the 'paycheck accrual rule'.  In Ledbetter v. Goodyear, the Supreme Court held that Ms. Ledbetter's time to challenge the discriminatory pay practices at Goodyear had expired because she did not file an administrative charge with the EEOC within the short time window, measured from the time the discriminatory pay practice was instituted, even though the discriminatory pay practice continued with each pay check she received.  The decision in the Ledbetter case dismissed Ms. Ledbetter's claim, and did not allow Ms. Ledbetter to challenge the discriminatory practice by filing a claim within the time allowed if measured from the date of the last discriminatory pay check.  This was recognized as a timely claim under the 'paycheck accrual rule.'  Opposition to the Supreme Court decision was immediate, and a legislative fix was narrowly defeated last year.

The law passed by the Senate reverses the Ledbetter v. Goodyear case and returns the law to the pre-Ledbetter v. Goodyear 'paycheck accrual rule.'  The new law is retroactively effective to the date of the Supreme Court's Ledbetter v. Goodyear decision so that there is no gap in the law's application of the 'paycheck accrual rule.'  Victims of pay discrimination will again be able to challenge illegal pay practices measured from the time of the last discriminatory pay check received, and will not be foreclosed because they did not recognize or challenge the practice on the first pay check received (or the first time an employer treated them unfairly in pay, unbeknownst to the employee).  The unfairness in this rule lies in the recognition that employers do not often issue memos to their employees advertising their discriminatory pay practices.  The passage of this law by the Senate is a strong statement that the Ledbetter decision was contrary to public policy and the intent of our anti-discrimination laws, notably Title VII to the 1964 Civil Rights Act and the Equal Pay Act, to allow a limitations-based dodge of this form of discrimination.  This law will assist to remedy discrimination in pay that has long plagued our economy and undermined the laws intended to end pay disparities based on gender, race, national origin or religion. 

With the passage of this Act, workers can eradicate lingering discrimination in pay.  Many, many companies have historically paid women and minorities less than they have paid other employees and have placed obstacles in the way of their promotion in their respective organizations - and continue to do so.  It is time to stop this form of discrimination, once and for all.  With the assistance of this law, employees can again expect the courts to enforce the law's requirement that they be paid the same wage for the same work, irrespective of gender, race or other protected class. 

Observers are predicting that litigation regarding this form of discrimination will return to its pre-Goodyear levels or, employers argue, will increase.  Employer groups who mounted efforts opposing efforts to pass this legislation have complained that employers should be able to rely upon the limitations periods that would bar such claims if not brought early in the discriminatory pay practice and that the law would encourage frivolous suits.  However, the truth is that these groups did not suggest that employers abandon discriminatory pay practices, but simply encouraged Congress to enforce a rule rewarding employers for hiding discriminatory practices for the applicable 180 or 300 day period (depending on the rules that apply in your state) after they were instituted.  If the practices were not detected and continued over time, the effect would be to insulate employers with discriminatory pay practices from the application of the law through the application of the very short administrative limitations period an employee had to preserve a claim by filing an EEOC discrimination charge. 

Application of the Ledbetter rule would have effectively gutted the laws prohibiting pay discrimination.  How many employees would be in a position, or even know of, the first date that a discriminatory pay practice was instituted against them?  Many employers try to strictly prohibit discussions of compensation.  In our experience, employers who engage in this form of discrimination have not posted the discriminatory pay schedules for all to see.  Rather, they conceal the pay schedules and, even after their pay systems have been challenged, go to great lengths to attempt to avoid disclosure of this information - as it is clearly illegal.  Reportedly, Ms. Ledbetter only learned about the discriminatory pay system at Goodyear through an anonymous tip as she was retiring.

This correction to the law is overdue.  It is only fair to return the law to the paycheck accrual rule to avoid an employer's 'gotcha' defense that, even though it had discriminated against an employee in pay, the employee didn't act soon enough to challenge the practice.  Many employers and employer advocacy groups are voicing complaints that this law increases the threats of lawsuits hovering over the heads of businesses.  Employers can avoid the threat of suits very simply - by paying their employees the same wages and benefits, and recognizing merit and their achievements, as they do with other employees and by not giving preferences based on gender or race.  The outcry from the business community comes from the recognition of how widespread this form of discrimination has penetrated business practices through the years.  Pay fairly and based on merit.  Now.  Employers who continue to violate the law should not be rewarded by continued efforts to conceal their discriminatory actions.    

Congratulations to the National Employment Lawyers Association, American Association of University Women (AAUW), Leadership Conference on Civil Rights (LCCR), National Organization of Women (NOW), American Association of Retired Persons (AARP) and other coalition partners for their strong efforts to have this bill passed and to resist diluting amendments offered before the Senate's passage of the Act.

