Washington--Employers face a smaller pool of potential litigants
and have gained a safe harbor against punitive damages under recent U.S.
Supreme Court rulings interpreting two anti-discrimination statutes.
For the nation's business community, the closing days of the high court
term were outstanding--they won even in a case they lost.
The end of the 1998-99 term mirrored the conclusion of the term just
one year ago with its emphasis on coverage and liability under federal
employment discrimination laws. But unlike last year, this time the high
court's job bias decisions were not hailed by lawyers for both employers
and alleged victims of discrimination.
The disability rights community was stunned by three decisions holding
that people whose disabilities can be mitigated or corrected by medicine
or medical devices cannot claim protection from discrimination under the
1990 Americans With Disabilities Act (ADA). Until this year, the group
had been savoring victory in the justices' initial interpretations of the
act.
"It's as devastating a cut to the ADA as one could imagine," says Professor
Chai Feldblum of Georgetown University Law Center who, as a disability
rights advocate, played a key role in the drafting of the act nine years
ago.
And the victory that the high court handed civil rights litigants by
rejecting a tough standard for punitive damages to plaintiffs who prove
intentional discrimination under Title VII of the Civil Rights Act of 1964
was gutted. The sharply divided court's application of agency principles
to limit employer liability for punitive damages nullified any previous
advance.
"It's very disheartening from a plaintiff's perspective," says job bias
specialist Debra Katz, of Washington, D.C.'s Bernabei & Katz. "If an
employer can show it has any kind of [discrimination] policy or, even worse,
a lack of awareness of their equal employment opportunity obligations,
you're going to provide a safe haven to employers not entitled to one."
But, management attorneys counter, the decisions, as a whole, provide
clarity where there was confusion over employers' obligations under the
statutes and bring the laws back to their underlying objectives of not
simply detecting but also deterring workplace discrimination.
The fallout will be twofold, predicts litigator Gary Phelan, of Garrison,
Phelan, Levin, Epstein, Chimes & Richardson, in New Haven, Conn., who
filed amicus briefs supporting the ADA plaintiffs on behalf of the National
Employment Lawyers Association.
Disability rights litigators, knowing that the door to the courthouse
does not swing wide, will be more selective in the cases they take, and
they'll turn to state laws that now offer greater protection, he says.
Prof. Feldblum also sees a potential remedy: Congress. The body that
wrote the ADA and created the Title VII punitive damages remedy in the
Civil Rights Act of 1991 (itself enacted to undo a series of significant
job bias decisions by the Supreme Court a decade ago) could involve itself
again.
Parsing words
The ADA employment cases turned on whether mitigating measures should
be considered when assessing if someone is "disabled" under the ADA. The
statute defines "disability" as a physical or mental impairment that substantially
limits a major life activity. Someone also can be covered by the act if
he or she is "regarded as" having such an impairment.
Disagreeing with the majority of circuits that have faced the question,
as well as with the Equal Employment Opportunity Commission, the high court,
in a 7-2 opinion by Justice Sandra Day O'Connor, held that courts must
assess individuals in their mitigated states for three reasons:
First, the statute uses the present indicative tense "substantially
limits," requiring that a person be "presently--not potentially or hypothetically
substantially limited" in order to show a disability. A corrected impairment,
she explained, while still an impairment, does not substantially limit
a major life activity.
Second, the ADA requires an "individualized" inquiry into the effect
of the impairment on the person's life, wrote Justice O'Connor. If people
were viewed in their unmitigated states, courts and employers would have
to speculate on their condition, perhaps looking to general information
rather than actual impact.
Finally, "and critically," she said, the act's findings that some 43
million Americans have disabilities are inconsistent with a definition
that includes people in their uncorrected states because the latter definition
would bring the total to as many as 160 million people.
Based on that rationale, the court held that twin sisters with severe
myopia, corrected to 20/20 vision with glasses, could not claim the act's
protection when denied jobs as pilots by United Air Lines (Sutton v. United
Air Lines, No. 97-1943); a mechanic who used medication to control high
blood pressure was not disabled under the act (Murphy v. United Parcel
Service, No. 97-1992); and a truck driver blind in one eye also was not
disabled (Albertsons Inc. v. Kirkingburg, No. 98-591).
Dissenting, Justice John Paul Stevens, joined by Justice Stephen Breyer,
accused the majority of having a "crabbed vision" of the ADA's scope, and
he warned that the decision erases protection for others thought clearly
covered by the act. The majority's approach results in a "counterintuitive
conclusion," he added, that the ADA's safeguards vanish when individuals
strive to make themselves more employable.
Crabbed/correct?
But management attorneys say the majority's vision is correct, not crabbed,
and extremely helpful to employers.
