As we reported on June 21, New York blew the lid off 30 years of sexual harassment and discrimination law by passing legislation that, among other things, bars mandatory arbitration of all claims of discrimination. That earthquake was followed by a substantial aftershock: according to a federal court, that provision of the state law doesn’t square with federal law, which specifically permits arbitration of these claims.

This latest monkey-wrench was thrown into the gears just last week by federal district court Judge Denise Cote when she held that New York’s arbitration law prohibiting arbitration of sexual harassment claims (effective as of July 2018 and reported on by this blog last year) is preempted by the Federal Arbitration Act (“FAA”), and is therefore invalid. This is the first case deciding the merits of this arbitration exclusion. And although Judge Cote didn’t formally rule on the more general, brand-new bar on arbitration of all discrimination claims (harassment or not), she observed in a footnote that the more general bar suffers from the same problem and is probably preempted by federal law, too.

This decision will likely result in a failure-to-launch of the arbitration prohibitions in this latest round of legislation. But for now, here’s the unsettling message for employers navigating the ever-shifting landscape of discrimination law obligations: the new provisions of New York law barring mandatory arbitration of all employment discrimination claims will be struck down, but for the time being, you can’t count on it.


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In Foster v. University of Maryland-Eastern Shore, the Fourth Circuit recently made clear that the McDonnell-Douglas test is alive and well, rejecting a District Court’s decision which had attempted to back away from the traditional test in evaluating a plaintiff’s burden of proof in a Title VII case.

Foster, a university police officer, alleged

Most practitioners know  that Title VII prohibits retaliation against any employee because he or she “opposed any practice made an unlawful employment practice [by the statute].”  Title VII does not define “oppose,” but the Supreme Court has held that it should have its ordinary meaning – “to resist or antagonize . . . ; to

As was discussed on Fox Business News’s Willis Report, Friday’s jury’s verdict in California rejecting Ellen Pao’s claims of gender discrimination and retaliation was undoubtedly a huge victory for the venture capital firm Kleiner Perkins.  However, before employers start popping champagne corks, all companies should consider the lessons learned from this case.

A brief background: Ellen Pao, a junior partner at Kleiner, claimed that she had been harassed and discriminated against while employed there because she is a woman.  Ultimately, she alleged that after she complained about this perceived discrimination, she was then terminated.  She sought many millions of dollars in damages – and potentially multiples of that in punitive damages.

Some of  the 24 days of testimony included tales of workplace romances, alleged sexual advances on business trips, and firm events which excluded women, like a high-end ski trip that was “men only.”  The jury, however, also heard from other witnesses, including women at Kleiner, who said that the firm was a fair place to work, that it was a competitive atmosphere for women  and men alike, and that Ms. Pao was the cause of her own difficulties . Clearly, the jury believed Kleiner’ s version of events, rejecting out of hand all of Ms. Pao’s claims.

Looking at it from afar, many are already saying that – even with a loss – the Pao case has sent some powerful messages through the high tech industry in Silicon Valley.

But, if you are not in the high tech world, you are probably asking, “What does this case have to do with my company?”  The answer is: a great deal.

First, any time there is a high profile harassment, case – whether it results in a plaintiff’s verdict or not – it brings sexual harassment back into the media and the spotlight, raising the specter of a spike in new claims. Some women may see and hear about this case and be tempted to become the next Pao. Although a jury found that Pao could not connect the industry’s male-dominated culture to Kleiner’s failure to promote her or to fire her, the case underscores how a work environment can provide fodder for discrimination claims and shine a spotlight on your culture.

Second, all employers should remember that any victory like this comes at a huge cost for the defendant/employer.  There are first the direct costs of hundreds of thousands (maybe millions) of dollars in legal fees.  There are also indirect costs, like the time taken away from the business by senior management because of the ligation, and then the public “airing” of the company’s dirty laundry in court and in the newspapers.  No company wants either, and depending on your business the reputational harm from a case like this  – win or lose- may be substantial.  In fact, that’s what much of the post-trial press has been about:  Pao lost in court, but her former employer may have lost in reputational terms.

Thus, the real win for a company is to avoid being the next Kleiner Perkins. But how can you do that? 
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On Monday, March 9, one day after we all celebrated International Women’s Day, Ellen Pao, a Harvard-trained lawyer, took the stand in her sexual harassment trial against venture capital firm Kleiner Perkins in California.  There are always two sides to every case, and Kleiner has just begun to cross examine Ms. Pao and offer its defense to her claims, so I do not profess to offer my views on which side is telling the truth. However, even before she testified, the evidence thus far has depicted an environment that – at least from what has been presented – was far from the model of the professional workplace.

First, there were alleged “slights” in the treatment of women at Kleiner. For example, women partners were not invited to an important client dinner with Vice President Al Gore and then were excluded from a company ski trip. One male partner asked two female junior partners to take notes at a meeting.  The firm has explanations for all of these incidents, but women felt that they were being treated as second-class citizens.

