Baker Sterchi Cowden & Rice L.L.C. (Kansas City, MO) Article: Tenth Circuit Decision Provides Excellent Discussion of Burden to Show Pretext in Discrimination Cases

ABSTRACT: Johnson County employee fired for dishonesty and insubordination puts up a solid fight trying to support his burden that the County’s reasons for his termination were a pretext for discrimination based on disability and were in retaliation for his exercise of ADA and FMLA rights. In Rutledge v. Board of County Commissioners, the Tenth Circuit analyzes and ultimately rejects each of the employee’s numerous arguments, providing a great overview of the current law on the “pretext” burden.

In Rutledge v. Board of County Commissioners, the Tenth Circuit provides a great refresher on the various ways an employee may be able to show “pretext” in support of discrimination and retaliation claims, and a 27-page treatise on how the familiar McDonnell-Douglas burden-shifting applies in practice. Here, the appellate court considered – and ultimately rejected – six separate arguments that the employee claimed satisfied his burden to establish pretext under the applicable laws.

Background

The employee, Rutledge, had been employed by the County for 13 years. He suffered a severe workplace injury about a year into his employment. His injuries resulted in permanent disability, a workers’ compensation claim, and workplace restrictions. The County accommodated his disabilities. Over the next 12 years, Rutledge would file 10 more workplace injury claims and the County responded by granting further accommodations. Rutledge also filed several harassment and bullying complaints. Each of those complaints were investigated and found to be meritless.

Key Facts Underlying Claims of Discrimination and Retaliation before the 10th Circuit

In May 2018, McCracken became Rutledge’s direct supervisor. While McCracken was being considered for the position, Rutledge complained he overheard coworkers say, if he gets the job, Rutledge would be bullied. The County investigated and found there was no reason to believe McCracken had treated or would treat Rutledge inappropriately. Rutledge then suffered two more work-related injuries shortly after McCracken became his supervisor, both of which necessitated additional workplace accommodations and FMLA leave.

Performance Review and Breakroom Incident

After returning from leave, Rutledge attended a performance review meeting with McCracken and Cloud. Rutledge was told his work was satisfactory, but that improvement was necessary, and that he would only be receiving a 1% raise. Rutledge was unhappy and stated he felt targeted and singled out due to his workplace injuries. Feeling unappreciated, he said other employees sat in the breakroom for an hour each morning after clocking in and that he was going to start doing the same. Cloud and McCracken warned him against doing so.

But the next day Rutledge clocked in at 7:00 a.m. and sat in the breakroom with several coworkers. When McCracken saw Rutledge sitting there, he asked Rutledge to get to work. Rutledge refused, saying he would continue socializing in the breakroom until 8:00 a.m. and claimed Cloud said he could. McCracken called Cloud, who confirmed he said no such thing. Cloud then called Rutledge and told him to begin working. Around 7:45 a.m. Rutledge headed to his truck to begin working. Later that same day, Rutledge met with Cloud and repeated his concerns that he was being singled out due to his work-related injuries. Before the end of the day, McCracken reported Rutledge’s harassment complaint against him and included notes detailing the performance review meeting as well as the breakroom incident.

The Investigations

The County responded by launching two separate investigations: one into Rutledge’s harassment and retaliation allegations against McCracken; and one into Rutledge’s alleged insubordination and dishonesty regarding the “breakroom incident.”

After reviewing relevant documents and interviewing witnesses, including Rutledge, Human Resources found no evidence that McCracken harassed or retaliated against Rutledge at any time. Rutledge was then placed on administrative leave with pay until after the investigation into the breakroom issue was concluded. As part of that investigation, HR interviewed Rutledge, McCracken, Cloud, and other employees who witnessed the incident. They determined Rutledge’s claim he was given permission to sit in the breakroom for an hour after clocking in was “not credible on its face.” HR also noted all of Rutledge’s allegations were contradicted by the testimony of other witnesses.