"First and most important, regardless of their substance, the decisions
now clarify the act's definitions," says Allen Fagin, chair of labor/employment
at New York's Proskauer Rose L.L.P. The decisions also end the confusion
caused by the splits among the circuits.
The decisions also let employers know that they can set appropriate
qualification standards, particularly those designed to ensure public safety,
says Thomas Hungar, of the Washington, D.C., office of Los Angeles' Gibson,
Dunn and Crutcher L.L.P., which was high court counsel to United Parcel
Service. "It's still going to be difficult in many cases for employers
to determine if a court is going to conclude an individual is substantially
limited in a major life activity," he says, "and yet the act requires employers
to make that determination upon pain of liability if they guess wrong."
In the end, Prof. Feldblum reflects, "[w]e didn't anticipate an invigorated
management bar that would nitpick the language of the statute and an over-legalistic
Supreme Court. The bottom line is the words used in the ADA definition
were problematic for a court that is so legalistic. It made sense for us
to use those words nine years ago--those were words in place for 17 years
under an existing civil rights law, the Rehabilitation Act. Because Congress
likes to do what it has done before, we adopted the definition with all
of its flaws."
In another area of employment law, there was barely a silver lining
for Title VII claimants. The high court's June 22 ruling in Kolstad v.
American Dental Association, No. 98-208 made it less onerous for employers
to justify hiring decisions under Title VII.
No silver linings
In 1992, Carole Kolstad, an attorney and director of federal relations
at the American Dental Association, applied, along with the association's
legislative counsel, for a newly vacated, high-level position in the association's
Washington, D.C. office. The job went to the legislative counsel, a man.
Ms. Kolstad sued, claiming that she was denied the job on account of her
sex.
A jury found intentional sex discrimination and awarded her $52,718
in back pay, but the trial judge dismissed her punitive damages claim for
lack of evidence. On appeal, a three-judge panel of the U.S. Court of Appeals
for the District of Columbia Circuit upheld liability and reversed the
punitive damages ruling. The panel held that evidence sufficient to prove
intentional discrimination is sufficient also to allow a jury to consider
punitive damages under the 1991 amendments to Title VII. But a 6-5 en banc
court subsequently reversed.
The circuit's conservative majority said the statute's structure--one
standard for basic liability, another for the exceptional remedy of punitive
liability--"strongly suggests" that the plaintiff must show more than intentional
discrimination before a jury can consider punitive damages. She must prove
the discrimination was intentional and egregious, the court held.
A 7-2 high court disagreed. Writing for the majority, Justice O'Con-nor
said that Title VII allows punitive damages to be awarded when an employer
has engaged in intentional discrimination and has done so with "malice
or with reckless indifference" to a person's federally protected rights.
The terms "malice" and "reckless" ultimately focus on the actor's state
of mind, not conduct, and pertain to the employer's knowledge that "it
may be acting in violation of federal law, not its awareness that it is
engaging in discrimination," she explained.
But the court then pursued the matter further and, by a 5-4 vote, went
on to hold that agency principles place limits on an employer's liability
for the acts of its agents in punitive awards under Title VII. Employers
"may not be vicariously liable" when their managerial agents discriminate,
wrote Justice O'Connor, if the employer has made a good-faith effort to
comply with Title VII, such as having a written anti-discrimination policy
and a complaint procedure in effect.
The dental association's general counsel, Peter M. Sfikas, called the
decision "good for employers." The standard for awarding punitive damages,
he explains, requires "very narrow grounds upon which the question can
go to a jury: You have to show evil intent."
Kolstad is consistent with the court's key sexual harassment rulings
last term in which the justices created an affirmative defense for employers
who also make good-faith efforts to comply with Title VII, says management
attorney Paul Salvatore, a partner at Proskauer Rose. Referring to Faragher
v. City of Boca Raton and Burlington Industries v. Ellerth, Mr. Salvatore
explains, "Those have become seminal opinions in employment law, not only
for what they say but for the spirit in which they were written. The same
spirit permeates Kolstad."
But after Faragher and Ellerth, many trial courts decided as a matter
of law that an employer's conduct was per se reasonable or unreasonable,
taking the issue away from juries, where it really belongs, says Ms. Katz.
"This gives lots of discretion to courts to deprive juries of looking at
the punitive damages issue."
The Supreme Court essentially snatched the agency issue out of thin
air--it was never raised by the parties or briefed, says Ms. Kolstad's
counsel, Joseph Yablonski, of Washington, D.C.'s Yablonski, Both &
Edelman. "I wish it weren't there," he adds, noting that by reaching out
for it, the court has once again set the stage for new litigation under
Title VII.
