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October Term, 2012

June 24, 2013

Today the Supreme Court issued three decisions, described below, of interest to the business community.

Title VII—Retaliation—Mixed-Motive Claims

University of Texas Southwestern Medical Center v. Nassar, No. 12-484 (previously discussed in the January 22, 2013, Docket Report)

Today, in a 5-4 decision authored by Justice Kennedy, the Supreme Court in University of Texas Southwestern Medical Center v. Nassar, No. 12-484, resolved a circuit split over the causation standard applicable to retaliation claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-3(a). Construing Title VII’s prohibition against employer retaliation, the Supreme Court held that an employee alleging retaliation must prove that “his or her protected activity was a but-for cause of the alleged adverse action by the employer.” Slip Op. at 23. The Supreme Court declined to apply the “motivating factor” test that was announced in Price Waterhouse v. Hopkins, 490 U.S. 228, 250 (1989), and subsequently codified in modified form as part of the Civil Rights Act of 1991. The majority held that Congress intended that this more lenient causation standard, which provides that an employee alleging discrimination satisfies his initial burden of proof by showing that the discrimination was “a motivating factor” in an adverse employment decision, would apply to claims of status-based discrimination only, not to retaliation claims.

Justice Kennedy was joined in the majority opinion by Chief Justice Roberts and Justices Scalia, Thomas, and Alito. Justice Ginsburg dissented, joined by Justices Breyer, Sotomayor, and Kagan.

Respondent Nassar, a medical doctor of Middle Eastern descent, sued his former employer, the University of Texas Southwestern Medical Center, alleging that the university prevented him from obtaining a staff position at its affiliated hospital in retaliation for a discrimination complaint that he had made against his supervisor at the university. The university responded that it had decided to deny Nassar the position at the clinic even before Nassar complained of discrimination. The district court instructed the jury that Nassar could satisfy his burden of proof by establishing that a retaliatory impulse was one motivating factor in the university’s decision to fire him, and the jury returned a verdict in Nassar’s favor. The Fifth Circuit affirmed.

The Supreme Court reversed the Fifth Circuit’s decision. The majority began by observing that “textbook tort law” requires a plaintiff to “show ‘that the harm would not have occurred’ in the absence of” the defendant’s conduct. The Court explained that Congress, in enacting Title VII, is “presumed to have incorporated” this general principle of tort law absent an indication to the contrary in the statute itself. Following Price Waterhouse, the Court observed, Congress did amend Title VII’s antidiscrimination provision to adopt that decision’s “lessened-causation framework.” Because Congress did not also amend Title VII’s retaliation provision, the Court in Nassar concluded that it did not intend to “make the motivating factor standard applicable to all Title VII claims.”

The Court rejected the argument that the 1991 amendment to Title VII’s discrimination provision was intended to encompass retaliation claims. Although the amendment’s text begins by referring to “unlawful employment practices,” a term defined elsewhere to include retaliation, the Court noted that the amendment addresses “only five of the seven prohibited discriminatory actions—actions based on the employee’s status.” According to the Court, this plain language demonstrates “Congress’ intent to confine that provision’s coverage to only those types of employment practices.”

In determining the appropriate causation standard for claims under Title VII’s retaliation provision, the Court also relied on Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009), which construed the Age Discrimination in Employment Act. In Gross, the Court interpreted the ADEA’s causation provision to require plaintiffs to prove “that age was the ‘but-for’ cause of the challenged employer decision.” Gross, 557 U.S. at 177-78. Noting the “lack of any meaningful textual difference between” Title VII’s retaliation provision and the ADEA provision at issue in Gross, the Court in Nassar concluded that plaintiffs claiming retaliation under Title VII must also prove but-for causation.

The Court concluded by pointing to the increased rate of filing of Title VII retaliation claims. It reasoned that adopting a lessened causation standard for such claims would “contribute to the filing of frivolous claims” and would impose increased costs even on employers “whose actions were not the result of any discriminatory or retaliatory intent.” That outcome, the Court opined, “would be inconsistent with the structure and operation of Title VII.”

