Monday, July 27, 2009

Passing the ball to the State Court of Appeals on the City Human Rights Law

Even the worst sexual harassment cannot get you a lawsuit against your employer if management promptly took care of the problem. If a supervisor committed the harassment, the employer may be automatically liable, but there's a catch: under two Supreme Court rulings from 1998, the employer can win the case if the employee does not reasonably take advantage of in-house policies which encourage timely complaints. The employer also wins if it promptly investigates the allegations and punishes the harasser. We call that the Faragher defense.

That framework for resolving sexual harassment cases applies under Title VII of the Civil Rights Act of 1964, the primary employment discrimination statute under federal law. The New York State Human Rights Law uses the same framework. But what about the New York City Human Rights Law? That's what the Second Circuit is trying to find out.

The case is Zakrzewska v. The New School, decided on July 27. The City Human Rights Law (technically, New York City Administrative Code Section 8-107) offers more remedies for sexual harassment than federal or state law. Unlike federal and state law, it provides for punitive damages. Unlike state law, it provides for attorneys' fees if the plaintiff wins the case. An argument can also be made that the Faragher defense does not apply under the city law.

The U.S. Court of Appeals heard that argument on June 16, 2009. The plaintiffs did not sue under Title VII. They brought the case in federal court because the parties are citizens of different states and the case is valued in excess of $75,000. In an interesting footnote, the Second Circuit observes that "Ordinarily, Title VII provides the cause of action for workplace harassment lawsuits brought in federal court. However, as the District Court observed, the instant case 'is representative of an increasing volume of employment discrimination cases that are brought [in federal court] pursuant to one or both local New York anti-discrimination laws—the New York State Human Rights Law (“NYSHRL”) and the NYCHRL—rather than Title VII.'"

But enough trivia. The trial court decided that the City Human Rights Law does not provide for a Faragher defense. In other words, the plaintiff wins if a manager sexually harassed her. But the trial court also decided this issue is so important that the case should be appealed to the Second Circuit right away (cases normally can't be appealed until all issues are decided, usually after trial). Now the ball is in the Second Circuit's hands. The Court of Appeals recognizes this issue is quite important, since New York City is an enormous municipality with zillions of workers who are covered under this civil rights statute. Without the Faragher defense, the employer loses the case so long as a manager or supervisor harassed the employee, so even a well-intentioned company is liable.

The Second Circuit doesn't like to definitively rule on unresolved state law principles. The process is for the U.S. Court of Appeals to certify these issues to the New York Court of Appeals which presumably is better equipped to figure out the answer. The last thing anyone wants is for the Second Circuit to interpret an important state law differently than would the state courts. As the Second Circuit puts it: "Although a decision from our Court is binding only within in the federal courts of our Circuit, our interpretation of the New York City Administrative Code would undoubtedly have some impact on employment discrimination claims pending in the state courts as well. We therefore proceed with caution and deference to the New York Court of Appeals." So now the ball has been passed to the New York Court of Appeals.

While the mid-level state appeals court with jurisdiction over New York City has already decided that the Faragher affirmative defense does not apply to the City Human Rights Law (Williams v. New York City Hous. Auth., 872 N.Y.S.2d 27, 32 (1st Dept. 2009)), the Appellate Division is not the State Court of Appeals. The State Court of Appeals has discretion whether to take the Second Circuit up on its offer. If the State Court of Appeals decides not to resolve this issue, than the Second Circuit has to resolve it. My guess is the State Court of Appeals will accept this appeal.

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