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Class Action Defense Issues-Ledbetter v. Goodyear: Divided Supreme Court Holds Statute Of Limitations For Title VII Pay Discrimination Claims Begins To Run When Discriminatory Act Occurs

Discriminatory Employment Practice Acts that occur Prior to EEOC Charging Period are Time-Barred even if the Discriminatory Acts had “Continuing Effects” During the EEOC Charging Period Supreme Court Holds

In a case that will have substantial impact of Title VII class action lawsuits, a divided Supreme Court held that the limitations period on a Title VII pay discrimination claim begins to run when the discriminatory act occurs. Ledbetter v. Goodyear Tire & Rubber Co., Inc., __ U.S. __, 2007 WL 1528298, *2 (May 29, 2007). Plaintiff had worked for Goodyear for almost 20 years, from 1979 to 1998, and received or was denied raises based on performance evaluations by her supervisors, id., at *3. Plaintiff filed a questionnaire with the Equal Employment Opportunity Commission (EEOC) in March 1998 alleging sex discrimination, and in July filed a formal charge with the EEOC. Id. In November 1998, after taking early retirement, plaintiff filed suit against Goodyear asserting several claims, including a Title VII pay discrimination allegation. Id. The Supreme Court summarized the district court proceedings at page *3 as follows:

The District Court granted summary judgment in favor of Goodyear on several of Ledbetter’s claims, including her Equal Pay Act claim, but allowed others, including her Title VII pay discrimination claim, to proceed to trial. In support of this latter claim, Ledbetter introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment. Toward the end of her time with Goodyear, she was being paid significantly less than any of her male colleagues. Goodyear maintained that the evaluations had been nondiscriminatory, but the jury found for Ledbetter and awarded her backpay and damages.

Defense attorneys appealed, arguing that plaintiff’s Title VII pay discrimination claim was time barred as to any acts prior to September 26, 1997 – i.e., as to all pay decisions made more than 180 days before plaintiff filed her questionnaire with the EEOC – and further arguing that no discriminatory pay decisions were made after that September date. Ledbetter, at *3. The Eleventh Circuit agreed with defense attorneys, holding that a Title VII pay discrimination claim must be based on a pay decision made during the EEOC charging period. Id. (citing 421 F.3d 1169, 1182-83 (11th Cir. 2005)). The Circuit Court reversed the judgment, concluding that “there was insufficient evidence to prove that Goodyear had acted with discriminatory intent in making the only two pay decisions that occurred within that time span.” Id. Plaintiff petitioned the Supreme Court for a writ of certiorari not as to the sufficiency of the evidence but, rather, limited to “Whether and under what circumstances a plaintiff may bring an action under Title VII of the Civil Rights Act of 1964 alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period, but is the result of intentionally discriminatory pay decisions that occurred outside the limitations period.” Id. Recognizing a split among circuit courts on this issue, the Supreme Court granted certiorari.

The Supreme Court began by summarizing at page *4 the statutory framework implicated by the case. Title VII of the Civil Rights Act of 1964 prohibits as an “unlawful employment practice” sex discrimination at the workplace. 42 U.S.C. § 2000e-2(a)(1). A challenge to such an employment practice must be initiated by filing a charge with the EEOC within 180 or 300 days (depending on the State) “after the alleged unlawful employment practice occurred,” id., § 2000e-5(e)(1), or the employee is precluded from challenging the employment practice in court, id., § 2000e-5(f)(1).

In determining whether an EEOC charge was filed timely, courts look to “the specific employment practice that is at issue.” Ledbetter, at *4. In this case, plaintiff argued that the Court should look to the paychecks she received during the 180-day period preceding the filing of her EEOC questionnaire because each “was a separate act of discrimination,” or, alternatively, “to the 1998 decision denying her a raise” because “this decision unlawfully “‘carried forward intentionally discriminatory disparities from prior years.’” Id. The Supreme Court rejected each theory “because they would require us in effect to jettison the defining element of the legal claim on which her Title VII recovery was based.” Id. This was true because the foundation of plaintiff’s damage claim was the she would have been paid more “if she had been evaluated in a nondiscriminatory manner prior to the EEOC charging period” and because the 1998 pay raise decision “’carried forward’ the effects of prior, uncharged discrimination decisions.” Id. (italics in original).

The Supreme Court held that precedent “squarely foreclosed” plaintiff’s argument that “it is sufficient that discriminatory acts that occurred prior to the charging period had continuing effects during that period.” Ledbetter, at *4. After analyzing its prior opinions, see id., at *4-*6, the High Court concluded that plaintiff’s arguments – “that the paychecks that she received during the charging period and the 1998 raise denial each violated Title VI and triggered a new EEOC charging period” – were irreconcilable with decisional law. Id., at *6. Moreover, plaintiff’s attempt to “circumvent the need to prove discriminatory intent during the charging period” would undermine existing case law, id., at *7. The Court explained at page *7:

Ledbetter’s attempt to take the intent associated with the prior pay decisions and shift it to the 1998 pay decision is unsound. It would shift intent from one act (the act that consummates the discriminatory employment practice) to a later act that was not performed with bias or discriminatory motive. The effect of this shift would be to impose liability in the absence of the requisite intent.

Accordingly, the Supreme Court affirmed the decision of the Eleventh Circuit. Ledbetter, at *14.

This decision, however, came on a 5-4 vote. Justice Ginsburg, joined by Justices Stevens, Souter and Breyer, dissented. See Ledbetter, at *14-*24. The essence of the dissent is that “pay discrimination” is fundamentally different from other acts of discrimination, id., at *15, and that such claims were akin to “hostile work environment” claims, which raise continuing violation arguments, id., at *17.

NOTE: The parties assumed that the March 1998 filing of the EEOC questionnaire was sufficient to commence the charging period even though the Title VII pay discrimination claim was not presented to the EEOC until the July 1998 formal charge; the Supreme Court did not address whether this assumption was correct as it was unnecessary to the outcome of the case. Ledbetter, at *3 n.1.

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