Contractors Should Note: Seventh Circuit Sets Up Sexual Orientation Split for SCOTUS

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By now you have certainly heard of the landmark en banc opinion recently handed down by the Seventh Circuit in Hively v. Ivy Tech Community College. On April 4, 2017, the Seventh Circuit reversed its own precedent and became the first federal appellate court to rule that Title VII prohibits discrimination based on sexual orientation. With this ruling, the Seventh Circuit has not only created a split with nearly every other federal appellate court, but directly pits the ideology of one of the circuit’s most prolific and respected jurists, Richard Posner, against that of newly minted Supreme Court Justice Neal Gorsuch.

By way of background, Kimberly Hively was an adjunct professor at Ivy Tech Community College located in Valparaiso, Indiana. In 2014, Hively sued pro se pursuant to Title VII, alleging she was passed over for several full-time professor positions and that her adjunct contract was not renewed, all because she is lesbian. The district court dismissed her case for failure to state a claim on the grounds that sexual orientation is not a protected class under Title VII.

The district court decision followed prior Seventh Circuit decisions that sexual orientation is not protected by Title VII’s prohibition against discrimination on the basis of “sex.” Other Circuit Courts of Appeal had also concluded that sexual orientation was not protected under federal laws. A number of states, including Illinois and Wisconsin, passed laws to prohibit orientation discrimination under state law in response to these federal decisions. Contractors also should be aware that in July 2014, President Obama signed Executive Order 13672, prohibiting federal contractors from discriminating on the basis of sexual orientation and gender identity.
…there is a paradoxical legal landscape in which a person can be married on a Saturday and then fired on Monday for just that act.
Hively, now represented by Lambda Legal, appealed the dismissal of her case. In July 2016, a panel consisting of Judges Ilana Rovner, William Bauer and Ken Ripple, upheld the district court’s dismissal, noting that it was bound by existing Seventh Circuit cases which hold that sexual orientation is not a protected class under Title VII. However, Judge Rovner (who penned the decision) discussed the fact that the Supreme Court has acknowledged that gender noncomformity claims are cognizable under Title VII, and that it can be difficult (if not impossible) to extricate gender noncomformity claims from sexual orientation claims. Thus, there is a tension between Supreme Court precedent and appellate court decisions that hold that sexual orientation is not a protected class. This difficulty has led to what Judge Rovner described as a “confused hodge-podge of cases.” Judge Rovner also noted that, in light of the Supreme Court’s ruling in Obergefell v. Hodges that same-sex couples have the Constitutional right to marry, there is “a paradoxical legal landscape in which a person can be married on a Saturday and then fired on Monday for just that act.” Nevertheless, the panel noted it was bound to the court’s existing precedent, and had no choice but to affirm the dismissal of Hively’s claims until the matter is addressed by the Supreme Court or through legislation.

In light of the importance of this issue, the Seventh Circuit agreed to rehear the case en banc with all judges on the court participating. In an 8-3 decision, the court held that discrimination on the basis of sexual orientation IS a form of sex discrimination, and therefore prohibited by Title VII. The majority opinion, written by Judge Diane Wood, began with the proposition that the task before it was to interpret what it means to discriminate on the basis of sex under Title VII, which is well within the court’s purview (not to “amend” the statute by adding a new protected category).

The court went on to consider Hively’s theories of discrimination, of which she advanced two. Hively first argued for a comparative method of analysis, which she supported with an analogy that if Hively had been a man married to/living with/dating a woman and everything else had stayed the same, Ivy Tech would not have refused to promote and fired her; and she also argued discrimination by association, i.e., that the law protects her right to associate intimately with a person of the same sex. With respect to Hively’s first argument, the court found that situation, if true, would be a classic case of gender nonconformity, which the Supreme Court has already held is a form of sex discrimination under Title VII. In other words, by definition, people in same sex couples fail to conform to gender norms because gender norms assume heterosexuality.

As for Hively’s second theory, the Seventh Circuit looked to the Supreme Court’s decisions in Loving v. Virginia, which holds that the Equal Protection Clause protects interracial marriage and Obergefell, noted above. Combining the key takeaways from those two cases with appellate court cases that hold that an employer may violate Title VII if it takes action against an employee because of the employee’s association with a person of another race, the Hively court reasoned that the same principles would mean that Title VII prohibits discrimination on the basis of someone’s romantic association with a person of the same sex.

