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Employer’s Revenge Lawsuits Are Not Considered Retaliation

If you believe your employer has discriminated against you because of a protected trait, such as a disability, you’re entitled to complain and report the discrimination. You can probably sue your employer too.

What if your employer gets mad at you about your lawsuit or your complaint to human resources and fires you? You now have a legal claim for unlawful retaliation.

But what if your employer decides to get back at you by suing you on some unrelated legal matter after you’re no longer an employee? Your employer may claim to have a legitimate lawsuit against you, but both of you know that’s a flat-out lie. Do you still have a retaliation claim? Probably you do in most states, but not in Texas, as Korrie Reed recently learned.

Equal Employment Opportunity Commission v. Carolina Creek Christian Camp

Korrie Reed worked for Carolina Creek Christian Camp (CCCC), a religious camp offering summer retreats and children’s camp activities. Before she became pregnant, Reed worked as CCCC’s registrar.

However, when Reed developed gestational diabetes, CCCC demoted her to the assistant registrar position. CCCC explained that the demotion was necessary due to Reed’s “medical condition.”

After having her child and returning from maternity leave, Reed was moved to another position, not restored to her previous registrar position. After Reed complained to CCCC that she felt these transfers constituted a demotion and were therefore a form of illegal discrimination, she was fired.

Reed filed a complaint with the Equal Employment Opportunity Commission (EEOC). In response, CCCC filed a lawsuit against Reed in Texas state court, claiming that Reed had quit and was now defaming CCCC with her EEOC complaint.

CCCC withdrew its case after the EEOC advised that the lawsuit constituted illegal retaliation. A few months later, CCCC filed another lawsuit against Reed, this time arguing that she improperly received state unemployment benefits.

When Reed and CCCC could not reach a settlement, the EEOC sued CCCC on Reed’s behalf, claiming sex discrimination, disability discrimination, and retaliation under both Title VII of the Civil Rights Act of 1964 (Title VII) and the Americans with Disabilities Act of 1990 (ADA).

Early in the lawsuit, CCCC asked the District Court for the Southern District of Texas to dismiss Reed’s retaliation claim on the basis that separate lawsuits filed against a plaintiff weren’t retaliatory under Title VII. In a curious decision, the district court agreed.

Title VII and Retaliation

Title VII outlaws discrimination on the basis of national origin, race, color, religion, and sex. Title VII also prohibits retaliation. Retaliation is defined as an employer’s “materially adverse action” against an employee because the employee exercised a protected right.

In Reed’s case, she claimed that CCCC’s lawsuits against her constituted a materially adverse action, and her protected right was complaining about the original discrimination and filing a complaint with the EEOC. The big question in Reed’s lawsuit against CCCC was whether the two lawsuits constituted a materially adverse action.

Courts typically define a materially adverse action as something an employer does that might convince an employee not to exercise a protected right. Typical materially adverse employment actions can include the following:

  • a negative performance review,
  • a transfer to a less desirable position,
  • a demotion,
  • a pay cut, or
  • termination of employment.

However, filing a lawsuit is not a typical retaliatory action taken by an employer. Most federal courts, including those in Virginia, have concluded that a lawsuit filed by an employer to “get back” at an employee will be considered retaliation under Title VII. But there are two caveats to this consensus.

First is whether the lawsuit is blatantly frivolous. If an employer has no reasonable basis for filing a lawsuit against an employee, the courts generally agree that retaliation has occurred. Even where the lawsuit is not obviously frivolous, a smaller number of courts will still conclude that filing a lawsuit can be considered retaliation.

The second caveat deals with when the lawsuit is filed. If it’s filed when the plaintiff is still an employee, many courts conclude that this too is unlawful retaliation. But if the lawsuit is filed after the plaintiff is no longer an employee, a minority of courts will conclude that this is not a materially adverse action and therefore not retaliation under Title VII. This is the legal stance that the United States Court of Appeals for the Fifth Circuit has taken.

Since Reed was suing in a district court within the jurisdiction of the Fifth Circuit, the district court was bound by the Fifth Circuit’s rule of law, even though many other federal courts disagree with it. Even more frustrating, the Supreme Court of the United States has essentially “overruled” the Fifth Circuit. Yet due to certain legal technicalities, the Supreme Court’s decision does not help Reed’s case.

Previous Case Rulings

In Burlington Northern & Santa Fe Railway Company v. White, a labor law case from 2006, the Supreme Court established the legal standard for what constitutes a materially adverse action. There, the court stated that a materially adverse action is something that might “have dissuaded a reasonable worker from making or supporting a charge of discrimination.”

It’s fair to conclude that if Reed knew she would be sued not once, but twice, by CCCC after she had already been fired, she might have been persuaded not to complain about the illegal discrimination. Most likely, the vast majority of workers would feel that way. What judge or jury would conclude otherwise? Apparently, those in Texas (and Mississippi and Louisiana, the two other states under the jurisdiction of the Fifth Circuit).

However, in Hernandez v. Crawford Building Materials Company, the Fifth Circuit concluded that there was no materially adverse action, and therefore no retaliation under Title VII, in a case where the plaintiff was no longer an employee when his former employer filed a lawsuit against him.

How the Hernandez Decision Affects Reed

Based on this Hernandez decision, the district court in Reed’s lawsuit found that CCCC’s lawsuits against Reed did not qualify as materially adverse actions. Therefore, the district court agreed with CCCC that it could not have retaliated against her.

But this seems to contradict the Supreme Court in White. As that case found, practically any judge or jury would agree that an employer’s lawsuit filed against its former employee would persuade that employee not to complain about discrimination. What’s going on here?

To answer that, we need to understand how court opinions work. Basically, a court opinion has two parts. It has a conclusion and a rationale for how it reached that conclusion. When a higher court’s decision only undermines the lower court’s reasoning, but not its eventual conclusion, the conclusion can still be considered good law. It’s a bit more complicated than that, but that’s the general idea.

Here, the Supreme Court’s decision in White only attacked the Fifth’s Circuit’s reasoning in Hernandez. It didn’t contradict the Fifth Circuit’s conclusion that a lawsuit filed against a former employee was not a materially adverse action and therefore not retaliation. As a result, the judge in Reed’s case could get away with dismissing Reed’s retaliation claim without contradicting the Supreme Court.

You don’t need to be a lawyer to understand that from a common sense perspective, the judge in Reed’s case is wrong. But to a lawyer, the judge in Reed’s case can still be legally right.

If you’d like to learn more about retaliation in general, you can read the EEOC’s “Questions and Answers: Enforcement Guidance on Retaliation and Related Issues.”

Summing It Up

  • Title VII prohibits employers from retaliating against employees for complaining about discrimination prohibited by Title VII, including sex discrimination.
  • Retaliation occurs when an employer takes a materially adverse action against its employee to punish the employee for exercising his or her protected rights.
  • According to the Supreme Court of the United States, a materially adverse action is something that might persuade an employee not to complain about illegal discrimination.
  • Most federal courts (except those located in Texas, Louisiana, and Mississippi) conclude that an employer filing a lawsuit against its current or former employee to get revenge for the employee’s complaint about discrimination constitutes a materially adverse action.

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