Supreme Court Retaliation Ruling Could Expose Employers

A Supreme Court ruling allowing employees to file suit under a Reconstruction Era civil rights law claims retaliation by employers may expose those employers to more severe judgments, according to employment practices attorneys.

“The cost of being found to have retaliated for claims of race discrimination may just have gone up,” said Paul Mickey, a partner in the Washington office of Steptoe and Johnson LLP.

In a 7-2 ruling on the case of CBOCS West Inc. vs. Humphries, case no. 06-1431, the high court upheld an appellate court ruling that the Civil Rights Act of 1866, also known as a “Section 1981” claim for the law's place in the U.S. Code, should be interpreted to include retaliation claims, despite no language specifically relating to retaliation existing in the law.

“We agree with CBOCS that the statute’s language does not expressly refer to the claim of an individual (black or white) who suffers retaliation because he has tried to help a different individual, suffering direct racial discrimination, secure his Section 1981 rights,” wrote Justice Stephen Breyer in the court’s ruling. “But that fact alone is not sufficient to carry the day,” he added, citing precedent as the basis for the court’s decision.

What the decision does, said Russell Adler, an associate in the New York office of the law firm WolfBlock, is broaden an avenue for filing suit.

In filing a complaint under Title VII of the Civil Rights Act of 1964, which is more common, he said, an employee was required to first go through an Equal Employment Opportunity Commission administrative procedure and obtain a “right to sue” letter before filing the case in federal court.

Additionally, the complaint would have to be brought within 180 or 300 days of the action, depending on the state where the employee resides, with most states using the 300-day rule.

At the same time, however, a case could be brought under the older statute allowing all citizens of any color the right to enter into contracts and enforce them, and the court’s ruling asserted that retaliation claims could be filed under this statue.

The decision “puts another arrow in the quiver of the employee,” Mr. Mickey said.

Mr. Adler, however, noted that the court didn’t change anything and that Section 1981 has always been an option.

“A good lawyer would sue under all these statutes,” he said, adding that an attorney would also likely include any state or local laws to the complaint as well.

Although many lawyers would not have filed the Section 1981 claim as well, he said, “they’re more likely to do it now because it’s in their minds” in the wake of the court’s decision.

Mr. Mickey agreed that it is “less common, but not uncommon” for complaints citing both statutes to be filed simultaneously, depending on the circumstances of the case at hand.

From an insurance perspective, an increase in claims filed under the older law could also mean more exposure in terms of severity. Both Mr. Mickey and Mr. Adler noted that while Title VII caps punitive damages, no such caps exist under Section 1981, meaning the court’s ruling “creates a more powerful economic weapon” for plaintiffs, Mr. Mickey said.

However, Mr. Adler argued that employers “should not change how they go about their business” in the wake of the decisions, as it doesn’t make any changes to the law that might make them more vulnerable to a retaliation claim, just the circumstances under which an employee alleging retaliation can file suit.

“It’s a warning for employers to be very careful when dealing with situations where reprisal might be charged,” Mr. Mickey said.

Both Mr. Adler and Mr. Mickey noted that retaliation claims can be problematic for employers, and that fact-finders, be they judge or jury, would naturally make an assumption of causation should an adverse act, such as an unusually bad review, follow a complaint of bias by an employee.

Mr. Adler also noted, however, that since the court only broadened the avenue for plaintiffs somewhat, rather than creating new liability, the ruling’s effect would not be as earth-moving as it has been depicted.

“I don’t think this decision is as significant as the press is making it out to be,” he said. “People could always sue for retaliation.”