Ninth Circuit Employment Cases

Sharon Moyer

Peterson v. Hewlett Packard Co.

Mr. Peterson was a 21-year employee of Hewlett Packard ("HP"). Problems developed when HP began to display diversity posters with photographs of HP employees with captions such as, "black," "blond," "old," "gay" and "Hispanic." Also included was a description of the personal interests of each featured employee, along with the slogan, "Diversity Is Our Strength."

Mr. Peterson described himself as a "devout Christian" who believes that homosexuality violates the commandments and that he has a duty to expose evil. He proceeded to post Biblical scriptures in response to the posters. His supervisor removed them ... he put them back up. After some more back and forth, he was terminated for insubordination. He filed a religious discrimination claim.

The Court dismissed his claim, finding that he was terminated for his violation of the company's anti-harassment policy and insubordination, not because of his religious beliefs. The Court also dismissed his claim that HP failed to accommodate his religious belief that he must expose "the evils of homosexuality." Rather, the Court noted that HP met with Peterson four times in an attempt to work out the issue and Mr. Peterson's requested accommodations were not reasonable.

Practice Pointer: It is often difficult to balance one employee's rights against another's. Here, the deciding factor was that HP really worked with the employee.

Schertz-Nelson v. AT&T Corp.

The employee in this case worked for AT&T as an account representative. While she was employed, she filed a charge with the EEOC and Arizona Civil Rights Division (ACRD), alleging discrimination in violation of the Americans with Disabilities Act (ADA). After she received her right-to-sue letter from the ACRD, she quit her job and moved out of state without filing suit.

About six months later, she filed for bankruptcy (Chapter 7). She did not, however, notify the bankruptcy court about her still-pending EEOC claim against AT&T. After she received a discharge from the bankruptcy court, she received a right-to-sue letter from the EEOC (finding cause), and she sued AT&T. AT&T asserted that the employee could not assert her claims because she failed to disclose them to the bankruptcy court.

The Court agreed with AT&T. Under bankruptcy law, a debtor is required to disclose all potential claims as assets during the bankruptcy proceeding. The employee did not do this, and she cannot now benefit from her failure to disclose that asset to the bankruptcy court.

Practice Pointer: This case underscores the importance of doing background investigations whenever an employee files a claim. You never know what you might find.

Zhang v. American Germ Seafoods Inc.

Mr. Zhang filed a race/national origin discrimination complaint against his former employer under Section 1981 of the Civil Rights Act of 1866 (42 U.S.C. 1981).

He was an executive in a food company. His employer fired him in the middle of an airport and then contacted all of his business associates in China with a letter, suggesting that Mr. Zhang was not trustworthy. The jury found the company liable for "bias" and awarded the employee $360,000 in compensatory damages, $2.6 million in punitives, and $86,000 in lost wages.

On appeal, the Ninth Circuit was asked to decide whether the award of punitive damages was unconstitutional. The Court found that the award was not unconstitutional because the corporate defendant's discrimination against the employer was "sufficiently reprehensible to justify a substantial punitive damages award." The Court was not troubled by the disparity between the actual harm suffered and the punitive damages awarded.

Practice Pointer: Although Title VII cases have a cap of $300,000 for punitive damages, there is no cap on cases filed under Section 1981. If an employer faces a race/ national origin discrimination claim, the stakes can be much higher than with a sexual harassment, gender, disability or other type of discrimination claim.

Manatt v. Bank of America

Ms. Manatt alleged race discrimination in violation of the Civil Rights Act of 1866. Manatt was a woman of Chinese descent who claimed that her co-workers and supervisor joked about "China man" and "rickshaw" and made fun of her English pronunciation. They also supposedly made several racial epithets against her.

The Court held that an employee could pursue a "hostile environment" claim under Section 1981, just the same as under Title VII, and that the same legal standards would apply. However, the Court also found that the conduct at issue in this case was neither severe nor pervasive enough to alter Manatt's conditions of employment. There was one incident in which the employees made fun of Manatt's pronunciation of "Lima" and made racially offensive gestures by pulling their eyes into narrow slits. The Court was "certainly troubled" by these incidents and recognized that they caused her to suffer pain. However, because these two "regrettable incidents" occurred over a span of two and one-half years, they did not alter the conditions of her employment, and her hostile environment claim failed.

Practice Pointer: This case is a warning to employers that a race-based hostile environment claim can be pursued under both Title VII and Section 1981. Again, the Section 1981 claim is not subject to the damages caps that apply to Title VII.

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