Termination

A draft termination letter was then circulated by management, which focused on the breakroom incident but also included numerous other acts of insubordination in support of the termination decision. Management ultimately revised the letter, deciding to focus only on the breakroom incident. The next day Rutledge attended a pre-disciplinary meeting with Kellison, who was the ultimate decision-maker. Rutledge was told the County intended to terminate his employment and he was then offered a chance to explain the breakroom incident before the County made a final decision. After that meeting, Kellison proceeded with termination. Rutledge subsequently appealed his termination to an administrative review panel, but the decision was upheld in December 2018. Rutledge’s lawsuit followed.

Rutledge’s Lawsuit 

Rutledge filed a lawsuit alleging violations of the Americans with Disabilities Act (discrimination and retaliation), the Family and Medical Leave Act (retaliation), and retaliatory discharge under Kansas law. The District Court entered summary judgment in favor of the County, and Rutledge appealed.

Appeal of Summary Judgment Decision

Since Rutledge presented no direct evidence of discrimination or retaliation, the Court of Appeals reviewed his claims under the familiar McDonnell Douglas Corp. v. Green burden-shifting framework. Finding Rutledge made a prima facie case of discrimination and retaliation and that the County articulated a legitimate, non-discriminatory reason for his termination, the Tenth Circuit turned its analysis to whether the District Court’s conclusion that Rutledge failed to show the reasons given for his termination were pretextual was proper.

Rutledge presented six separate arguments that he established pretext at the District Court level.

Argument 1 – Falsity of the Proffered Reason

First, Rutledge argued the County just got it wrong. He insisted Cloud gave him permission to sit in the breakroom for an hour after clocking in. As such, he claimed he simply was not dishonest or insubordinate, so the County’s reason for his termination was false. According to the Court, his focus, however, was incorrect. The Tenth Circuit explained it is, instead, required to look at the facts as they appeared to the person making the decision to terminate. So, the relevant inquiry is whether the County honestly believed its reasons and acted in good faith upon them. Applying this standard, even if the County was mistaken, the Court found Rutledge presented no evidence the County honestly believed anything other than Cloud never told Rutledge he could spend an hour in the breakroom.

The easy takeaway here is neither the employer nor the Court are required to blindly accept the employee’s side of the story.

Argument 2 – Inconsistent Reasons for Termination

Next, Rutledge claimed he established pretext by relying on the County’s alleged inconsistent reasons for his termination. Rutledge primarily relied on the draft termination letter, which included many additional reasons for his proposed termination. Rutledge argued the County abandoned these additional bases in favor of one that was harder to dispute because it knew none of the explanations were true. The Court of Appeals rejected this argument, finding the County’s decision to delete the additional reasons, while consistently sticking with the breakroom incident, did not suggest dishonesty or bad faith.

Rutledge also focused on a declaration provided by Kellison that outlined what occurred at the pre-disciplinary meeting, claiming the County was now relying on his conduct at that meeting as the basis for his termination. The Court also rejected this argument, finding the declaration merely supported the County’s position that it followed its disciplinary policies before making the final termination decision.

While these arguments failed for Rutledge under the facts of his case, they serve as an important reminder that contradictions or inconsistencies in an employer’s stated reasons for termination can in fact support pretext.

Argument 3 – Unfair Investigations

Rutledge next turned his attention to the two investigations. First, Rutledge claimed the breakroom incident investigation was unfair, which can support an inference of pretext under the law. However, the Court rejected this argument, pointing out that employers can overcome this inference of pretext where it has obtained from the employee his side of the story, which the County did here on two occasions.

Focusing on the alleged unfairness of the investigation of his harassment complaint, Rutledge made two arguments: (1) the County omitted from its investigative report a discriminatory comment he complained about, which he attributed to McCracken; and (2) the report, which included a couple of adverse findings against McCracken, was not provided to him until after his termination. In this regard, the report found: (1) McCracken failed to distribute overtime evenly; and (2) Rutledge’s coworkers could view his scheduled medical appointments because McCracken’s Outlook calendar was public.

In considering this argument, the Court focused on the fact both of these issues were unrelated to the breakroom incident, and determined that no reasonable jury could find the decision to omit the comment or to delay providing the report were made for the purpose of hiding an alternative inappropriate motive. Relying on established precedent, the Court also noted the omitted comment was an isolated “stray remark” made by a non-decisionmaker. As such, the Court found that comment was insufficient to show discriminatory animus in the termination decision.