Then there are the more significant “events” and incidents. It is undisputed that Ms. Pao had a consensual  affair with a married partner.  When that ended, the same partner appeared at the door of yet another female partner’s hotel room in a bathrobe carrying a wine bottle.  When that woman complained, a partner suggested she “did not want to go public” and that she should be “flattered” by his attention. When Ms. Pao tried to complain about the partner, senior partner John Doerr laughed it off, claiming the partner was a “sex addict.”

Beyond these lurid incidents, the testimony also reveals a deeper possible double standard that the women like Ms. Pao had to endure.  Ms. Pao’s evaluations revealed sometimes contradictory advice and criticism. In some situations they were told to “speak up,” while at other times they were told to be quiet.

When outside counsel (a male law firm partner) was finally brought in to investigate Ms. Pao’s complaint, it is alleged that no one could locate a copy of the firm’s harassment policy. When asked about Ms. Pao, Mr. Doerr told the investigator she had a “female chip on her shoulder.”  Once he made his report, Mr. Doerr did not have time to read it, so it was merely “summarized” for him. There are also now allegations from Ms. Pao that the outside counsel was biased, as he was trying to get hired by Kleiner for an in-house position.

Ultimately, Ms. Pao claims that she was terminated in retaliation for reporting this alleged harassment.

Again, the trial continues and the defense is now cross-examining Ms. Pao and putting some holes in her story, but many of the facts which have come out at the trial are disturbing.

So you may ask yourself what does this case have to do with my company?
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A Title VII plaintiff can prove retaliation using either the direct or indirect method.  Under the direct method a plaintiff must prove (1) that she engaged in a statutorily protected activity; (2) that she was subjected to an adverse employment action; and (3) that there was a causal connection between the two.

In Greengrass v. International Monetary System Ltd., No. 13-2901 (7th Cir. Jan. 12, 2015), the Seventh Circuit Court of Appeals reversed a summary judgment decision of the District Court and determined that an adverse employment action included listing an employee’s name in publically available filings with the Securities and Exchange Commission (“SEC’).

In September 2007, Greengrass made a written complaint to IMS alleging harassment by a manager, and subsequently quit her job in November 2007.  In January 2008 Greengrass filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission (“EEOC”) against IMS alleging sex discrimination,  national origin discrimination, and retaliation.  In July 2008 IMS received correspondence from the EEOC seeking information regarding other sexual harassment claims leveled against the company and, in January 2009, IMS received notices that the EEOC wanted to conduct interviews regarding Greengrass’s charge of discrimination. In September 2009 the EEOC found reasonable cause to believe that Greengrass and other females as a class were subject to harassment because of their sex and national origin, and Greengrass and females, as a class, were constructively discharged because of their sex, national origin, and in retaliation for engaging in protected activity.  In December 2009 the parties resolved Greengrass’s original EEOC charge of discrimination through conciliation, which did not include IMS’s rehiring of Greengrass.

As a publically traded company, IMS is subject to the Securities and Exchange Commission (“SEC’) periodic reporting requirements. Specifically, IMS is required to describe any material legal proceedings, including principal parties, facts giving rise to the proceeding, and the relief sought.  See 17 C.F.R. § 299.103.  IMS did not refer to Greengrass’s charge of discrimination in its 2008 SEC disclosures.  However, for the next SEC filing in April 2009, and less than three months after IMS received notices that the EEOC wanted to conduct interviews (in January 2009), IMS chose to include Greengrass’s EEOC charge of discrimination and to specifically identify her, stating: “On January 20, 2008, Celia Greengrass filed a sexual harassment complaint with the [EEOC].  The claim is still under investigation by the EEOC and IMS believes the claims to be meritless and will vigorously defend itself.”  These SEC disclosures were repeated in a subsequent amendment to the annual report and in a quarterly disclosure in May 2009.

After leaving IMS, Greengrass had difficulties finding and maintaining regular employment, and she attributed this to IMS’s SEC filings that specifically identified her.  Greengrass claimed that a Google search of her name displayed results of IMS’s SEC filings that included her name, and further claimed that a recruiter informed her that she was “unemployable” due to this information.  Thus, in September 2010, Greengrass filed a second EEOC charge of discrimination alleging IMS retaliated against her by identifying her in its SEC filings because of her previous charge of discrimination, and after receiving the EEOC right-to-sue letter, subsequently filed a lawsuit against IMS alleging retaliation under Title VII of the Civil Rights Act, as amended.
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valentinesThe New Jersey Supreme Court last week gave New Jersey employers an early Valentine’s Day present, with a decision that recognizes that an employer may defend a “hostile environment” sexual harassment claim under the New Jersey LAD (Law Against Discrimination) using the “Faragher/Ellerth” defense.  In other words, if the employer can show that it “exercised