Court to rule on liability for discriminatory comments

When do discriminatory comments create liability for the employer? in an upcoming federal court decision, Hill v. Lockheed Martin Logistics Management Inc., the full Fourth Circuit en banc panel will answer this question.

Hill was employed by Lockheed as an aircraft sheet metal mechanic. Hill was directly supervised by a lead person. Lockheed assigns safety inspectors to each of its jobsites. The safety inspectors have no direct supervisory authority over the mechanics.

The safety inspector at Hill's jobsite allegedly referred to Hill as a "useless old lady" and a "damned woman" who should retire.

Hill was terminated after she received three written reprimands during her eight months of employment. Hill had received one reprimand for unsatisfactory quality or quantity of work from her lead person at a previous job site. Two additional reprimands were issued by the lead person at the job site where she was working at the time of her termination. The final reprimand followed several discrepancy reports by the safety inspector who had made the discriminatory comments. Although Hill admitted the discrepancy reports were accurate, she called them "nit-picky and trivial." Subsequently, Hill filed a lawsuit alleging age and sex discrimination.

The district court awarded summary judgment in favor of Lockheed. However, on appeal before a three-judge panel of the Fourth Circuit, summary judgment for the employer was reversed, and the case was remanded for trial. Judge Traxler dissented, in a well-reasoned 32-page dissent.

A rehearing en banc has now been granted, and the prior Fourth Circuit opinion has been vacated pending the en banc decision. The original three-judge panel focused on the following issues, which will now be decided by the full eleven-judge panel.

Both the majority opinion and Judge Traxler agree that the first step is identifying who actually made the challenged employment decision. If that person is different from the person identified as harboring the discriminatory bias, the next step is to determine whether the discriminatory motives of the subordinate employee can be fairly attributed to the formal decision-maker.

This is an important distinction between formal decisionmakers and actual decision-makers. Actual decision-makers, according to the majority, are "subordinates who lack formal authority but who nevertheless exercise substantial influence in employment decisions."

It is undisputed that the formal decision-makers here were two off-site employees - the east coast supervisor and the program manager.

Hill herself said that the lead person was "principally responsible" for the challenged decisions. The focus becomes the degree of influence exercised by the safety inspector who made the discriminatory comments. The majority and dissent part company on the extent of the safety inspector's influence.

Substantial influence

The majority believes that, in general, the issue is a subordinate's actual influence rather than his formal role in the employment decision. In fact, the majority held that a subordinate is "a decision-maker for Price Waterhouse purposes if he has a substantial influence on the employment decision."

The majority also said that a subordinate lacks substantial influence when the formal decision-maker conducts an independent investigation and exercises independent judgment free of discrimination.

The majority concluded the safety inspector exercised this substantial influence.

'Cat's Paw'

The dissent proposes that where the person harboring the discriminatory animus is neither the formal decision-maker nor the direct supervisor but only in a position to influence an employment decision, the "cat's paw" analysis should apply.

Liability would attach only where the formal decision-maker is a "cat's paw" who merely rubber stamps the discriminatory subordinate's recommendation.

The aggrieved employee should be required to show that the subordinate was the actual decision-maker or the individual "principally responsible" for the decision. The dissent notes that the lead person, who directly interacted with one of the formal decision-makers, independently verified the discrepancies identified by the safety inspector.

As a result, the dissent found that independent investigation and verification removed any taint from the safety inspector's discriminatory remarks.

Direct evidence

Why is defining the safety inspector's role in the termination important? A plaintiff in a discrimination lawsuit may prove her case either by direct evidence or by circumstantial evidence.

A plaintiff who has direct evidence has an easier burden than a plaintiff who must prove her case by circumstantial evidence. Derogatory remarks may constitute direct evidence.

U.S. Supreme Court Justice O'Connor has said, however, that direct evidence does not include "stray remarks in the workplace, ... statements by non-decision-makers, or statements by decision-makers unrelated to the decision or process itself."

In the majority Fourth Circuit opinion, the inspector's remarks were found to constitute direct evidence of sex and age discrimination bearing directly on Hill's termination. Under the direct evidence (Price Waterhouse) framework, the burden then shifts to the employer to show that it would have made the same decision based on purely legitimate reasons.

With direct evidence, the plaintiff need not take the extra step to show that the employer's reasons are pretextual.

The majority further found that Hill met her burden and Lockheed did not. The majority found that all of the factors considered together would enable a reasonable fact finder to find that the safety inspector had written the discrepancy reports because of his bias against Hill's age and sex and, later, in retaliation for her complaints about his comments.

This case is important. It will decide to what extent an employer will be held liable for an employee's discriminatory comments and motives where the employee is not the formal decision-maker in an employment decision.