Decisionmaker Need Not Have Knowledge of an Individual's Protected Conduct or Be Acting Upon Orders of Someone with Knowledge; Now, It Is Sufficient for the Decisionmaker to Be Acting Pursuant to Encouragement by a Superior with Knowledge

On August 4, 2010, the United States Court of Appeals for the Second Circuit considered in the context of a challenge to a jury charge, whether an individual asserting a retaliation claim could still establish the causation element where the party imposing the adverse employment action neither knew that the plaintiff engaged in protected conduct nor necessarily acted, explicitly or implicitly, upon the orders of a superior who did have knowledge of the plaintiff’s conduct. Henry v. Wyeth Pharmaceuticals, Inc., 2010 U.S. App. LEXIS 16109 (2d Cir. Aug. 4, 2010). In Henry, the Second Circuit answered that question in the affirmative, ruling that a causal connection is sufficiently demonstrated if the decisionmaker of the employment action, though ignorant of the protected activity, is acting pursuant to “encouragement” by a superior (who has the requisite knowledge) to disfavor the plaintiff.

The Facts 

In 1992, Howard Henry, an African-American, began working as a temporary employee for the predecessor of Wyeth Pharmaceuticals, Inc. (“Wyeth”) in Pearl River, New York. A year later, Henry obtained a full-time position as a Chemist and received two promotions thereafter. 

In approximately 2001, his upward progress stalled. In December of that year, Henry applied for the position of Project Engineer, for which the hiring manager selected a white female. In July 2002, Henry applied for another promotion. The hiring manager for that position chose a white male for the job. 

In September 2003, Henry received a mid-year performance review which was lower than the two previous annual evaluations he had received. In that mid-year review, Henry had also received more extensive criticism than he had in the past. In November 2003, Henry applied for another position at Wyeth; this time, the job was awarded to a Hispanic male. 

Around the same time that Henry had applied for that last position, Wyeth’s Pearl River facility underwent a corporate restructuring, as a result of which, Henry was reassigned to a different position and to a new manager. Because the reassignment did not affect Henry’s salary or grade, the company considered it a lateral move, although Henry considered it a demotion because the new position required a lower educational degree and involved tasks that he believed would not be relevant for future promotions. At the same time, Henry received his year-end review. He again received a rating of “three” (out of “five”), which was lower than the rating he had received in past annual reviews. 

In January 2004, Henry complained to management about the reassignment and the review and for the first time, raised the issue of discrimination. An investigation found no evidence of discrimination, but Henry was granted a reprieve from his reassignment and was allowed to remain in his old position. However, Henry maintained that in the wake of his complaints, his work environment changed. For example, Henry claimed that his new supervisor at Wyeth gave him additional duties, wrote him up for absences that he had cleared in advance, and “started to develop a paper trail,” all of which were part of a campaign to “manufacture pretenses for future adverse employment actions.” 

On September 24, 2004, Henry filed a charge of discrimination with the New York State Division of Human Rights and the U.S. Equal Employment Opportunity Commission (“EEOC”). A week later, Henry applied for and was denied another promotion; this one was awarded to a white male. He again received a rating of “three” on his year-end performance review. On June 24, 2005 – three days after the EEOC issued a “right to sue” letter – Wyeth placed Henry on a performance improvement plan to help bring his performance in line with company expectations. The two managers who advised Henry of this action were unaware that he had complained about discrimination. Henry successfully completed the performance improvement plan, but shortly thereafter, took a medical leave of absence and never returned to work. 

The District Court

On September 19, 2005, Henry filed a lawsuit in the United States District Court for the Southern District of New York, alleging Wyeth violated Title VII and the New York State Human Rights Law by denying him promotions, demoting him and retaliating against him. The Complaint also named three individual defendants and alleged that these individuals aided and abetted violations of the state anti-discrimination statute. 

After some of Henry’s claims were dismissed on summary judgment, the case proceeded to trial on the remaining discrimination and retaliation counts. After the jury was charged on the law of retaliation, defense counsel requested a supplemental instruction involving the causation element of a prima facie case of retaliation. That element, counsel contended, required Henry to show that the individuals responsible for the retaliatory action “if it wasn’t imposed by corporate had knowledge of the protected activity.” Henry’s counsel argued that he was not required to demonstrate anything more than general corporate knowledge. The trial judge agreed with defense counsel, and gave a supplemental jury instruction to the effect that the person responsible for making the employment decision knew that the discrimination complaint had been filed. When the jury sought further clarification regarding one of the retaliation claims, the trial court reiterated that Henry must prove that the individual decisionmakers knew that he had filed a discrimination complaint. Henry’s counsel renewed his objection to that charge. The jury returned a verdict for defendants on all counts. 

The Second Circuit

On appeal to the Second Circuit Court of Appeals, Henry alleged that the trial court made multiple errors, including the handling of the jury instruction on his retaliation claim. The Court of Appeals agreed that the trial court had erred in giving that instruction. In so finding, the Court relied upon a decision it had issued ten years earlier in Gordon v. New York City Board of Education, 232 F.3d 111, 117 (2d Cir. 2000), where it had rejected the argument that in order to satisfy the causation requirement, a plaintiff had to show that the persons who carried out the adverse action knew of the protected activity. The Gordon Court, 232 F.3d at 117, held that a jury may:

find retaliation even if the agent denies direct knowledge of a plaintiff’s protected activities, for example, so long as the jury finds that the circumstances evidence knowledge of the protected activities or the jury concludes that an agent is acting explicitly or implicit[ly] upon the orders of a superior who has the requisite knowledge.

