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August 03, 2005
State secrets trump Title VII
How can a covert CIA agent bring a Title VII action without running head-on into the "state secrets doctrine"?
Jeffrey Sterling, an African-American, was a covert CIA agent who claimed racial discrimination by CIA management plus retaliation for using internal EEO procedures.
In defending Sterling's Title VII action, the CIA Director filed a declaration with the court saying that this case would require disclosure of highly classified information about the identity, locations, and assignment of CIA operatives.
The judge reviewed the declarations ex parte and in camera.
Conclusion: Case dismissed. The 4th Circuit affirmed. Sterling v. Tenet (4th Cir 08/03/2005). http://caselaw.findlaw.com/data2/circs/4th/041495p.pdf
- Proving a prima case would require revealing secret information.
- Requiring the government to show a legitimate non-discriminatory reason would involve disclosure of secret information.
- Proof of the facts in this case would require attendance by witnesses who would be covert CIA operatives.
- Proceeding under special procedures would be too risky.
Bottom line: Dismiss the case.
My view: An unusual situation that most lawyers will never confront.
Posted August 03, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
April 25, 2005
Supreme Court gets 42 USC 1981 case
Section 1981 prohibits race discrimination in the formation, termination, and performance of contracts. Can a person who is not a contracting party recover under 1981?
That's what the US Supreme Court will decide in Domino's Pizza v. McDonald, Docket No. 04-593, certiorari granted April 25, 2005.
The allegations were: McDonald, an African American, was the president and main shareholder of JWM, a corporation. JWM entered into contracts with Domino's. Domino's made it difficult or impossible for JWM to perform, propelling JWM into bankruptcy. JWM and Domino's settled. McDonald sued Domino's under Section 1981 claiming financial and emotional loss. He claimed that the downfall of JWM was caused by racial discrimination on the part of Domino's. The allegation have not been proved. The trial court granted summary judgment for the Domino's.
The 9th Circuit reversed, saying that McDonald, even though he personally had no contractual relationship with Domino's, had standing to sue Domino's for alleged injuries that he personally suffered. The 9th Circuit's decision (06/18/2004) was not reported. See 2004 WL 1380296.
The 9th Circuit relied on its earlier case Gomez v. Alexian Bros. Hosp., 698 F.2d 1019 (9th Cir 1983). The Circuits are split on this theory. See Guides Ltd v. Yarmouth Group, 295 F.3d 1065 (10th Cir 2002).
Posted April 25, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
April 22, 2005
This corporation was a 42 USC 1981 "person"
Section 1981 prohibits race discrimination relating to contract formation and performance. A corporation does not have a "race" so you would think a corporate independent contractor could not be a "person" under 1981. Usually true, but here's an exception.
Bains LLC was a corporation, and all the stock was owned by three brothers who were US citizens born in India. The brothers and many of the corporation's employees were religiously observant Sikhs who wore turbans and long beards.
Bains LLC contracted with ARCO to haul fuel to ARCO's Seattle terminal. Bill Davis was ARCO's lead man at the terminal, and he made life difficult for Bains' drivers - verbally harassing them, slowing them down, making them stand in the rain, etc. Bains complained to Davis' boss, the abuse continued, Bains complained again. Then ARCO terminated Bains LLC without giving a reason and without the required 30 day notice.
A jury returned a verdict for Bains: ARCO breached the contract - damages $50,000. ARCO discriminated on account of race - nominal damages $1 plus punitive damages of $5,000,000. Yes, five million dollars punitive damages on top of a one dollar compensatory damages, but 9th Circuit ordered the punitives reduced to no more than $450,000. Bains LLC v. ARCO Products (9th Cir 04/19/2005).
How can a corporation prevail under Section 1981? The 9th Circuit explains that Bains LLC "acquired an imputed racial identity." This was the theory used in Thinket Ink v. Sun Microsystems (9th Cir 2004).
My view: Perhaps a small corporation whose shareholders are all of one race should be treated as a Section 1981 "person," but not for the reasons given in the Thinket case. In Thinket the 9th Circuit analyzed whether a corporation could have "standing," and relied on the classical standing cases. Those cases might be relevant if the corporation is suing to redress injuries to others (e.g., shareholders, employees), but not so relevant when the corporation sues to redress an injury to itself. In those cases, the more relevant inquiry is one of pure statutory interpretation: Did Congress intend for a corporation to be a "person" under Section 1981? Perhaps, given 1981's history as a post-Civil War statute designed to eradicate the badges and incidents of slavery. In any event, the Bains case appears to be the prevailing view.
Posted April 22, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
April 12, 2005
Four-fifths test is not a safe harbor
"A selection rate for any race, sex, or ethnic group which is less than four-fifths (or eighty percent) of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact, while a greater than four-fifths rate will generally not be regarded by Federal enforcement agencies as evidence of adverse impact." So says the EEOC regulation.
How does a Memphis police sergeant to get promoted to lieutenant? First pass a written test (whose cut-off score was never validated), and then move on to three other requirements.
The City had required a passing score of 70, but that resulted in a greater than 4/5 impact on African-American applicants, so the City reduced the passing score to 66. Black applicants who failed the test sued under Title VII claiming race discrimination, using the disparate impact theory.
The City's defense: No disparate impact proved because under the new cut-off score the impact was less than the four-fifths required by the EEOC regulation. In other words, there was some impact but not enough to trigger a requirement that the cut-off score be validated.
The trial court used other statistical methods as evidence of adverse impact. (a) The "T-test" which measures the difference in mean (i.e. - average) scores between minority and non-minority candidates. (b) The "Z-test" which measures statistical success among groups (i.e. - it computes the average scores of the passing candidates for each group and then compares those group averages).
The 6th Circuit (2-1) affirmed the trial court's finding of adverse impact, rejecting the City's argument that disparate impact could not be proved unless the impact satisfied the four-fifths rule. Isabel v. City of Memphis (6th Cir 04/11/2005).
The dissent was quite sure that previous authority in the circuit meant that no other statistical methods could be used if an employer satisfied the four-fifths rule. She thought the City properly "relied on the bright line four-fifths rule" and that plaintiffs should not be allowed to use "the newest statistical flavor of the month."
My view: It's too late in the day to argue that only one method of statistical analysis can be used to prove disparate impact. These cases are won or lost at the trial level, by persuading the court that one or another statistical method is truly indicative of whether the measured impact is merely a matter of chance.
Posted April 12, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