As a practice pointer, the Court’s analysis shows how critical it can be to provide an employee with the opportunity to give his version of the events before taking an adverse employment action. Also, make sure management does not include employee’s medical appointments on public calendars. Under different facts, that could have become an issue as it violates the strict confidentiality requirements of the ADA.

Argument 4 – Discriminatory Comments and Subordinate-Bias Theory

Rutledge next focused on the alleged discriminatory comments that: McCracken called him “half timer”; McCracken and Cloud’s told him they wanted him at work “all the time”; and McCracken told him he “couldn’t take” FMLA leave. The Court recognized anecdotal evidence of discriminatory conduct can support a showing of pretext if the comments were connected to the disputed adverse employment action.

For Rutledge, the first problem with his argument was he conceded McCracken and Cloud were not involved in the decision to fire him. Regardless, he argued the comments were relevant because they “influenced” the decision. The Court’s opinion thus turned to a discussion of the not very well-known “subordinate-bias” theory of liability. Under the theory, a plaintiff must show the biased subordinate’s discriminatory reports, recommendations, or other actions actually caused the adverse employment action.

The Tenth Circuit noted there are several ways an employer can absolve itself from liability under this theory by breaking the “causation” chain. First, an employer can avoid liability if it directs someone higher up in the decision-making process to independently investigate the grounds for termination. Second, the Court explained an employer that gives the employee an opportunity to state his side of the dispute will also defeat an inference of pretext under this theory because such conduct demonstrates the employer did not rely exclusively on the biased subordinate. Finally, the Court advised an independent review that takes place after the termination will also break the causal chain. Because the County did all of these things, the Court held Rutledge failed to show a causal relationship between McCracken and Cloud’s comments and his termination.

Admittedly, it is likely not practical or feasible for most small businesses to implement all three procedures outlined above as an effort to mitigate risks. However, this argument provides yet another basis for employers to strongly consider the potential benefits of providing the employee with the opportunity to present his side of the story before implementing an adverse employment action.

Argument V – Deviation from Disciplinary Policy

Rutledge then argued he established pretext because the County deviated from its progressive discipline policy. He claimed the policy provides the County generally should not terminate employees without first using other lesser forms of discipline or unless there were multiple or repeated incidents of misconduct. While deviation from employment policies may establish pretext in some circumstances, fatal to Rutledge’s argument was the fact the County’s progressive discipline policy was entirely discretionary.

If your business uses a progressive discipline policy, this case serves as a good reminder to review that policy and make sure, like the County’s policy, it provides the employer complete discretion to skip the progressive steps and to proceed with termination, as it sees fit.

Argument 6 – Disparate Treatment

For his final argument, Rutledge claimed he presented sufficient evidence of pretext because he was treated differently than other employees who also sat in the breakroom after clocking in and were not fired. In order to establish pretext, the Tenth Circuit reminded us that a plaintiff must produce evidence that the employer treated the plaintiff differently than other similarly situated employees who violated work rules of comparable seriousness. In finding Rutledge failed to meet this threshold, the Court held Rutledge presented no evidence: (1) any other employee refused to return to work after being asked to do so; or (2) that any employee insisted they had permission to socialize for an hour after clocking in.

On this point, any time an employer is considering discipline and before it acts, it should always carefully review its decision and evaluate whether it is applying and enforcing its policies in a uniform and consistent manner. If it is treating an employee differently than other similarly situated employees, the employer should carefully consider whether there is a justified or lawful basis for such differential treatment.

Conclusion

The Court of Appeals ultimately held all of Rutledge’s arguments, even when considered together, failed as a matter of law. Unfortunately for the plaintiff, his negative reaction to his performance review and resulting defiant plan to go on a “one-hour” strike each morning provided the County with a sufficient non-pretextual justification for his termination. Here, as a government entity, the County’s defenses were significantly bolstered by its established substantial processes related to conducting investigations and implementing discipline. In the private sector these procedures are sometimes absent, or, at least, far less comprehensive.

* Allison Garrett, Law Clerk, assisted in the research and drafting of this post. Garrett is a 3L student at the University of Missouri School of Law.