In Wyeth, the Second Circuit extended the Gordon holding one step further by declaring that it was not necessary that the supervisor with knowledge of the plaintiff’s protected activities ordered the agent to impose the adverse employment action. Rather, that causal connection element could be established if the corporate agent who is unaware of plaintiff’s protected conduct acts pursuant to “encouragement” by a superior (who has knowledge) to disfavor the plaintiff. 

Because Henry had presented evidence at trial – albeit not overwhelming evidence – sufficient to allow a jury to find causation under this standard, the Second Circuit concluded the trial court’s erroneous jury instruction was not harmless and may have influenced the jury’s verdict. Accordingly, the Court of Appeals vacated the portion of the judgment that pertained to Henry’s retaliation claims.

Comparison to the Causation Requirement in the Third Circuit and New Jersey

Unlike the Second Circuit, the courts in New Jersey have, to date, adopted a different approach to retaliation claims – an approach that is more favorable to employers. The New Jersey federal courts have held that in order to establish a prima facie case of retaliation, the plaintiff must be able to show that the decisionmaker knew of the protected conduct. See, e.g., Dooley v. Roche Lab Inc., 275 Fed. Appx. 162, 165 (3d Cir. 2008) (plaintiff failed to make prima facie case because she did not point “to any evidence that the decisionmakers…were aware of her internal complaints (and thus that there could be a causal link between the complaints and those decisions)”) (emphasis in original); Bailey v. Commerce Nat’l Ins. Servs., Inc., 267 Fed. Appx. 167, 170 (3d Cir. 2008) (summary judgment correctly entered because individual who decided to terminate plaintiff was unaware of protected action); Hargrave v. County of Atlantic, 262 F. Supp. 2d 393, 423 n.13 (D.N.J. 2003) (noting Third Circuit has observed that “a plaintiff cannot make out a prima facie showing of causation without some evidence that the decision-makers responsible for the alleged adverse employment action were aware of the plaintiff’s protected activity”). 

The state courts in New Jersey follow a similar rule. See, e.g., Erickson v. Marsh & McLennan Co., 117 N.J. 539, 560 (1990) (“The central element of a retaliatory discharge claim under [the] LAD is that the plaintiff be ‘engaged in a protected activity, which is known by the alleged retaliator.’”) (citation omitted); Gerety v. Atlantic City Hilton Casino Resort, 2008 N.J. Super. Unpub. LEXIS 2807 (App. Div. Feb. 29, 2008) (“The first element of the retaliation claim…requires that the person authorized to make the employment decision knew about the protected activity.”); Young v. Hobart West Group, 385 N.J. Super. 448, 466 (App. Div. 2005) (because neither of individuals involved in plaintiff’s termination had any knowledge of her complaints, plaintiff could not establish that employer terminated her in response to her engaging in protected activity). 

Thus, unlike the Second Circuit, the federal and state courts in New Jersey, at least as of the present, require a plaintiff pursuing a retaliation claim to establish that the decisionmaker had knowledge of his or her protected activity. Absent that knowledge, a causal connection should not exist where an agent merely acted pursuant to orders or encouragement of a supervisor with knowledge of the protected conduct. 

H.R. Tip of the Month – The Many Benefits of Documenting Performance Problems

If an employee engages in actions that violate company policy, or has a performance deficiency or attendance problem, it is important for the employer to counsel the employee about the conduct at issue. Ideally, the individual should be alerted to the problem at the time it occurs, or as soon thereafter as possible. It is also a good practice for the employer to document the issue in writing and advise the employee that additional instances of misconduct could lead to further disciplinary action, up to and including termination. The employer should also consider asking the employee to sign the document. Because the employee may believe that his or her signature reflects an admission that he or she engaged in the misconduct or policy violation, the employee may refuse to sign it. That refusal, however, can be noted on the document itself. 

The purpose of documenting performance problems, especially when those problems first become known to the employer, is not necessarily to build a “paper trail” justifying a termination decision. Indeed, discharge may not even be something on the employer’s radar screen at that stage. Rather, in the first instance, the goal may (and perhaps should) be to improve the employee’s behavior and eliminate the issue on a going-forward basis. The employee may want to succeed in the job – an objective shared by the employer – but simply may need some guidance if he or she is not performing to expectations. 

In the event the employee is terminated, and the employer is threatened with a lawsuit, a thorough record of documented performance deficiencies may cause an attorney to think twice before filing a lawsuit. If a lawsuit is already filed, the documents can have other benefits. For example, they could help substantiate the employer’s legitimate, non-discriminatory reason for taking the adverse action. Second, they could undermine any claim by the former employee that he or she did not know that the company was unhappy with his or her performance. Third, documents drafted contemporaneously with the conduct at issue may be helpful if the manager who delivered the counseling sessions is no longer employed by the company or if that manager’s memory has faded. Fourth, the documents may help the employer’s “image” in the eyes of the jury. Though fairness may not be a legal issue in a wrongful termination trial, the benefits of a jury’s believing that an employer was fair to the discharged employee can be immeasurable. If the evidence shows that the company set out clear expectations to the individual and regularly communicated to him or her when those expectations were not being realized, a jury may be more inclined to conclude that the company treated the former employee fairly, and not in a discriminatory or unlawful fashion. After all, chances are that some members of the jury, at some point in their career, will have worked for a manager whom they did not believe treated them fairly. A properly documented file can help overcome any potential mistrust that jurors may harbor for a corporate defendant. 

This Alert has been prepared by Sills Cummis & Gross P.C. for informational purposes only and does not constitute advertising or solicitation and should not be used or taken as legal advice. Those seeking legal advice should contact a member of the Firm or legal counsel licensed in their state. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. Confidential information should not be sent to Sills Cummis & Gross without first communicating directly with a member of the Firm about establishing an attorney-client relationship.