February 15, 2011

U.S. Supreme Court Allows Third-Party Retaliation Claim Under Federal Discrimination Law

In its recent unanimous decision in Thompson v. North American Stainless, LP, the U.S. Supreme Court expanded the scope of the anti-retaliation provision contained in Title VII of the Civil Rights Act of 1964 to enable employees who have not engaged in protected activity under the statute, but who claim to have been retaliated against for another person’s protected activity, to bring suit. Claims by such employees are referred to as “third party” retaliation claims.

Title VII’s Anti-Retaliation Provisions

In addition to prohibiting discrimination in terms and conditions of employment on the basis of race, color, religion, sex and national origin, Title VII contains the following anti-retaliation provision:

It shall be an unlawful employment practice for an employer to discriminate against any of his employees or applicants for employment because he has opposed any practice prohibited by [Title VII], or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under [Title VII].

The statute permits a person claiming to be “aggrieved” to file a charge with the Equal Employment Opportunity Commission (“EEOC”) alleging that the employer committed an unlawful employment practice, and, if the EEOC declines to sue the employer, it permits the “aggrieved” person to bring a civil action. To establish a retaliation claim, the “aggrieved” person must show that his or her employer took an action against the employee that “might well have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  See generally Goodwin Procter’s July 20, 2006 Labor & Employment Alert, “U.S. Supreme Court Defines Scope of Retaliation Claims Under Federal Discrimination Law.”

Thompson addresses two novel questions:  (1) whether unlawful retaliation can be predicated on the firing of an employee who has not engaged in protected activity, but who is closely related to an employee who has engaged in protected activity and (2) whether the fired employee has standing to sue.

Facts, Issues and Holding of the Thompson Case

Eric Thompson and his fiancée, Miriam Regalado, were employees of North American Stainless (“NAS”). In February 2003, Ms. Regalado filed a charge against NAS with the EEOC, alleging sex discrimination. Three weeks later, Mr. Thompson was fired. Mr. Thompson then sued under Title VII, claiming that NAS had fired him to retaliate against Ms. Regaldo for filing an EEOC charge.

The district court granted summary judgment to NAS, concluding that Title VII’s anti-retaliation provision does not extend to claims of employer action against an employee who has not engaged in protected activity (i.e., a “third party”). A panel of the Sixth Circuit reversed the district court, but on rehearing en banc, the Sixth Circuit affirmed the district court’s decision. The Sixth Circuit reasoned that because the plaintiff did not engage in any protected activity, he was not included in the class of persons for whom Congress created a retaliation cause of action.

The Supreme Court granted certiorari to address two questions:  (1) Did NAS’s firing of Mr. Thompson constitute unlawful retaliation?  And (2) if it did, does Title VII grant Mr. Thompson a cause of action?

The Court had “little difficulty” concluding that NAS’s firing of Mr. Thompson violated Title VII, relying on its prior holding in Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006), that “‘Title VII’s antiretaliation provision must be construed to cover a broad range of employer conduct.’”  The Court reiterated that under Burlington, “‘the antiretaliation provision, unlike the substantive provision, is not limited to discriminatory actions that affect the terms and conditions of employment.’  Rather, Title VII’s anti-retaliation provision prohibits any employer action that ‘well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.’”  Applying this standard, the Thompson Court concluded that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.

The Court then addressed NAS’s argument that the Burlington standard should not be applied to employer action against a third party like Mr. Thompson because that would “place an employer at risk any time it fire[d] any employee who happen[ed] to have a connection to a different employee who filed a charge with the EEOC.”  The Court recognized NAS’s concern, but held that there was no textual basis in Title VII’s anti-retaliation provision to distinguish retaliation against third parties categorically. The Court also declined to identify a fixed class of relationships for which retaliation against third parties is unlawful, stating only that “[w]e expect … firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.”  The Court reiterated its Burlington refrain:  “the significance of any given act of retaliation will often depend upon the particular circumstances.”

The Court finally addressed the difficult question of whether Mr. Thompson had standing to sue NAS as a person “aggrieved” under Title VII by NAS’s alleged retaliation. The Court declined to limit the definition of “aggrieved” person to employees who engage in protected activity, as NAS urged. The Court instead applied a “zone of interests” test that permits a plaintiff “aggrieved” by a violation of particular statute to sue if he falls within the “zone of interests” sought to be protected by that law. Applying this test, the Court held that Mr. Thompson fell within the zone of interests sought to be protected by Title VII:  “he was an employee of NAS and the purpose of Title VII is to protect employees from their employers’ unlawful actions.”  Further, accepting the facts as alleged, Mr. Thompson was not an “accidental victim” of the retaliation; rather, injuring him was NAS’s means of harming his fiancée. Thus, Mr. Thompson was an “aggrieved” person with standing to sue.

Implications for Employers

The retaliation standard post-Thompson is unchanged. Retaliation claims must be based on “material adversity,” not “trivial harms.” The Court’s holding that firing an employee’s fiancé because the employee engaged in protected activity is not surprising. Clearly, such an action might dissuade a reasonable worker from making or supporting a charge of discrimination. However, the decision creates considerable uncertainty, and opens the door to more potential claims by employees who believe they have been treated unfairly. At this juncture we do not know the outer limits of the Title VII “zone of interests” entitled to protection from alleged retaliation. Certainly, employers should proceed carefully before taking action against an employee who they know has a close relationship to an employee who recently engaged in protected activity. As always, consistent application of personnel policies and sound documentation supporting adverse employment decisions provide the best defense against retaliation claims.