Defamatory Job Evaluation Statements: Virginia Supreme Court Clarifies Actionable Defamation Cases

We all know that employers can ruin reputations by creating false impressions of poor job performance.  However, when employers mix partially true statements and opinion with false statements, some courts have been reluctant to enforce the rule that requires the statements to be viewed as a whole to discern the underlying defamatory message or content conveyed.  Now, the Virginia Supreme Court has delivered a clear message that an alleged defamatory statement must be viewed as a whole to determine the truth or falsity of the statement – and this includes the falsity created by accompanying inference and innuendo.

 

On January 16, 2009, the Virginia Supreme Court reiterated that damaging defamation can occur in the workplace when untrue statements are combined with partially true statements and opinion.  The Supreme Court again reviewed the case of defamatory statements made in a performance review which, when read together with all the circumstances, inferences and innuendo, were alleged to have a defamatory meaning.  The case, decided Friday, January 16, 2009 is Hyland v. Raytheon Technical Services Company, et al, Record No. 080157.  The case may be read in its entirety at http://www.courts.state.va.us/opinions/opnscvwp/1080157.pdf

 

In Cynthia Hyland v. Raytheon Technical Services Company, et al, the Virginia Supreme Court held that a claim for defamation is stated when one makes a false factual statement that concerns and harms a person’s reputation.  Ms. Hyland’s case arises out of defamation that occurred in the workplace.  Cynthia Hyland worked for Raytheon for about 21 years and was a senior VP and general manager of a Raytheon division when the statements which she contends were defamatory were made.  Ms. Hyland oversaw a division that bid for government contracts.  While her division lost government contract bids in 2000 and 2002, Ms. Hyland continued to receive positive performance evaluations - and was even appointed senior VP and general manager for her division and two additional units.  However, after Ms. Hyland made critical statements about the leadership style of the president, Bryan Even, in a supposedly confidential internal job assessment, she saw a dramatic change.  Apparently, Mr. Even learned of the critical comments.  Ms. Hyland’s next performance appraisal was negative and her employment was later terminated.  She filed suit for defamation.  A jury returned a verdict for $1,850,000 (including $350,000 punitive damages), based on five allegedly defamatory statements, and a judgment was entered for Ms. Hyland.  Raytheon appealed.

 

That judgment was reversed by the Virginia Supreme Court in a 2007 Virginia Supreme Court case, Raytheon Tech. Servs. Co. v. Hyland, 273 Va. 292 (2007) and the Supreme Court sent the case back to the trial court because 3 of the 5 statements relied on by Ms. Hyland at trial were determined to not be actionable defamation (the Supreme Court determined that 3 statements were opinion).  Because the jury considered all 5 statements in its verdict, the Supreme Court could not determine which statements the jury had relied upon: the 2 statements of defamation or the 3 statements of opinion. 

 

The second trip to the Supreme Court involves the trial court’s dismissal of the case.  On remand to the trial court, the Fairfax Circuit Court (the trial court) granted judgment to Raytheon, this time holding that the 2 defamatory statements contained true elements of fact and opinion and, therefore, were true - and that Ms. Hyland admitted as much.  Ms. Hyland took the position that she had not conceded this, relying on the full inferences and defamatory implications of the entire statements as a whole, and she appealed. 

 

Last week, handing down an opinion in its second review of this case, the Virginia Supreme Court reversed and again returned the case for trial on the 2 statements Hyland relied on as defamatory.  The Supreme Court stated that the trial court was wrong when it parsed the defamatory statements to separate factual portions and when it failed to consider the statements as a whole.  Defamation may be stated by inference, implication or insinuation.  While opinion is not considered actionable defamation, factual statements made in support of an opinion can form the basis for a defamation action.  A court may not isolate one portion of the statement from another portion of the statement to sanitize it or insulate it from a defamation claim.  A court must consider the statement as a whole.  Factual portions of an allegedly defamatory statement must not be viewed in isolation, but must be considered in view of accompanying opinion and other stated facts.  The key is what message is conveyed and whether the facts used to support the message may be proved false.  Once a court determines that an allegedly defamatory statement is capable of being proved false it is the jury’s function to evaluate the evidence presented and determine whether the plaintiff has proven that the statement is false.     

 

            The Virginia Supreme Court recognized the following performance evaluation statements as stating a claim for actionable defamation:

 

Cynthia lead [sic] [Raytheon] in the protest of the FAA’s evaluation selection process for the TSSC contract and through a difficult procurement for the TSA, both of which demanded her constant attention.  These visible losses created significant gaps in our strategic plans and in her business unit financial performance.

 

Cynthia and her team met their cash goals, but were significantly off plan on all other financial targets including Bookings by 25%, Sales by 11.5%, and profit by 24%.

