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Sitting with a favorite associate general counsel at docket call a few weeks ago, he asked, “What are the big controversies, the pitched battles, the disputed issues in employment law whose resolution will make a difference to me, my managers and my company?” Good question. Fortunately the judge called our case before having to give on-the-spot answers. After reflection, though, there is one blockbuster (well, monster is more like it) issue — namely how do the courts figure out whether an employer intentionally discriminated? Because our legal system is fixated on the impossible — determining the objective truth –the courts have developed tools of imprecise calibration to measure the heart, gauge the mind and plumb the soul. Here’s the first head of the Hydra: What evidentiary weight is given to a biased manager who influenced a challenged employment decision but who didn’t make the final decision? Does the court only consider the mental state of the decision-maker? Or does it factor in the machinations of the biased wizard behind the curtain? In a controversial 2004 en banc decision, Hill v. Lockheed Martin Logistics Management Inc., the 4th U.S. Circuit Court of Appeals answered this last question with a resounding “no,” focusing exclusively on the intent of the decision-maker. The court said, “An aggrieved employee who rests a discrimination claim upon the discriminatory motivations of a subordinate employee must come forward with sufficient evidence that the subordinate employee possessed such authority as to be viewed as the one principally responsible for the decision, or the actual decision-maker for the employer.” The 4th Circuit joins some of its sister circuits, which also require a factual basis for any assertion that the biased manager’s prejudice was the motivation for the decision-maker’s actions. Consider the implications: dismissal of a discrimination claim even though a workplace is infested with biased subordinates whispering in the ear of the unbiased decision-maker. Right now, the 5th U.S. Circuit Court of Appeals takes a more relaxed stance. It addressed the issue in Laxton v. Gap Inc. (2003), where Joanna Laxton sued the Gap after being fired as a manager of one of its Old Navy stores; she alleged it was because of pregnancy, the Gap because of poor performance. According to the opinion, at trial, Laxton relied heavily upon the purported attitude of her direct supervisor, Karen Jones. Upon informing Jones of her pregnancy, Laxton claimed Jones became visibly angry, telling her that she didn’t appreciate the timing of the pregnancy, because the birth would interfere with the busy Christmas season, requiring her to hire someone to fill in for Laxton, according to the opinion. Jones also gave Laxton two disciplinary write-ups after being told of the pregnancy, which led to Laxton’s ultimate termination. The Gap downplayed this evidence. After all, Jones did not make the final decision to terminate Laxton and thus the evidence could not bear on a finding of potential discrimination. The 5th Circuit was not persuaded, saying that the realm of the inquiry is whether Jones “had influence or leverage” over the ultimate decision-makers. Because the decision-maker considered the write-ups in making its decision, that was enough to satisfy the 5th Circuit that Jones had exercised “influence or leverage” over the decision. There was no evidence of an independent investigation by the decision-makers of the validity of the write-ups, and Jones served as the primary source of information on their contents. Her earlier purported comments to Laxton therefore tainted the write-ups. Soon, the U.S. Supreme Court may enter the fray. On June 28, the justices asked the U.S. solicitor general whether an employer should be liable for the intentional bias of a nonmanager. It could be that the high court will grant review of the 4th Circuit’s Hill decision and resolve this issue. HONEST MISTAKE Now, let’s look at the vexing issue of what weight should be given to an employer’s honest but mistaken belief that an employee is guilty of misconduct. According to the 7th Circuit’s opinion in Johnson v. Nordstrom (2001), Gail Johnson worked as a clerk at Nordstrom, a fancy department store. She was not promoted to a position she wanted, and she sued, alleging race discrimination. The store said she wasn’t promoted because her co-workers viewed her as a “shark,” according to the opinion. A shark is a not-too-endearing retail term for sales employees who serve more than one customer at a time, thereby depriving co-workers of commission opportunities. Nordstrom believed the co-workers. In throwing the case out, the 7th Circuit wrote: “Johnson argues that her ‘stealing’ of customers in violation of work rules was disputed by her. Whether she stole customers is not relevant; what is relevant is the undisputed fact that her co-workers thought she did.” The 7th Circuit in Wyninger v. New Venture Gear Inc. (2004) pushed this deference to an employer’s explanation for its decision to the outer limits saying “an employer’s explanation can be foolish or trivial or even baseless so long as the company honestly believed in the reasons it offered for the adverse employment action.” So a pure heart and an empty head get a company off the hook for discrimination? Apparently so. In fact, when looked at closely, this line of reasoning discourages employers from learning anything at all about the alleged misconduct lest it learn of some exculpatory evidence and — if it takes adverse action against the employee — is found not to have an honest belief as to the misconduct. The 6th Circuit is having none of it, ruling en banc in Wexler v. White s Fine Furniture Inc., (2003) that: When the employee is able to produce sufficient evidence to establish that the employer failed to make a reasonably informed and considered decision before taking its adverse employment action, thereby making its decisional process unworthy of credence, then any reliance placed by the employer on such process cannot be said to be honestly held. The facts, as laid out by the 6th Circuit, are as follows: Donald G. Wexler worked