3rd Circuit -- NJ State Law Sexual Harassment Claim Viable Under Disparate Impact Theory

While on the national scene the Supreme Court left dangling the question of whether the refusal to re-hire a drug user could be successfully attacked under a disparate impact theory, the 3rd Circuit was predicting that such a theory would be sufficient to state a cause of action for a sexual harassment hostile environment case under the New Jersey Law Against Discrimination. In Thomas v. Town of Hammonton (3rd Cir. 12/4/03) [pdf] it reversed summary judgment against a police dispatcher trainee who had been treated as a part of a class of two, to a series of sexually explicit comments, including portions of 911 tapes with sexual connotations. (Incidentally confirming some 'urban myths' about the types of injuries seen in hospital emergency rooms involving household appliances.) In the money quote, the Court said:

Based upon the rationale of Lehmann, we would expect the Supreme Court of New Jersey to hold that a sex-oriented employment environment that has a disparate impact on reasonable women violates the LAD. Lehmann, 626 A.2d at 454 (acknowledging that intent to discriminate is not necessary and that there is a distinction between an environment that a reasonable man would consider hostile and one that a reasonable woman would consider hostile). It would be permissible, we believe, for a trier of fact to conclude that the environment created by Howard was 'qualitatively different' for a woman than for a man.

On the brighter side for employers, the Court also dealt with the perennial problem of whether timing alone will serve as a sufficient basis for causation in a retaliation case. Here, a 3 week period taken in the context of other developments did not. This was the Court's standard:

We have recognized, to be sure, that a suggestive temporal proximity between the protected activity and the alleged retaliatory action can be probative of causation. See Rauser v. Horn, 241 F.3d 330, 334 (3d Cir. 2001). However, [e]ven if timing alone could ever be sufficient to establish a causal link, . . . the timing of the alleged retaliatory action must be unusually suggestive of retaliatory motive before a causal link will be inferred. Estate of Smith v. Marasco, 318 F.3d 497, 512 (3d Cir. 2003) (internal quotations omitted; alterations in original); see also Jalil v. Avdel Corp., 873 F.2d 701, 708 (3d Cir. 1989) (two days between protected activity and alleged retaliation sufficient to draw inference of causal connection). In cases such as this one where the temporal proximity is not so close as to be unduly suggestive, we have recognized that timing plus other evidence may be an appropriate test . . . . Marasco, 318 F.3d at 513 (internal quotations omitted).

Fair Credit Report Amendment To Correct Problem (Which Might Never Have Existed) On Sexual Harassment Investigations Signed Into Law By President Bush

How lawyers can make a mountain out of a mole hill. On the occasion of my 48th birthday, although I do not believe this was anything other than happenstance, a Federal Trade Commission staff attorney responded to a private sector lawyer's inquiry to the FTC, by opining that a sexual harassment investigation conducted by a 3rd party met the definition of a consumer report under the FCRA, thus invoking a number of requirements under the FRCA including obtaining permission of the person to be investigated and providing the subject of the investigation a copy of the report prior to taking any adverse action. The letter concluded, as did all such opinions, that -- This is an informal staff opinion and is not binding on the Commission."



Although it is unknown, at least to me, what prompted this inquiry, I am not aware of any reported instance where a claim had successfully been brought or even been asserted that the failure to comply with the FCRA in connection with a sexual harassment investigation by a third party was illegal under the FRCRA. Having started the ball rolling however, and still as far as I am aware any reported case where this had proved to be an actual problem, yet another private lawyer inquired about implementing the FCRA provisions in connection with a 3rd party investigation, and received a similar non-binding letter that it was impermissible to redact any information from the report before giving it to the person being investigated.



Given these two non-binding opinions, the purveyors of legal information, in this case primarily management side employment lawyers' went into full swing to notify all concerned about this "development". A smattering of such reports derived from just the first page of a google search gave us the following headlines: SEXUAL HARASSMENT INVESTIGATIONS MAY BE SUBJECT TO FCRA; FEDERAL TRADE COMMISSION FLEXES ITS MUSCLES IN THE EMPLOYMENT ARENA; The FTC Says Sexual Harassment Investigators Must Comply With the Fair Credit Reporting Act ; The New Sexual Harassment Pitfall: The Fair Credit Reporting Act and Sexual Harassment Investigations and on on. In full disclosure, I am sure that I too wrote or at least made similar proclamations.



