Wednesday, September 29, 2010
The Tennessee Supreme Court issued an important decision last week, rejecting the use of the McDonnell Douglas test at the summary judgment stage in litigating under Tennessee law. The decision, Gossett v. Tractor Supply Co., was a common law tort action for discharge in violation of public policy, but most of the court's analysis focused on discrimination and retaliatory discharge cases more broadly.
The employee here, Gary Gossett, alleged that his boss asked him to do some "creative" work with the publicly held company's inventory reserves that would artificially inflate the company's quarterly earnings statement in violation of federal securities laws. He refused, and he alleged that he was fired because of that refusal. The company moved for summary judgment, providing some evidence that Gossett was fired because the company wanted to reduce its workforce. The district court denied the motion for summary judgment but granted a second motion on the grounds that Gossett did not report the illegal activity first.
The Supreme Court held, an important issue in its own right, that in public policy discharge cases where the employee alleges that he or she is discharged for failing to participate in illegal conduct, the employee need not report that illegality. The court contrasted this case with a whistleblowing case, where blowing the whistle needs to occur and itself must further an important public policy.
The bulk of the opinion, though, was spent explaining why the McDonnell Douglas framework was inappropriate for the summary judgment stage in Tennessee. As a preliminary note, the Tennessee common law discharge in violation of public policy tort and the employment discrimination statute both allow for mixed motives cases: an employee need only prove that the prohibited motive (conduct or status) was a substantial factor in the employer's decision. Moreover the summary judgment standard in Tennessee requires that the party moving for summary judgment must produce evidence or point to evidence in the redord "that affirmatively negates an essential element of the nonmoving party's claim or shows that a nonmoving party cannot prove an essential element of the claim at trial." In other words, Tennessee requires even a defendant moving for summary judgment to point to evidence that tends to disprove a material factual allegation made by the nonmoving party. Here, the evidence of a legitimate reason did nothing to disprove the evidence that the employee provided from which a reasonable jury could conclude that the employee's refusal to engage in the illegal activity was a substantial factor--the employer didn't attempt to negate or undermine a single allegation of fact that the employee made. In language even more plain, the employer's evidence that one reason for the employee's discharge was to reduce the employer's work force, that evidence did not show that reducing the workforce was the only reason for firing the employee.
In reaching its conclusion, the court explained quite fully how the McDonnell Douglas test tends to lead courts to resolve disputed issues of fact on summary judgment and why it is, therefore, a poor fit at that stage of the litigation. Essentially the court concludes that the function of the test--which as stated in Burdine is designed "to progressively sharpen the inquiry into the elusive factual question of intentional discrimination" or retaliation--is simply incompatible with the function of summary judgment--which is to operate to show that there is no genuine issue of material fact as to an essential element. To sharpen the inquiry toward the ultimate conclusion at the summary judgment stage leads the court to put on blinders and view the evidence too narrowly and improperly resolve factual issues. The court even used one of its own prior cases where summary judgment was affirmed to show how the test led to that conclusion even though now, looking at the evidence as a whole, the court could see that a reasonable jury could conclude that retaliation was a substantial motive.
Two Justices concurred in the holding about reporting the illegal activity but dissented from the court's decision about the McDonnell Douglas test. The dissent wrote that the employer's evidence of a nondiscriminatory reason did show that the employee could not prove that the prohibited reason was a substantial factor. Moreover, the case could have been affirmed here without getting rid of the test because the employee provided evidence to cast doubt on the employer's proferred reason--or at least to cast doubt on how much of a role that reason played in the decision.
In my view, the dissent seems to focus on the matter as if substantial factor meant something like single cause or at least overwhelmingly predominant cause, although that could be because the employee never conceded that the employer may have had any nondiscriminatory motive. The majority's opinion seems to me to get better at what it is that we have to decide at summary judgment given what must be proven and how people actually make decisions. As I've argued before, the test really out to be "whether a rational factfinder would be required to find that the challenged employment decision was taken only for reasons unrelated to discrimination or discriminatory beliefs." Rejecting the McDonnell Douglas test better gets at that question. And all the rejection means is that fewer cases will be improperly disposed of on summary judgment, not that employers are more likely to lose at trial. To win on summary judgment, employers will have to be careful to present evidence that they were not motivated by the improper factor alleged, which evidence of a legal motivation is necessary, but not alone sufficient, to show.
One last note, although the opinion interprets Tennessee's summary judgment standard, most of the legal analysis could just as well have been done for the federal rule, as the court's citations demonstrate.