Although the Fourth Circuit has historically been considered one of the more conservative and employer-friendly jurisdictions in the country, several notable recent decisions reflect a shift in this ideology.  These decisions have altered expectations for employers and employees in the Fourth Circuit, and likely will impact policy decisions and litigation strategy for employers with operations in the Fourth Circuit, which encompasses the federal courts in Maryland, North Carolina, South Carolina, Virginia and West Virginia. 

Expansion of Definition of “Hostile Work Environment”

On May 7, 2015, in a rare en banc decision, the Fourth Circuit reversed its own precedent and held that a single incident involving the use of a racial epithet may create a hostile work environment.

InBoyer-Liberto v. Fontainebleau Corporation, 2015 WL 2116849 (4th Cir. May 7, 2015)(en banc), plaintiff, a cocktail waitress at a hotel, alleged that she was called an offensive racial epithet by a supervisor twice in 24 hours and was threatened with termination.  After reporting the incident, plaintiff’s employment was terminated, and she filed suit, alleging a hostile work environment and retaliation under both Title VII and 42 U.S.C. §1981.

The hotel moved for summary judgment, arguing that the supervisor’s conduct was not severe or pervasive enough to alter the plaintiff’s conditions of employment, a prerequisite for stating a hostile work environment claim.  The U.S. District Court for the District of Maryland granted the hotel’s motion, and the plaintiff appealed.  Initially a three judge panel of the Fourth Circuit ruled in the employer’s favor, citing Jordan v. Alternative Resources, Corp., 458 F.3d 332 (4th Cir. 2006) and other prior Fourth Circuit cases holding that a single off-color remark would not support a hostile work environment claim as a matter of law.  A full fifteen judge en banc panel reheard the case, and a strong majority reversed the initial appellate panel and the District Court.  In so doing, the Fourth Circuit expressly overruled its prior decision in Jordan and found that the racial epithet was severe and pervasive enough, in conjunction with the other behavior alleged, that a jury could reasonably conclude that workplace harassment occurred, “whether viewed as a single incident or as a pair of discrete instances of harassment.” In reaching the decision, the Court rejected Jordan and other prior decisions requiring more than a single incident of harassment for a hostile work environment case to prevail.

As a result of this opinion, U.S. District Court judges may be more hesitant to grant summary judgment in favor of employers on hostile work environment claims.  The decision also underscores the importance of proactively enforcing anti-harassment policies and practices and providing targeted training to supervisors.

Employee’s Burden in Proving Retaliation Claims Reduced in Two Meaningful Ways

In addition, the decision in Boyer-Liberto in conjunction with another recent case, Foster v. University of Maryland-Eastern Shore, 2015 WL 2405266 (4th Cir. May 21, 2015), further eased an employee’s burden in proving retaliation under Title VII in the Fourth Circuit.  In Boyer-Liberto, the Fourth Circuit concluded that an employee may establish that he or she “engaged in protected activity” both by opposing employment actions that are actually unlawful and by opposing employment actions an employee “reasonably believes” are unlawful. This holding effectively overruled a second holding inJordan, which had required an employee to demonstrate a manifest “intent” on the part of the employer to create a hostile work environment.  Under the new standard adopted by the Fourth Circuit, “an employee is protected from retaliation for opposing an isolated incident of harassment when she reasonably believes that a hostile work environment is in progress,” and she is not required to provide evidence that a plan was in motion to create such an environment.

Additionally, in Foster v. University of Maryland-Eastern Shore, decided May 21, 2015, the Fourth Circuit addressed the impact of the Supreme Court’s decision in University of Texas Southwestern Medical Center v. Nassar, 133 S. Ct. 2517 (2013), on the elements of proof required to demonstrate retaliation under the McDonnell Douglas burden shifting framework.  Just two years ago in Nassar, the Supreme Court held that a plaintiff must prove that he or she would not have experienced an adverse employment action “but-for” retaliation by the employer.  At the time, this decision was widely regarded as making it more difficult for plaintiffs to establish retaliation claims.  The Nassar decision, however, involved a mixed-motive case and did not address the elements of a prima facie case in the burden-shifting McDonnell Douglas model, which is frequently relied upon by plaintiff employees who lack direct evidence of retaliatory discrimination.  Under the McDonnell Douglas framework, a plaintiff employee is required to initially establish that her protected activity resulted in an adverse employment action.  If the employee can establish her prima facie case, the burden shifts to the employer to show that the adverse employment action was based on legitimate business reasons.  Thereafter, the employee must show that such reasons are really just a “pretext” for discrimination.

In Foster, the Fourth Circuit held that the “but-for” standard discussed in Nassar does not alter the long-established case law allowing a plaintiff to use a burden-shifting framework to establish retaliation claims.  The Court concluded that an employee need not establish as part of her prima facie case that retaliation was the “but-for” reason for the adverse action she suffered.  Instead, the Court reasoned, in the burden-shifting framework an employee has always been required in demonstrating pretext to prove that retaliation was the actual, or “but-for” reason for the adverse action she suffered.  This holding is distinguishable from at least two other Circuits, both of which found that Nassar requires a plaintiff to establish the higher “but-for” standard as an element of her prima facie case.   Ultimately, while a plaintiff must still demonstrate that retaliation was the “but-for” reason for an adverse employment action, Foster provides further evidence that the Fourth Circuit is no longer a safe-bet for employer-friendly opinions.

Wal-Mart v. Dukes Ruling Not Applicable to Smaller Class Action Suits.

Finally, the Fourth Circuit has demonstrated a reluctance to apply Supreme Court precedent in a recent case involving a class action.  In Brown v. Nucor Corp., 2015 WL 2167646 , (4th Cir. May 11, 2015), the Fourth Circuit vacated a decision by the U.S. District Court for South Carolina that had decertified a class of black steelworkers, who alleged their employer practiced racial discrimination in its employment and promotion practices and subjected its employees to a hostile work environment.  The District Court had relied on the United States Supreme Court’s decision in Wal-Mart v. Dukes, 131 S.Ct. 2541 (2011), which held that Wal-Mart employees across the country did not have enough in common to support a class action because of the variability of the plaintiffs’ working environment and circumstances.

The Fourth Circuit determined that the District Court misapplied the Dukes framework in theBrown case, and that the Dukes standard did not favor decertification in this case. Because the class in Nucor involved about 100 employees working in a single plant, all of whom demonstrate a pattern of similar alleged discrimination, the Fourth Circuit found that the evidence favored certification, in contrast to Dukes, which involved 1.5 million class members with various jobs and experiences in more than 3,000 stores across the country. Moreover, the Fourth Circuit held that anecdotal and statistical evidence revealed a pattern of discrimination that, standing alone, could support a disparate treatment claim, even where the pattern is a result of discretionary decision-making.

Overall, while Dukes still serves as an impediment to the certification of very large class actions composed of employees working in different jobs at different locations under different management, Nucor appears to prevent the application of that reasoning in cases involving fewer class members, jobs, supervisors, and locations, reasoning that in such instances anecdotal and statistical evidence that was discounted in Dukes is more likely to reveal a common pattern of discrimination necessary for class certification.

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