As a result, substantial attention to this problem, that still as far as I know had never resulted in a successful claim being made under this theory, on the part of the Society for Human Resource Management and others have led to a legislative fix. Yesterday, President Bush signed into law the Fair and Accurate Credit Transactions Act of 2003 which contains § 611 to resolve the problem, although that particular piece didn't make it into the Fact Sheet released by the White House.



So more than 5 years after we started down this road, and killed no telling how many forests to get the word out about the problem that could have been, we can now all sleep better knowing that this is one dragon that has been slain. At least until we get to comment on the regulations that no doubt will follow.

City Funds Trapped By Sexual Harassment Judgment

Cash flow in Bernardsville, NJ (population 7,345) just got a little tighter as a lien for $1.4 million was placed on the city's bank account just before Thanksgiving. The lien was based on a $500,000 jury verdict, which was coupled with $900,000 in legal fees stemming from a claim of sexual harassment by a former police department employee.



The city said it was blindsided by the action. In what I hope is a misquote or at least taken out of context, a lawyer hired to evaluate an appeal for the city (which decided not to) said, "I can't really give you a good rational explanation why she did this," he said." I think I can. She wanted (and no doubt was entitled to) her money. That's what happens when judgments become final. You can check out the story in the Bernardsville News.

Updated Thoughts on Raytheon v. Hernandez

After seeing a number of headlines today saying in effect, company wins, for example the Daily News Tribune and the Boston Globe , I thought I better re-read the opinion and my comments. It is true that the company won yesterday in the sense that the employer was going to trial as a result of the 9th Circuit decision, and now they are at least going back to the 9th Circuit, and maybe even back to the district court on the issue of their summary judgment. And absent some real reaching to find some other evidence that there was an intention to discriminate because of the prior drug use (which may be difficult since there was some indication that the person applying the rule was not aware that the reason he was terminated initially was for failing the drug test) the company might prevail, even in the 9th Circuit, on that issue.



Where it could lose, and certainly where it seems the bigger question that was dodged by the Supreme Court is -- does such a rule have a disparate impact on individuals with disabilities, and if so, is such a rule justified by business necessity? The Supreme Court without much analysis seemed to say that the disparate impact theory is available in an ADA case which means that the next challenge to such a rule will come under that theory. The old "rule of the case" doctrine may preclude Hernandez himself from getting a bite at that apple. However, it is likely that some other company with such a policy, who may feel much better about it today because of some of the headlines referred to above, may find that they have just picked up the laboring oar of proving that it does not disproportionately impact those with disabilities and/or that it is justified by business necessity. While the Boston Globe article discounts that as only a theoretical possibility, not likely to succeed, a statement from the National Council on Disability calls it a 'partial victory' for those with disabilities. I think I was right - it was mostly a punt, but from Raytheon's perspective, it was probably a good one that may have pinned down the other side near their own goal line.

Ever Wanted to Determine What Turn Over Really Costs?

Check out the handy Turnover Calculator that the folks at the superb website, workforce.com have tracked down. It helps quantify both out of pocket as well as the still real, but hidden, soft dollar costs such as loss of productivity and administrative time in processing leaving employees out and new employees in. You have to fill in your own numbers, but my guess is that doing this analysis might be a good incentive for better hiring decisions, as well as training and even treating your current employees better!

First Supreme Court Employment Law Decision of the Term Is A Punt

Raytheon v. Hernandez (U.S. 12/2/03) raised the interesting question of whether or not an employer's no rehire for misconduct rule violated the ADA when applied to a former employee who was terminated for testing positive on a drug test. The answer is .... maybe, but we don't know yet because the 9th Circuit applied the wrong test. Instead of treating the case as a disparate impact case it applied the McDonnell-Douglas analysis used in cases of disparate treatment. The result, kick it back without reaching the question on which certiorari was granted.



Maybe it will come back for a second shot after the 9th Circuit revises its opinion, but I would be somewhat surprised. If I am correct, that is probably bad news for the company.