In her dissent, Justice Ginsburg argued that the majority erred by ignoring the “symbiotic relationship between proscriptions on discrimination and proscriptions on retaliation.” According to the dissent, retaliation is best viewed as “a manifestation of status-based discrimination,” rather than as an entirely separate claim. The dissent found there to be “scant reason to think that” Congress “meant to exclude retaliation claims from the newly enacted ‘motivating factor’ provision.” In the dissent’s view, the majority also erred in refusing to defer to the views of the Equal Employment Opportunity Commission, which had interpreted the 1991 amendment to encompass retaliation claims. The dissent closed by suggesting Congressional action to reverse “[t]oday’s misguided judgment.”

Today’s decision is of interest to all employers. By limiting the motivating-factor causation standard to claims of status-based discrimination, the decision sets a higher bar for plaintiffs seeking to establish retaliation under Title VII. The Court’s reiteration of its view that but-for causation is required unless Congress expressly says otherwise may also influence the interpretation of other federal antidiscrimination statutes.

Any questions about this case should be directed to Miriam R. Nemetz (+1 202 263 3253) in our Washington office.

Title VII—Workplace Harassment—Employer’s Vicarious Liability for Acts of Supervisor

Vance v. Ball State University, No. 11-556 (previously discussed in the February 21, 2012, Docket Report)

Under Title VII of the Civil Rights Act of 1964, the standard for imposing liability on an employer for acts of workplace harassment depends on the status of the alleged harasser. When the harassment is committed by a co-worker, the employer ordinarily is not liable unless the plaintiff demonstrates that the employer was negligent in preventing or responding to the harassment. In a pair of 1998 cases, Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), however, the Supreme Court established a different liability standard for harassment by supervisors. Under Faragher and Ellerth, an employer is vicariously liable for harassment by a supervisor—without proof of negligence—unless it establishes affirmatively that (1) it exercised reasonable care to prevent and promptly correct any harassing behavior; and (2) the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities that were provided.

In Vance v. Ball State University, No. 11-556, the Supreme Court resolved a long-standing circuit split concerning who qualifies as a “supervisor” for purposes of applying Faragher and Ellerth’s vicarious-liability rule. In a 5–4 opinion authored by Justice Alito, the Supreme Court held that a supervisor is an employee authorized by an employer to take “tangible employment actions” against another worker. Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas joined the majority opinion. Justice Ginsburg filed a dissenting opinion, joined by Justices Breyer, Sotomayor, and Kagan, in which she advocated for a broader definition of “supervisor.”

Petitioner Maetta Vance, who is African-American, worked in respondent Ball State University’s catering department. A co-worker who had been given the authority to direct the work of several employees, including Vance, allegedly subjected Vance to severe and pervasive racial harassment. Vance sued the university under Title VII, asserting hostile-environment and retaliation claims. The district court granted Ball State’s motion for summary judgment. It relied on Seventh Circuit precedent holding that, for purposes of imposing vicarious liability on an employer, “supervisor” status turned on “the power to hire, fire, demote, promote, transfer, or discipline an employee,” which the alleged harasser lacked. The Seventh Circuit affirmed.

The Supreme Court largely adopted the Seventh Circuit’s definition. After examining the origins of the supervisor-liability rule, the majority held that an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has “empowered” the employee to take “tangible employment actions against the victim.” The Court defined such actions to mean that the co-employee must be vested with the authority “to effect a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” The majority rejected as unworkable the broader definition that had been adopted by the Equal Employment Opportunity Commission and by several circuits. That definition afforded supervisor status to any employee bestowed with the authority to exercise significant control over the plaintiff’s daily work. Although the majority today adopted a relatively narrow definition of who counts as a supervisor, it cautioned that an employer that “concentrates all decisionmaking authority in a few individuals” would be unlikely to “isolate itself from heightened liability” because “the employer may be held to have effectively delegated the power to take tangible employment actions to the employees on whose recommendations it relies.”

In dissent, Justice Ginsburg criticized the majority’s decision as “ignor[ing] the conditions under which members of the work force labor,” and “disserv[ing] the objective of Title VII to prevent discrimination from infecting the Nation’s workplaces.” Noting that Congress had “in the recent past, intervened to correct the Court’s wayward interpretations of Title VII,” she urged Congress to “restore the robust protections against workplace harassment the Court weakens today.”

