A split decision by the Tennessee Supreme Court in an employment discrimination case looks set to make life more expensive for companies sued by current or former employees — but also opens up a legal avenue that will make it harder for plaintiffs to make their cases stick in court.
Ruling on the case of Gary Gossett and Tractor Supply Co., Supreme Court judges this week upheld a Court of Appeals decision to deny the retailer’s motion for summary judgment – a move that means Gossett’s claim related to his 2003 firing will be heard in Davidson County Chancery Court. But two of the five judges on the bench disagreed with the majority’s decision to cast aside an established federal framework for handling summary judgment motions in employment cases.
Large parts of the opinion by the majority – led by Chief Justice Janice Holder – and the partial dissent authored by Justice Cornelia Clark and joined by Justice William Koch discuss the so-called McDonnell Douglas framework, which has been used across the country since the 1970s as a standard during summary judgment deliberations in employment cases. The McDonnell Douglas case established that companies must show that their actions were not discriminatory or retaliatory and were instead driven by legitimate business reasons.
In its Gossett opinion, the majority has written that McDonnell Douglas skews courts’ decision frameworks in favor of the employer, which can show a legitimate reason for a firing without actually having to refute workers’ allegations. Clark and Koch argue that instead of tossing overboard McDonnell Douglas — despite its “potential flaws” — the state’s top court “could have re-educated our lower courts on the proper application of the framework in the summary judgment context.”
Clark wrote that the majority opinion means the Supreme Court “has foreclosed perhaps the most common argument” companies use when seeking summary judgment. That, she added, will create confusion for lower-court judges and push to trial a lot more employment discrimination cases, which are typically more lengthy and expensive than other civil cases.
“An employer advancing a legitimate reason for its personnel action may now fail at the summary judgment stage even if the employee has no evidence of pretext,” Clark wrote. “This sweeping change in our law will make it needlessly more difficult for defendants to obtain summary judgment.”
Bob Boston, a partner at Waller Lansden Dortch & Davis, said the Gossett ruling “takes away the realistic likelihood of summary judgment” in employment cases and means business should expect to pay up when they’re sued. The costs of trial preparation and actual trial work will almost triple the bill for most cases.
For that reason, the ruling has drawn vocal criticism and calls for legislative relief during the next General Assembly session. But Boston said he doesn’t expect state lawmakers to intervene on behalf of employers. He pointed out that the court’s reasoning applies only to retaliatory cases and in state courts, limiting its potential impact.
“It’s a huge departure from decades of law that people understand,” Boston said. “But I don’t think [McDonnell Douglas] comes back […] and I don’t think it will become a national case.”
A silver lining?
The Gossett case builds in part on a 2008 state Supreme Court decision, Hannan v. Alltel Publishing Co., that stipulated that, to obtain summary judgment, an employer also has to “affirmatively negate an essential element” of a worker’s claims – in essence, prove a negative – or show that the employee cannot prove the essential element at trial.
Combined, the Hannan and Gossett rulings suggest a number of Supreme Court judges “want to make summary judgment a much less important legal procedure,” said Zan Blue, managing partner at Constangy Brooks & Smith. Echoing Clark, he said companies will end up spending more time in court after being sued by their employees – although he also pointed out the companies win about 60 percent employment discrimination cases.
But, Blue added, discarding McDonnell Douglas also has the perhaps unintended consequence of putting aside a presumption first stated more than 30 years ago “that the employer had an unlawful motive absent proof to the contrary.”
“The court has stripped away that assumption,” Blue said. “That’s not necessarily a bad thing.”
That means plaintiffs must now work harder to prove that the companies they’re suing had unlawful motives and used the employees’ complaints as reason for firing them. In essence, it restores some elements of the ‘put up or shut up’ approach a number of courts have said employers can’t take when facing fired workers.
The upshot for businesses? Yes, it will be harder to have discrimination and retaliation complaints summarily dismissed. Yes, more cases going to trial will cost more money. But both Boston and Blue said that the ruling also makes it clearer than ever that companies need to mind their Ps and Qs when planning to fire workers.
Properly investigating complaints and documenting legitimate actions and decisions taken prior to a firing will put managers on far more solid ground once cases make it in front of a jury. Consider it an ounce of diligence being worth a pound of liability.
“Let’s streamline the legal process and get on to the jury,” Blue said. “They usually do the right thing.”
- ALEX B FRUIN INHERITANCE TRUST; CANDACE F STEFANSIC INHERITANCE TRUST; CANDANCE F STEFANSIC INHERITANCE TRUST; FRUIN, ALEX B TRUSTEE; FRUIN ALEX B INHERITANCE TRUST; STEFANSIC, CANDACE F TRUSTEE; STEFANSIC CANDACE F INHERITANCE TRUST; STEFANSIC CANDANCE F INHERITANCE TRUST
- ROSS, BRIDGETT D
- COOKE, ETHEN LANYARD TRUSTEE; COOKE, ETHEN LEWIS ESTATE
- JACOBS, JESSICA ALEXANDRA; JACOBS, ERIKA BESS