The case is Kwan v. The Andalex Group, LLC, decided on December 15. This is a good decision for plaintiffs. But Judge Parker's dissent shows there is much room for disagreement on the Court of Appeals about how to interpret the employer's less-than-clear response to the plaintiff's retaliation claims, and when the jury may find that the employer acted in bad faith in terminating the plaintiff.
Kwan worked as Vice President of Acquisitions for a family-owned real estate management firm.One of her early supervisors said that plaintiff's performance was "very good." A subsequent supervisor complimented plaintiff's work, and she received a performance-based bonus. Nine months after plaintiff got that bonus, she was fired, a day after she left work early. Plaintiff said she had permission to do so; management said she did not. Plaintiff's termination took place three weeks after she told one member of management that she was being discriminated against in respect to salary and bonuses. Another corporate officer fired plaintiff.
Here is why the Court of Appeals (Koeltl [D.J.] and Lohier) reverses summary judgment on the retaliation claim:
1.While someone else made the decision to fire plaintiff, the fact that she complained to a corporate officer about discrimination is enough to show the company knew about her protected activity. Under the "general corporate knowledge" rule, if a corporate officer knows about the complaint, that knowledge is imputed to the corporation as a whole. The Second Circuit has applied "general corporate knowledge" before, but this time it gives a reason why the theory makes sense: "This case is a good illustration of why corporate knowledge is sufficient for purposes of a prima facie case of retaliation. If that were not true, a simple denial by a corporate officer that the officer ever communicated the plaintiff’s complaint, no matter how reasonable the inference of communication, would prevent the plaintiff from satisfying her prima facie case, despite the fact that the prima facie case requires only a de minimis showing."
2. Of course, the employer did articulate a reason why the plaintiff was fired: job performance and business restructuring. Here is where the Court of Appeals untangles the Supreme Court's recent rule that retaliation plaintiffs must show their protected activity was a "but for" cause of the termination. While the new "but for" test creates a higher burden for plaintiffs (the old standard was "motivating factor"), "'but-for' causation does not require proof that retaliation was the only cause of the employer's action, but only that the adverse action would not have occurred in the absence of the retaliatory motive." Moreover, under traditional tort law, "a plaintiff’s injury can have multiple 'but-for' causes, each one of which may be sufficient to support liability." The Court adds, "Requiring proof that a prohibited consideration was a 'but-for' cause of an adverse action does not equate to a burden to show that such consideration was the 'sole' cause." "But-for" causation is difficult to resolve on summary judgment motions. As part of a monster footnote, the Court says:
In this case, the parties have put forward several alleged causes of the plaintiff’s termination: retaliation, unsuitability of skills, poor performance, and inappropriate behavior. The determination of whether retaliation was a “but-for” cause, rather than just a motivating factor, is particularly poorly suited to disposition by summary judgment, because it requires weighing of the disputed facts, rather than a determination that there is no genuine dispute as to any material fact. A jury should eventually determine whether the plaintiff has proved by a preponderance of the evidence that she did in fact complain about discrimination and that she would not have been terminated if she had not complained about discrimination.3. Plaintiff can show that she was fired for pretextual reasons. That allows the jury to find that retaliation was the real reason. In concluding that management offered shifting explanations, the Second Circuit closely scrutinizes management's reasons for plaintiff's termination, starting with a pre-litigation letter that first explained why plaintiff was fired. He said that the business focus had changed and plaintiff (and a non-Asian co-worker) was no longer suitable for the position. The letter also criticized plaintiff's job performance. When plaintiff then filed an EEOC charge, defendant's position statement again mentioned the company's new business focus. The introduction to that statement did not cite poor job performance, and the body of the position statement largely focused on the new business priorities, though it made "brief reference" to her performance deficiencies. As the Second Circuit writes, "any fair reading of Andalex's Position Statement to the EEOC indicates that Andalex claimed that Kwan was fired primarily because its business focus had changed." Then, in deposition, the Chief Financial Officer said that the company's business focus had already changed when plaintiff was hired. He said that plaintiff was not fired because of the new business focus but because of poor job performance. But another member of management testified that "plaintiff's termination was the 'culmination of her poor performance and the fact that ... our business model had begun to change.'" In telling the Court of Appeals why plaintiff was fired, the defendant cites three discrete incidents of poor performance. The problem is that only one of those reasons was cited in the defendant's EEOC position statement.
This is not the first time the Court of Appeals has held that shifting explanations supports a finding of pretext. But it is probably the Court's most thorough application of that principle. In dissent, Judge Parker does not like this reasoning at all. He says that, like non-retaliation cases, the plaintiff must prove the employer's articulated reason was not merely pretext, but pretext for retaliation. The Court of Appeals has never come out and said that pretext-plus is the model for retaliation cases. While Judge Parker promotes that theory, the majority appears to reject it, reasoning that "Andalex's inconsistent and contradictory explanations for the plaintiff's termination, combined with the close temporal proximity between the [protected activity] was a but-for cause of the plaintiff's termination." For straight McDonnell-Douglas discrimination claims we live in a pretext-plus world in the Second Circuit, but the majority reiterates that "A plaintiff may prove that retaliation was a but-for cause of an adverse employment action by demonstrating weaknesses, implausibilities, inconsistencies, or contradictions in the employer’s proffered legitimate, non retaliatory reasons for its action. From such discrepancies, a reasonable juror could conclude that the explanations were a pretext for a prohibited reason." In other words, pretext alone can get you a trial in a retaliation case.
The majority also rejects Judge Parker's analysis of the evidence. He finds that the so-called inconsistent explanations are not that inconsistent, and that the prima facie case is quite thin, relying on the legal fiction of "general corporate knowledge" to prove that the decisionmaker knew about her protected activity, and "there is no evidence that Andalex shifted its position for strategic reasons because, for example, new evidence undermined a prior asserted justification. To the extent its position has shifted at all (and I would find ... that it has not), that shift merely reflected a change in the description it applied to a consistent set of facts." These are not shifting explanations, Judge Parker says, but variations on the same evidentiary themes.
What does this case tell us? If you represent management, you have to get the story straight when the plaintiff sues your client for discrimination or retaliation. Shifting explanations do not look good to a court or to the jury, and they suggest the employer is dissembling in order to avoid liability. If you represent plaintiffs, look out for this kind of pretext, for the same reasons. Maybe some additional depositions of decisionmakers will bring about different reasons for the plaintiff's termination. This case also tells us that, after several decades of constant litigation alleging discrimination and retaliation, the federal courts -- and some of its most distinguished judges -- cannot agree on basic principles governing Title VII.
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