Client Bulletin #610

As we reported early this morning, the full U.S. Court of Appeals for the Seventh Circuit decided in Hively v. Ivy Tech Community College of Indiana that the prohibition in Title VII against discrimination based on “sex” encompasses discrimination based on sexual orientation. It is the first federal appellate court to do so, although recent decisions from other federal appeals courts – declining to expand Title VII this far – seem “conflicted” about the issue.

The Hively decision is 67 pages long, including the majority opinion (by Chief Justice Diane Wood), two concurring opinions (by Judge Richard Posner and Judge Joel Flaum) and one comprehensive dissent (by Judge Diane Sykes). The opinions in their entirety present what are probably the best arguments for and against extending Title VII to include sexual orientation discrimination.

The majority view

In a nutshell, the expansive interpretation adopted by the majority and the two concurrences is based on evolving societal attitudes toward sexual orientation, gender identity, and same-sex marriage. They frankly acknowledge that Congress did not consider “sex” to include “sexual orientation” when Title VII was enacted in 1964. Nonetheless, they argue, the understanding of sex discrimination in 1964 was relatively limited – so limited, in fact, that Congress and society may have understood it primarily as a simple refusal to hire or promote women because they were viewed as less capable than men.

Society’s understanding of sex discrimination, and the scope of Title VII’s ban on “sex” discrimination, have obviously been expanded in a number of ways since 1964. Courts have subsequently interpreted “sex discrimination” to include stereotypes about traditional female roles (for example, not hiring women for sales positions on the assumption that women would not want to travel, or refusing to hire or promote women with young children based on the view that their maternal responsibilities would interfere with job performance). Beginning in the 1980s and 1990s, Title VII was interpreted to include sexual harassment. In that same general period, two Supreme Court decisions – Price Waterhouse v. Hopkins and Oncale v. Sundowner Offshore Services, Inc. – indicated that it would be unlawful to subject an employee to adverse action or treatment for failing to conform to sex stereotypes. (Simplistically stated, Price Waterhouse involved an “aggressive” woman who did not have a sufficiently “feminine” appearance, and Oncale involved a man with “effeminate” characteristics.)

More recently, society’s views of sexual orientation have changed. Most significantly, the Supreme Court decided in Obergefell v. Hodges that laws against same-sex marriage violated the Due Process and Equal Protection clauses of the Fourteenth Amendment to the U.S. Constitution. Thus, sexual orientation is now viewed as a protected category, making the Supreme Court’s 1967 decision in Loving v. Virginia (finding it unconstitutional for states to prohibit interracial marriage) relevant to this issue. In Loving, the State of Virginia unsuccessfully argued that it did not discriminate based on race because it treated the Caucasian spouse of an interracial marriage the same as the African-American spouse. The Supreme Court, however, found that “discrimination on the basis of the race with whom a person associates [sic] is a form of racial discrimination.” (Quote is from the majority opinion in Hiveley.) Although Loving did not involve Title VII, the Seventh Circuit says that the same reasoning should apply to discrimination based on the sex of the person with whom an individual associates in the context of a Title VII claim.

The dissent

In a dissent joined by Judges William Bauer and Michael Kanne, Judge Diane Sykes criticized the majority for legislating from the bench: “The result is a statutory amendment courtesy of unelected judges.” Using terminology from Judge Posner’s concurrence, she argued that the Court is not authorized “to engage in ‘judicial interpretive updating.’”

Judge Sykes argued that, in interpreting a statute like Title VII, the Court is supposed to be guided by the statutory language as it would have been understood by a reasonable person at the time of enactment, and she contended (correctly, no doubt) that it was not “remotely plausible” that a reasonable person at the time of enactment would have understood “sex” to encompass “sexual orientation.” She also noted that in subsequent state and federal legislation, “sexual orientation” is expressly enumerated as a protected category, indicating that Congress and state legislatures consider “sex” and “sexual orientation” to be two different things.

Judge Sykes also argued that discrimination based on sexual orientation is a separate category from discrimination based on sex. She argued that Loving did not apply because it was not a Title VII case and because anti-miscegenation statutes were based on the philosophy of “white superiority.” By contrast, she argued, “sexual-orientation discrimination . . . is not inherently sexist.” (Emphasis in original.) Finally, she contended that Price Waterhouse, Oncale, and Obergefell and the other “sexual orientation” Supreme Court decisions did not apply because they involved different legal issues.

Applicability of Hively, predictions, and caveats

The Hiveley decision will be binding legal authority for employers with operations in the Seventh Circuit states of Illinois, Indiana, and Wisconsin. It is likely to be very influential in other parts of the country, but courts outside the Seventh Circuit will not be obligated to follow it. It should be noted that panels of two federal Courts of Appeal – the Second Circuit and the Eleventh Circuit – have recently declined to extend Title VII to include sexual orientation discrimination.

In any event, federal contractors are already required to prohibit discrimination or harassment based on sexual orientation or gender identity, many state laws and local ordinances prohibit such discrimination or harassment, and even in jurisdictions that have no such legislation in place, we recommend that employers prohibit such discrimination or harassment as a matter of company policy. We also recommend that it be included in companies’ regular EEO and harassment training.

With a split in the circuits, it is possible that this issue will reach the U.S. Supreme Court. Assuming Judge Neil Gorsuch is confirmed to replace the late Justice Antonin Scalia, our best prediction would be a 5-4 split: Justice Anthony Kennedy may join Justices Breyer, Ginsburg, Kagan, and Sotomayor in affirming the Seventh Circuit decision, with Chief Justice Roberts, and Justices Alito, Gorsuch, and Thomas dissenting – probably for many of the reasons articulated in Judge Sykes’ dissent.

Hively was the outcome of Ivy Tech’s motion to dismiss for failure to state claims for which relief can be granted. This is a motion filed at the very outset of the case, before discovery has begun. At this early stage, the Court is required to assume that the allegations in the lawsuit are true, and can dismiss the lawsuit only if – based on that assumption – it appears that the plaintiff has not made a valid legal claim. Thus, after discovery, Ivy Tech may ultimately be able to prevail on summary judgment or at trial.

A three-judge panel of the Seventh Circuit found in August 2016 that Title VII did not prohibit sexual orientation discrimination. The panel majority opinion was written by Judge Ilana Rovner. Last fall, the Seventh Circuit voted to vacate the panel decision and rehear the case. Interestingly, Judge Rovner joined the majority in yesterday’s en banc decision.

Finally, it should be noted that the Seventh Circuit majority opinion points out that no religious exemption was at issue in Hively, nor was there any issue related to “the provision of social or public services.”

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