2nd Circuit demolishes key DOJ argument against workplace protection for gays

(Reuters) - The en banc 2nd U.S. Circuit Court of Appeals stood up against workplace prejudice on Monday, ruling in Zarda v. Altitude Express that the Civil Rights Act bars discrimination based on employees’ sexual orientation. The 2nd Circuit’s decision deepens an existing circuit split on whether Title VII of the Civil Rights Act, which bars on sex discrimination, encompasses discrimination based on sexual orientation. The 10 judges in the 2nd Circuit majority in Zarda lined up with the en banc 7th Circuit in 2017’s Hively v. Ivy Tech Community College - and against a divided three-judge panel at the 11th Circuit, which said in 2017’s Evans v. Georgia Regional Hospital that Title VII does not protect gay and lesbian workers. Three judges dissented.

There’s no guarantee when, if ever, the U.S. Supreme Court will step in. The justices denied a petition last year for review of the 11th Circuit’s decision, which had a weird procedural defect because the hospital insisted it was never properly served so the appellate courts didn’t have jurisdiction. The community college defendant in the 7th Circuit case didn’t petition the Supreme Court, and it’s not clear whether Altitude Express, a skydiving company accused of firing Donald Zarda after it learned he was gay, will ask the justices to take its case. Altitude counsel Saul Zabell of Zabell & Associates told my Reuters colleague Dan Wiessner that he actually agreed with the 2nd Circuit on the scope of Title VII protection for gay and lesbian employees, but that his client didn’t discriminate against Zarda based on his sexual orientation.

But if the justices eventually have to decide whether discrimination against gay and lesbian employees is a form of sex discrimination – and therefore a violation of Title VII protections – the 2nd Circuit’s decision will be important not just for its affirmation that sex discrimination encompasses discrimination against gays and lesbians but also for its demolition of the lead argument to the contrary. As I’ve said, the 7th Circuit’s Hively ruling, which was, in turn, based on the Equal Employment Opportunity Commission’s 2015 ruling in Foxx v. Baldwin, shrewdly used Supreme Court precedent to show why workplace bias against gays and lesbians is a form of sex discrimination. The 2nd Circuit in Zarda explained why Hively critics, led by the U.S. Justice Department, are promoting a misguided framework.

The critics’ argument, as the Justice Department laid it out in an amicus brief in the Zarda case is that workplace sex discrimination is defined by disparate treatment of male and female employees. If an employer, for instance, pays a woman less than a man with the same experience, that’s discrimination. The test, according to this theory, is to compare workers who are the same in every way except for their gender. And to figure out if sex discrimination encompasses prejudice against gays and lesbians, this theory goes, you don’t ask whether employers treat lesbian employees differently than straight women and gay employees different than straight men but whether employers treats gays and lesbians similarly.

In other words, according to proponents of this theory, discrimination based on sexual orientation is only sex discrimination if an employer is biased against gays or lesbians – but not if it’s equally inhospitable to men and women who are attracted to people of the same sex.

“The but-for ‘comparison can’t do its job of ruling in sex discrimination as the actual reason for the employer’s decision … if we’re not scrupulous about holding everything constant except the plaintiff’s sex,’” the Justice Department wrote in its Zarda amicus brief, quoting 7th Circuit Judge Diane Sykes’ dissent in the Hively case. “The EEOC and the 7th Circuit majority fail to hold everything else constant because their hypothetical changes both the employee’s sex (from male to female) and his sexual orientation (from gay to straight). The proper comparison would be to change the employee’s sex (from male to female) but to keep the sexual orientation constant (as gay).”

The 2nd Circuit majority in Zarda said the government is pushing the wrong comparison: The correct test doesn’t compare gay men to lesbians but rather considers disparate treatment between lesbian employees and heterosexual male employees; or gay men to heterosexual women.

The court looked at the Supreme Court’s 1978 decision in City of Los Angeles v. Manhart, which struck down a city water department rule requiring female employees to contribute more than men to the employee pension fund because women live longer. The justices concluded that life expectancy was a proxy for sex, so the rule violated Title VII. Similarly, in 1989’s Price Waterhouse v. Hopkins the Supreme Court used a comparison test to conclude Title VII protects employees who don’t conform to gender stereotypes, in the case of a female auditor who claimed she didn’t make partner because she was as brusque and aggressive as male counterparts.

Based on that precedent, the 2nd Circuit said, the question to be answered in the comparison test isn’t whether employers treat gays and lesbians the same way but whether sexual orientation is a function of sex, like life expectancy or “ladylike” behavior. Using the test advocated by the government (and Judge Sykes in her Hively dissent) “would not illustrate whether a particular stereotype is sex dependent but only whether the employer discriminates against gender non‐conformity in only one gender,” the 2nd Circuit said. “Instead, just as Price Waterhouse compared a gender non‐conforming woman to a gender conforming man, both of whom were aggressive and did not wear makeup or jewelry, the Hively court properly determined that sexual orientation is sex dependent by comparing a woman and a man with two different sexual orientations, both of whom were attracted to women.”

The law, according to the 2nd Circuit, leads to an inescapable destination: “To determine whether a trait operates as a proxy for sex, we ask whether the employee would have been treated differently ‘but for’ his or her sex,” wrote Chief Judge Robert Katzmann for the majority. “In the context of sexual orientation, a woman who is subject to an adverse employment action because she is attracted to women would have been treated differently if she had been a man who was attracted to women. We can therefore conclude that sexual orientation is a function of sex and, by extension, sexual orientation discrimination is a subset of sex discrimination.”

The Justice Department, as you probably recall, muscled into the Zarda case without an invitation. The 2nd Circuit had asked the EEOC to submit an amicus brief in the private dispute. The EEOC, operating at the time with a Democratic majority, sides with Zarda and its own precedent from the 2015 Baldwin case. The Justice Department broke with tradition to assert a competing argument in a case in which the EEOC appeared as an amicus.

DOJ’s reward for meddling is the 2nd Circuit’s very firm rejection of its lead argument. That doesn’t mean, of course, that the government can’t or won’t continue to push its comparison test theory in other circuits or, if it comes to that, the Supreme Court. Justice, moreover, has other arguments for why the prohibition on sex discrimination doesn’t cover gay and lesbian employees, most notably Congress’s refusal to shield gays and lesbians against prejudice in the workplace.

As Judge Gerard Lynch wrote Monday in the lead dissent to the 2nd Circuit’s majority opinion in Zarda, it would sure be great if Congress were suddenly to pass such a law. (He said he was speaking as a private citizen; as a judge, he said, he was constrained to conclude that Title VII, as written, “did not, and does not, prohibit discrimination against people because of their sexual orientation.”) But absent congressional action, it’s up to the courts to decide the scope of the law – and Title VII’s aegis is expanding.

“Legal doctrine evolves,” the Zarda majority said. “Applying (Supreme Court) precedents to sexual orientation discrimination, it is clear that there is ‘no justification in the statutory language ... for a categorical rule excluding’ such claims from the reach of Title VII.”