Sixth Circuit Affirms City's Judgment But Reversed Union's Judgment in Case Alleging Discriminatory Layoffs

This week there have already been three interesting decisions.  In one, the Sixth Circuit absolved a City of discrimination for accommodating a union demand to layoff one group of employees over another, but pulled the union back into the litigation for potential discrimination liability for making that demand in the first place.   Peeples v. City of Detroit, No. 17-222 (6^th Cir. 2018). The Court refused to let plaintiffs alleging race discrimination “piggyback” on the only timely EEOC Charge which resulted in a right-to-sue letter when that charge alleged only national origin discrimination.  It also refused to find statements made by a city employee about the union’s purported motivation as direct evidence.  It also found no circumstantial evidence of discrimination based only on statistics which did not attempt to show significant deviations from non-discriminatory factors, like seniority, and which were based on small sample size.  The Court, however, found that the plaintiffs did not need to show that the union breached its duty of fair representation in order to sue the union under Title VII.

According to the Court’s opinion, the City of Detroit instituted layoffs in advance of filing for bankruptcy protection.  It announced the layoff list based on city-wide seniority, but the fire department union objected on the grounds that it should be based on department seniority and filed a grievance. The City ultimately resolved the grievance by granting the union’s request.   The distinction resulted in the layoff of more minority officers under the union’s proposal than the City’s plan.  After four EEOC Charges followed, the fire union relented and agreed to the City’s initial plan.  The City ended up re-hiring the affected employees 80 days later and giving them full back pay, missed overtime pay and medical benefits.  Nonetheless, even though only one of the plaintiffs had obtained a right-to-sue letter from the EEOC, eleven of the affected minority employees brought suit against the City and the Union, seeking compensatory and punitive damages.

The Court addressed whether all of the plaintiffs could piggy back onto the one plaintiff’s right-to-sue letter.  Sadly for the plaintiffs, they did not raise any arguments to rebut the failure-to-exhaust remedies argument raised in the City’s summary judgment motion and, thus, were limited in what could be argued on appeal.   The only plaintiff to obtain a right-to-sue letter asserted only a national origin discrimination claim and the remaining plaintiffs were asserting racial discrimination.  The Court found that they were not substantially related claims, and thus the race claims could not piggyback onto an EEOC Charge asserting only national origin discrimination.

The Court also rejected the plaintiff’s claim of direct evidence of discrimination.  One of the plaintiffs testified in deposition that he heard a City employee state that he concluded the union was trying to protect the “white boys” from layoff.    This was not direct evidence of discrimination because it was a city employee explaining the union’s motivation and required an inference that the City endorsed that motive.  It also likely hearsay, but the Court did not ultimately resolve that issue.  

The Court also rejected the plaintiffs’ statistical evidence, which was pretty much all that they had to show that they were selected for the layoff on account of their race (in that they were not replaced).  First, they failed to organize their statistics in any meaningful way before the trial court.  Second, the fact that the percentage of white layoffs fell and of minority layoffs rose significantly under the union plan did not, by itself, show impermissible bias.  To prove an inference of bias, “the statistics must show a significant disparity and eliminate the most common nondiscriminatory explanations for the disparity.”  For instance, one could use three standard deviations from hypothetical random chance.   The plaintiffs made no effort to account for seniority differences, for instance.  The City also argued about the sample size (only 27 people) and the other cost-cutting efforts made, including demotions, reductions in overtime and rescinded promotions.   The plaintiffs also made no effort to show the racial composition of the fire department before and after the layoff. “Unless the statistics, standing alone or in comparison, are sufficient to lead the mind naturally to the conclusion sought, they have no probative value; they do not move the proof one way or another.”

The Court also rejected the plaintiff’s damage claim in that they had already received full back pay with the resolution of their grievances. The plaintiffs failed to introduce any evidence disputing that they had already received full back pay.  The union pointed out that they never raised breach of settlement agreement claims based on the resolution of their grievances when they were reinstated.  Accordingly, while they might have some compensatory and punitive damages available under Title VII, their claims for backpay were rejected by the trial and appellate courts.

Finally, the Court rejected the union’s argument that Title VII claims were subject to the same burden of proof as fair representation claims under labor-relations laws, meaning that the plaintiffs need not show that the union breached its duty of fair representation before it could sue them for discrimination under Title VII. Because the union had prevailed on that issue before the trial court, the Sixth Circuit reversed the union’s summary judgment.  