 

The employer’s use of the word “significantly” did not make the statements non-actionable opinion because the factual statements used addressed Hyland’s responsibility for the losses and purportedly missing goals.  Raytheon convinced the trial judge that the case should be dismissed because, it alleged, Ms. Hyland admitted the truth of aspects of the two allegedly defamatory statements.  By improperly limiting its consideration to the separate factual portions of statements (and excluding consideration of the statements as a whole) the trial court denied Ms. Hyland the opportunity to demonstrate that the messages conveyed, “including any implications, inferences or insinuations that could reasonably be drawn from each statement,” were defamatory.  Ms. Hyland returns to Fairfax Circuit Court to have a jury determine whether her employer defamed her – under the rule of law that allegedly defamatory statements must be viewed in their entirety, as a whole, for defamatory content.

 

The Bottom Line:

 

• Virginia law protects employees from defamatory employer statements in the workplace, even in performance appraisals;

 

• Defamatory statements must be viewed as a whole, with all defamatory inferences and innuendo;

 

• Employees’ reputations are not legally subject to an employer’s whim when it mischaracterizes facts to convey that the employee has failed to perform, has cost the employer money or to otherwise falsely paint an employee as a poor performer;

 

• Situations where employers dramatically change position on performance to retaliate against employees for some reason are often the starting point for such false statements – this may occur when, for example, an employee has taken legally protected actions such as reporting illegal or unethical conduct by the employer, has responded honestly to an internal request for information (as it appears was the case with Ms. Hyland) or has reported sexual harassment, gender discrimination or racially based discrimination or harassment;

 

• Virginia trial courts should be expected to follow this clarification of defamation law where someone makes false statements to harm one’s reputation.  Under our legal system, employers should not escape the harmful result of their actions by arguing to judges that portions of their statements were true or were opinion.  Under the clear rule in Virginia, juries should be permitted to determine the falsity and reputational damage done to employees in workplace situations and in other situations involving reputational damage.

• With this case and other helpful case law, Virginia employment lawyers and civil rights lawyers can better protect employees whose reputations have been damaged by malicious defamatory statements in the workplace. 

Fixing a Systemic Problem - Discriminatory Race and Gender Pay Claims May Become Easier to Prove

On Friday, January 9, 2009, the U.S. House of Representatives passed legislation which could make proving race or gender based pay practices a little easier.  The Ledbetter Fair Pay Act and the Paycheck Fairness Act were passed by the House of Representatives as combined H.R. 11. 

 

This legislation, if enacted and signed into law, will overrule a hurdle to proving race or gender pay practices erected by the U.S. Supreme Court in Lilly Ledbetter v. Goodyear Tire & Rubber Co., Inc.  That 2007 U.S. Supreme Court decision erected a wall to proving such cases that meant many people receiving lesser pay than their white or male peers, would effectively, be out of court.  The Ledbetter rule states that if an employee fails to challenge the discriminatory pay practice or plan within a short time after the first notice or indication of the discriminatory pay practices, the case is untimely – and a discriminating employer is not legally responsible. 

 

But when was the last time an employer who was shorting women or minorities sent a memo around to bring attention to the fact that it is paying women or African American employees less, or providing lesser promotional or advancement opportunities to such workers?  Let’s face it - many, many employers do pay women and minority employees less than they pay comparably situated male or white employees.  Often, this fact does not come to light until the pay structure is examined more carefully, such as when a termination is questioned, or some other, more apparent differential treatment is observed – say the failure to promote or advance minorities or women.  But, under the Ledbetter rule, if that challenge is too late, then too bad – you cannot enforce the laws that prohibit pay discrimination based on gender or race.

 

Prior to the Ledbetter decision, most courts accepted a ‘paycheck accrual’ rule that held that every paycheck under a discriminatory pay plan was a separate actionable event, allowing an employee to go back in time to capture the underpayment once the discrimination becomes apparent.  Under such a rule, all discriminatory payments would be due under a theory which recognizes that an employer must be responsible for past, as well as present, violations under a ‘continuing violation’ theory. 

 

The Ledbetter decision rejects such a ‘paycheck accrual’ rule and makes it much more difficult for a women, African American, Hispanic, Asian American or other racial or religious minority to challenge the discriminatory pay practice.  H.B. 11, the legislation currently identified as the Ledbetter Fair Pay Act and the Paycheck Fairness Act, will reaffirm the prior ‘paycheck accrual’ rule and will allow underpaid women and minorities the ability to enforce the laws which prohibit such discriminatory pay practices.  It will eliminate artificial time barriers to challenge these illegal pay practices and will remove the employer defense that a person did not challenge the discrimination soon enough!  Please contact your U.S. Senator to encourage them to vote in favor of this legislation.  There is no legal excuse for paying women or minorities lesser wages for performing the same work – and there should be no legal incentive to avoid the law (or for keeping illegal pay systems in place) because some woman or racial minority failed to ‘beat the clock’ to challenge the practice.  Our laws should encourage following the law – not avoiding it!