as a store manager for a furniture company. The sales at his particular store were terrible, and the company expressed dissatisfaction with them. Wexler said that business for furniture sales was bad nationwide, and that the company’s advertising strategy had hurt sales throughout the chain. Nevertheless, the company demoted him and replaced him with a younger manager. He sued for age discrimination. The 6th Circuit standard said a jury could infer that the justification was nothing more than scapegoating, that there was no nexus between the reasons for the termination and Wexler’s performance, and therefore age could be the real reason. It’s hard to reconcile the views of the 7th and 6th circuits in this matter. Frankly, we prefer the wisdom of the late Judge Irving L. Goldberg of the 5th Circuit who, in Thornbrough v. Columbus R. Co. (1985), remarked with typical prescience, “[E]veryone can make a mistake, but if the mistake is large, we may begin to wonder whether it was a mistake at all.” The third head of the Hydra is the “same actor” inference — no discrimination if the person who fires or demotes an employee is the same one that hires him or her. After all, why hire somebody over 40 just to let him go a few years down the line? Same with the protected classifications of race and sex. Most courts agree that the same actor inference should be given some weight, but they diverge on just how much. Some courts find it extremely persuasive, such as the 9th Circuit in Bradley v. Harcourt, Brace & Co., where the inference has achieved near presumption status, while others such as the 3rd Circuit in Waldron v. S L Industries Inc. (1995) just throw it into the fact pile. The rationale behind this inference is best stated by the 4th Circuit: Claims that employer animus exists in termination but not in hiring seem irrational. From the standpoint of the putative discriminator, it hardly makes sense to hire workers from a group one dislikes (thereby incurring the psychological costs of associating with them) only to fire them once they are on the job. The fact that the actor involved in both employment decisions is also a member of the protected class only enhances the inference. The 5th Circuit is somewhat schizophrenic on this point, finding in 1995′s Brown v. CSC Logic Inc., “The same actor inference has been accepted by several other circuit courts, we now express our approval.” The court seemed to back off a year later in Haun v. Ideal Industries Inc., but on the whole the 5th Circuit is aligned with the 2nd, 4th, 8th and 9th circuits that the same actor inference creates a virtual presumption, which places it at odds with the 3rd, 6th and 7th circuits, which say that it’s one more log on the evidentiary pile. And, frankly, those courts aligned with the virtual presumption live in a hermetically sealed world of legal reasoning that doesn’t jibe with the real world. A manager can hire a black employee or a woman believing the employee should act in certain ways, only to find that the employee does not meet the manager’s stereotypical view. If so, the inference is, at best, weak. Here are some practical thoughts for in-house counsel. Take a pro-active approach when confronted with the issue of a possibly biased nondecision-maker. We suggest an “audit” of the nondecision-maker’s input (or of decision-maker’s input, for that matter, to ensure that the decision will withstand court scrutiny). Ask hard questions: Was there a factual basis for the adverse employment action? Was the adverse act proportionate or disproportionate to the offense at hand? Is there corroboration to support the action? If a close question, don’t hesitate to spend a little extra time doing an entirely independent assessment. As to pure hearts and empty heads, it’s better to make a fully informed decision and develop a fully formed belief — even if it’s later shown to be a mistaken one. Ask the following questions: � Why is the company’s belief more plausible than another explanation or scenario? � Are there any reasons for the company to disbelieve the version of events it is relying upon? � Is the company basing its beliefs on something someone is telling it, and is that person credible? Why or why not? � Did the company conduct a thorough investigation into the misconduct allegations? The 5th Circuit’s decision in Laxton is useful not just on biased nondecision-makers but also on this point. It should be required reading for all corporate counsel and their human resources department. It is a road map for how a plaintiff can get a case to a jury. Laxton won because she focused her attack on the factual foundation of the employer’s reasons for termination, steering clear of attacking the business wisdom of the reasons. Laxton raised factual disputes as to the objective correctness and prevailed. The honest belief the Gap had was built on shaky facts. To paraphrase our favorite pizza delivery service, “better facts, better results.” Finally, the same actor inference: Don’t take too much comfort from it. Its cousin, the same group inference — that a 50-year-old can’t discriminate against a 47-year-old, or a black supervisor against a black employee — has long been discredited. As Justice Antonin Scalia eloquently explained in Oncle v. Sundowner Offshore Services Inc. (1998), “[B]ecause of the many facets of human motivation, it would be unwise to presume as a matter of law that the human beings of one definable group will not discriminate against other members of their group.” The same nuanced view of human nature will, we think, soon weaken the presumptive force of the same actor argument. With any luck, the U.S. Supreme Court will resolve these three vexing issues. We welcome that certainty. But like the Hydra who gets one of its heads cut off, others will just spring up in its place. That’s just not the law — that’s human nature. Michael P. Maslanka is chairman of the labor and employment section at Godwin Gruber in Dallas and writes the Texas Employment Law Letter, which can be accessed at HRhero.com. Burton D. Brillhart is a partner in the firm. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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