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Reverses Dismissal of Race Discrimination Claim Where Plaintiff Might Show Continuity of Interests Between Defendants and Respondent Named in EEOC Charge

Two weeks ago, the Sixth Circuit Court of Appeals in Cincinnati reversed the dismissal of a race discrimination complaint where the plaintiff had not named all of the defendants as respondents in her EEOC Charge.  Lockhart v. Holiday Inn Express Southwind, No. 12-6309 (6^th Cir. 7-29-13).  In her EEOC Charge, the plaintiff had named only the trade name of the hotel, as opposed to the name of the partnership or partners who owned it.  In response to her amended complaint (which was filed and served two years after she first filed her lawsuit), the individual defendants raised the affirmative defense that she had failed to exhaust her administrative remedies by first filing an EEOC Charge against them and then successfully moved to dismiss the complaint.   The Sixth Circuit found that the amended complaint’s allegations about ownership were sufficient to survive a motion to dismiss because it asserted a possible identity of interest between the named defendants and EEOC respondent.  Moreover, the Court concluded that the new allegations might relate back to the date that the original complaint had been filed and that the trial court had erred in not considering whether the plaintiff had good cause in failing to serve the complaint upon the defendants within 120 days.

According to the Court’s opinion, after the plaintiff had been fired from her job at the defendant hotel, she filed a Charge of Discrimination with the EEOC naming the trade name of the hotel as the respondent.  When she filed suit pro se, the trial court ordered her to amend her complaint because the defendant hotel was not registered to do business under that name.  She then amended her complaint to name the partnership and the individual partners who owned the hotel.   The individual partners moved to dismiss the amended complaint on the grounds that they had not been named as respondents in her EEOC Charge and it was too late (i.e., more than 300 days since her termination) to do so now.   In other words, the plaintiff had failed to exhaust her administrative remedies by first filing an EEOC Charge against them.  The trial court granted their motion and the Sixth Circuit reversed.

As a general rule, a plaintiff “may only sue an entity for violating civil rights statutes such as Title VII . . . if it named the same entity in its prior EEOC charge.” Szoke v. United Parcel Serv. of Am., Inc., 398 F. App’x 145, 153 (6th Cir. 2010)  . . .  see also 42 U.S.C. § 2000e-5(f)(1). This rule is, however, susceptible to a “limited exception” where there exists a “clear identity of interest” between the party named in the EEOC charge and the unnamed party that was actually sued.

The Sixth Circuit follows tests established by the Seventh and Third Circuits to determine whether a sufficient “identity of interest” exists between the defendant and respondent named in the EEOC Charge.  Under the Seventh Circuit’s test “an identity of interest exists when the unnamed party possesses sufficient notice of the claim to participate in voluntary conciliation proceedings.” Under the Third Circuit’s test, the court will consider the following factors:

 (1) Whether the role of the unnamed party could through reasonable effort by the complainant be ascertained at the time of the filing of the EEOC complaint;

(2) Whether, under the circumstances, the interests of a named [party] are so similar as the unnamed party’s that for the purpose of obtaining voluntary conciliation and compliance it would be unnecessary to include the unnamed party in the EEOC proceedings;

(3) Whether its absence from the EEOC proceedings resulted in actual prejudice to the interests of the unnamed party;

(4) Whether the unnamed party has in some way represented to the complainant that its relationship with the complainant is to be through the named party.

The Sixth Circuit noted that it is inappropriate to dismiss a complaint based on an affirmative defense unless the complaint’s own allegations reveal the defense and legally defeats the claim for relief.  In this case, the complaint alleged that the individual defendants were co-owner/operators of the hotel that employed her.  

This Court has held that there may be an identity of interest between a corporation and its owners. . . . at this stage, the record is insufficiently developed to allow us to conduct the identity-of-interest analyses under Eggleston and Glus. Some, potentially limited, discovery is necessary before it may be determined whether Defendants have a “clear identity of interest” with the party named in Plaintiff’s EEOC charge. Therefore, it was error for the district court to have dismissed Plaintiff’s Title VII claims at this stage in the litigation.

The defendants  also argued that it was too late for her to amend her complaint to include them as defendants because she was required to file suit within 90 days of receiving her EEOC right-to-sue letter and her complaint was not amended and served on them for another two years.

When a plaintiff seeks to amend a complaint to add a party against whom the claim would otherwise be barred by the statute of limitations, the amended pleading is considered to relate back to the date of the original, timely pleading where:

1. “the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading,” see Fed. R. Civ. P. 15(c)(1)(B), and

2. the added party is “served within 120 days after the [initial] complaint is filed . . . [or] the plaintiff shows good cause for the failure [to serve the added party within 120 days], see Fed. R. Civ. P. 4(m).

Fed. R. Civ. P. 15(c)(1)(C). If both these criteria are satisfied, then the party may be added so long as the added party,

3. “received such notice of the action that it will not be prejudiced in defending on the merits,” see Fed. R. Civ. P. 15(c)(1)(C)(i), and

4. “knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity,” see Fed. R. Civ. P. 15(c)(1)(C)(ii).

The Court found the district court erred in applying the 120-day rule “because it can be excused for good cause.”  However, the trial court failed to consider in this case whether the plaintiff had good cause to excuse her non-compliance with the 120-day period.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.