An intriguing aspect of this ruling, which was issued in the midst of confirmation hearings for Justice Neal Gorsuch, is the tension between an opinion concurring with the majority penned by Judge Richard Posner, and the dissent written by Judge Diane Sykes and joined by Judges Bauer and Kanne. In his concurrence, Judge Posner minced no words in cautioning against a “diehard originalist” approach to statutory interpretation famously espoused by now Justice Gorsuch, which looks strictly to what the words of a statute meant at the time it was drafted. Instead, Judge Posner openly advocated for judicial interpretation that “give[s] fresh meaning to a statement (which can be a statement found in a constitutional or statutory text) – a meaning that infuses the statement with vitality and significance today.” He noted that this is not a new concept, and that it has been done in numerous other contexts. He even noted this approach has been taken by the late Justice Antonin Scalia who held that “burning the American flag as a political protest is protected by the free-speech clause of the First Amendment,” even though “[b]urning a flag is not speech in the usual sense and there is no indication that the framers or ratifiers of the First Amendment thought that the word ‘speech’ in the amendment embraced flag burning ...” With that backdrop, Judge Posner acknowledged that “[i]t is well-nigh certain that homosexuality, male or female, did not figure in the minds of the legislators who enacted Title VII.” However, “today ‘sex’ has a broader meaning than the genitalia you’re born with.” Thus, he concluded, “I don’t see why firing a lesbian because she is in the subset of women who are lesbian should be thought any less a form of sex discrimination than firing a woman because she’s a woman.”

By contrast, the dissent criticized the majority for “circumventing the legislative process by which people govern themselves” and adding a new protected category to Title VII, i.e., sexual orientation. According to the dissent, “we are not authorized to infuse the text with a new or unconventional meaning or to update it to respond to changed social, economic, or political conditions.”

Ivy Tech has indicated it will not petition the Supreme Court to resolve this issue. Rather, the case will be remanded to the district court for further proceedings. However, there are other similar cases making their way through the federal appellate circuit courts. Thus far, every other federal appellate court to address this issue has held that Title VII does not protect sexual orientation. That said, some of the Seventh Circuit’s sister circuits, such as the Second Circuit, have reluctantly dismissed similar cases noting they were bound by their own precedent. Regardless, there is a very clear split in results, and it is likely that sooner than later, one of these cases will result in a petition for certiorari to the Supreme Court. If that occurs, and the Court decides to hear the issue, it will have to address head-on the apparent clash of judicial philosophy exemplified by Judge Posner’s concurring opinion and the dissent, i.e., whether courts may engage in interpretative “updating” of outdated laws or must defer to the original intent of drafters, no matter what the outcome. With the recent addition of Justice Gorsuch to the Court, that is certain to be an interesting ideological battle.

Hively is now the governing precedent interpreting Title VII in the Seventh Circuit, which covers Illinois, Wisconsin and Indiana. Practically speaking, most employers in the Seventh Circuit are already prohibited from sexual orientation discrimination under state law in Illinois and Wisconsin. So the immediate effects of this decision are limited to Indiana. However, the long-term impact of this ruling is likely to be more widespread. Indeed, the Seventh Circuit may have provided legal and philosophical support for other reluctant and/or conflicted circuit court judges to reverse course and find that Title VII extends to sexual orientation claims. This, combined with the fact that the EEOC recently clarified that it also interprets Title VII to protect sexual orientation, means all employers should take this development as a signal that the law may be changing.

For federal contractors, Hively is more than an academic exercise. Although OFCCP enforces E.O. 13672 along with E.O. 11246, it handles few complaints of discrimination, concentrating more on facility-wide audits. The EEOC remains the primary agency investigating employee complaints. As other courts adopt the result in Hively, which we think is likely, contractors, and employers generally, can count on more scrutiny of this area of potential discrimination.

Moreover, despite President Trump’s asserted goal to reduce regulation, the White House, in a January 31, 2017 press release, stated the President will continue to enforce Executive Order 13672 protecting the rights of the LGBTQ community in the workplace. Protections for LGBTQ employees, thus, are not going away, and after Hively will likely continue to expand. That means this is a good time to revisit policies and best practices to ensure fair treatment and adequate protection of the rights of LGBTQ workers.