Update 12/3/03: After seeing a number of headlines today saying in effect, company wins, for example the Daily News Tribune and the Boston Globe , I thought I better re-read the opinion and my comments. It is true that the company won yesterday in the sense that the employer was going to trial as a result of the 9th Circuit decision, and now they are at least going back to the 9th Circuit, and maybe even back to the district court on the issue of their summary judgment. And absent some real reaching to find some other evidence that there was an intention to discriminate because of the prior drug use (which may be difficult since there was some indication that the person applying the rule was not aware that the reason he was terminated initially was for failing the drug test) the company might prevail, even in the 9th Circuit on that issue.



Where it could lose, and certainly where it seems the bigger question that was dodged by the Supreme Court is -- does such a rule have a disparate impact on individuals with disabilities, and if so, is such a rule justified by business necessity. The Supreme Court without much analysis seemed to say that the disparate impact theory is available in an ADA case which means that the next challenge to such a rule will come under that theory. The old "rule of the case" doctrine may preclude Hernandez himself from getting a bite at that apple. However, it is likely that some other company with such a policy, who may feel much better about it today because of some of the headlines referred to above, may find that they have just picked up the laboring oar of proving that it does not disproportionately impact those with disabilities and/or that it is justified by business necessity. While the Boston Globe article discounts that as only a theoretical possibility, not likely to succeed, a statement from the National Council on Disability calls it a 'partial victory' for those with disabilities. I think I was right - it was mostly a punt, but from Raytheon's perspective, it was probably a good one that may have pinned down the other side near their own goal line.

Where To Put The Portable Toilet - Let's Count The Cost of Deciding

As always, there is no doubt much more behind the story than is told by this 10 page opinion, including no doubt a long history of mistreatment by some of migrant workers. Nevertheless, the lengths that it took to get a reasonable reading of an OSHA standard which requires with some (very important for this case) exceptions, a toilet and handwashing facility be within a 1/4 mile walk for any hand laborer in a field, do seem to be the sort of issue that makes many question the wisdom of the legal process and government bureaucracies.



The particulars detailed in Advanta v. Chao (8th Cir. 12/01/03) [pdf] are that the exception allows toilets be located at the point of vehicular access when the terrain makes the 1/4 mile rule unworkable. In this case, Advanta placed the toilets at the end of corn rows, since putting them in the middle of the field which would have been required by the literal language of the standard, would have precluded the company from successfully detasseling the corn, the purpose for which the workers were there. Notwithstanding language in the preamble to the standard which seems, and in fact was, tailor made for this particular problem, first the DOL, then an administrative law judge and finally the Occupational Safety and Health Review Commission issued and enforced a $1,000 citation against Advanta.



Challenging the rules under the appropriate procedural process, Advanta went through those two proceedings and appealed to the 8th Circuit. There they were supported by an amicus brief of the American Trade Seed Association, a trade organization of 800 companies involved in seed corn production. ATSA must have been surprised to be there since it was the organization's initial comment to the standard during the rule-making process which elicited the language in the preamble to the standard which seemed to support precisely what Advanta (and apparently all 800 companies who are involved in similar activities) did on a regular basis.



In finding the DOL's position unworthy of support, the Court had a number of arguments to make that case, but the concluding one gives you a tenor of their feeling:

We also find it curious that the DOL's interpretation of the Standard would require a seed company to place facilities in cornfields for seasonal corn detasselers who are never more than a half hour from a facility, while a seed company would not have to provide facilities at all - whether in the field or at a point of closest vehicular access - for seasonal corn detasselers who work three hours or less each day. See 29 C.F.R. § 1928.110(c)(2)(v) ("Toilet and handwashing facilities are not required for employees who perform field work for a period of three (3) hours or less (including transportation time to and from the field) during the day.") The DOL's decision to interpret the Standard in such a confusing manner further convinces us the DOL's interpretation of the Standard is unreasonable and is unworthy of deference and enforcement against Advanta.

So let's count the cost - Initial rule-making, with participation by ATSA. Investigation by OSHA, hearing before an administrative law judge, appeal to the Occupational Safety and Health Review Commission, and finally the appeal to the 8th Circuit. It does seem to be a long and expensive road to common sense.