Justice Thomas filed a short concurrence, in which he stated that Faragher and Ellerth were wrongly decided. He joined with the majority, however, because in his view the Court’s decision “provides the narrowest and most workable rule for when an employer may be held vicariously liable for an employee’s harassment.”

This case is important to all employers. The Court’s adoption of a clear and objective rule for determining when an employer is vicariously liable for harassment is likely to promote the resolution of claims at the summary-judgment stage. The decision is also likely to affect other statutes that borrow definitions from Title VII, such as the Federal Labor Standards Act.

Any questions about this case should be directed to Miriam R. Nemetz (+1 202 263 3253) in our Washington office.

Federal Food, Drug, and Cosmetic Act—Generic Drugs—Preemption—Products Liability

Mutual Pharmaceutical Co. v. Bartlett, No. 12-142 (previously discussed in the December 3, 2012, Docket Report)

The Federal Food, Drug, and Cosmetic Act prohibits generic-drug manufacturers from unilaterally altering the FDA-approved labeling of their products. See 21 U.S.C. § 355(j)(2)(A)(v). Two years ago, in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011), the Supreme Court held that state-law failure-to-warn claims against generic-drug manufacturers were impliedly preempted by the FDCA. Today, in a 5–4 decision in Mutual Pharmaceutical v. Bartlett, No. 12-142, the Court held that state-law design-defect claims are likewise impliedly preempted when the claims “turn on the adequacy of a drug’s warning.”

The petitioner in Bartlett, Mutual Pharmaceutical Co., manufactures a generic drug. After suffering injuries from use of the drug, the respondent brought a design-defect claim under New Hampshire law, and was awarded $21 million in damages. On appeal, the First Circuit affirmed, holding that the design-defect claim was not preempted because Mutual could have complied with both state law (which effectively required issuance of a different warning from the one prescribed by the FDA) and federal law (which prohibited issuance of a different warning) by declining to market the drug altogether. See Bartlett v. Mutual Pharmaceutical Co., Inc., 678 F.3d 30 (1st Cir. 2012).

In its ruling today, the Court explicitly rejected what it called the “‘stop-selling’ rationale as incompatible with [the Court’s] pre-emption jurisprudence.” Clarifying a principle that was implicit in the Mensing decision, the Court stated that “[o]ur pre-emption cases presume that an actor seeking to satisfy both his federal- and state-law obligations is not required to cease acting altogether in order to avoid liability.” To hold otherwise would, said the Court, render impossibility preemption “all but meaningless.”

The Court’s holding prompted two dissents. Justice Breyer, joined by Justice Kagan, argued that even if compliance with both state and federal law would have required Mutual to withdraw from the market or pay damages, this did not mean that the state law was preempted on grounds of impossibility, because state tort law supplements the FDA’s regulatory activity. Justice Sotomayor, joined by Justice Ginsburg, also dissented, on the ground that New Hampshire law does not compel a generic-drug manufacturer to change its label (and thereby make simultaneous compliance with federal law impossible), but only requires a manufacturer to pay compensation to an injured plaintiff if it fails to do so.

Today’s decision resolves a conflict between the First Circuit and several other circuits that have addressed the issue. See, e.g., Gaeta v. Perrigo Pharms. Co., 469 Fed. App’x 556  (9th Cir. Feb. 27, 2012); Mensing v. Wyeth, Inc., 658 F.3d 867 (8th Cir. 2011); Smith v. Wyeth, Inc., 657 F.3d 420 (6th Cir. 2011); Demahy v. Actavis, Inc., 650 F.3d 1045 (5th Cir. 2011).

Bartlett is significant for the business community because it clarifies and reaffirms Mensing’s holding that claims against a generic-drug manufacturer based on the warnings on a drug label are preempted as long as the manufacturer has complied with its federal obligation to ensure that the generic bears the same warnings as the corresponding brand-name drug.

Any questions about the case should be directed to Henninger S. Bullock (+1 212 506 2528) in our New York office or Andrew Tauber (+1 202 263 3324) in our Washington office.

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