Sixth Circuit Applies Balancing Test In Retaliation Case Involving an Employee's Disclosure of Confidential Documents

Posted on July 1, 2008 by Rob Stalter

A recent Sixth Circuit decision addressed the issue of whether the disclosure of confidential, proprietary documents by an employee to her attorneys constitutes a protected activity for which the employee cannot be terminated or otherwise disciplined. In 2000, numerous individuals filed a class action against the Cincinnati Insurance Company (CIC), alleging that CIC had discriminated against women in violation of the Equal Pay Act (EPA). Kathy Niswander, a claims manager at CIC, was one of the plaintiffs in the class action. 

In order to respond to CIC’s discovery requests, the plaintiffs’ attorneys asked each of the plaintiffs, including Ms. Niswander, to send them any documents in their possession that related to the case or that might support their discrimination claims. In response, Ms. Niswander sent the attorneys any documents she had that could potentially be relevant, but she also submitted confidential claim-file documents that did not contain any information relevant to the alleged discrimination.

The plaintiffs’ lawyers produced the documents submitted by Ms. Niswander to CIC’s attorneys. CIC believed that Ms. Niswander’s conduct in delivering the documents to her attorneys violated the company’s Privacy Policy and its Code of Conduct, each of which prohibited the disclosure of confidential information, including personal information about policyholders. CIC decided to terminate Ms. Niswander because of her disclosure of the documents to her attorneys.

Ms. Niswander then filed a separate suit against CIC, alleging retaliation under the EPA and Title VII. She argued that she could not be terminated for delivering the documents to her attorneys in the class action because the documents were requested by her attorneys, who needed them in order to respond to CIC’s discovery requests. CIC argued that because the confidential documents were not relevant to the EPA claims at issue in the class action, her breach of the company’s policies was a legitimate ground for her termination.

The district court granted CIC’s motion for summary judgment. Ms. Niswander then appealed the decision to the Sixth Circuit Court of Appeals, which recently affirmed the judgment. The court noted that the anti-retaliation provisions of Title VII prohibit an employer from discriminating against an employee because the employee engaged in a protected activity. Thus, in order to prove a claim of retaliation, a plaintiff must first show that he or she engaged in a protected activity. 

The court first had to decide whether Ms. Niswander’s delivery of the documents to her lawyers constituted either participation in the class action lawsuit or opposition to unlawful conduct by CIC. If it were either participation or opposition under Title VII, the court stated that a balancing test would then have to be applied to determine whether her disclosure was a protected activity for which she could not be fired.

The court found that her disclosure did not constitute participation in the underlying lawsuit, noting that while providing relevant documents during the discovery process might constitute participation, the provision of irrelevant, confidential information cannot be viewed as participating in the proceeding. The court then looked at whether Ms. Niswander's delivery of the documents constituted opposition to unlawful conduct by CIC. Finding that it could be viewed as opposition, the court applied a balancing test to weigh the employer’s need to protect its confidential business and client information against the employee’s need to be properly safeguarded against retaliatory actions. The court noted that the ultimate question under the balancing test is whether the employee’s dissemination of confidential documents was reasonable under the circumstances. The court looked at the following six factors:

  1. how the documents were obtained;
  2. to whom the documents were produced;
  3. the content of the documents, both in terms of the need to keep the information        confidential and its relevance to the employee’s claim of unlawful conduct;
  4. why the documents were produced;
  5. the scope of the employer’s privacy policy; and
  6. the ability of the employee to preserve the evidence in a manner that did not violate  the employer’s privacy policy.
Finding that the only two factors that even arguably weighed in Ms. Niswander’s favor were numbers 1 and 2, the court found that her delivery of the confidential documents to her attorneys did not qualify as a protected activity. The court thus held that she did not meet her burden to show that the company had retaliated against her. Therefore, the disclosure of confidential, proprietary documents by an employee to her attorneys does not constitute a protected activity where the documents are irrelevant to the claims asserted in the underlying litigation.
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Sixth Circuit Expands Group of Persons Protected from Title VII Retaliation to Friends and Family of the Charging Party

Posted on April 3, 2008 by Jamie LaPlante

In Thompson v. North American Stainless LP, a divided Sixth Circuit panel expanded the class of persons protected from retaliation to include associated third-parties. In so doing, the Sixth Circuit created a split among the federal appellate circuits to have weighed in on this issue: the Sixth Circuit now expressly allows associational retaliation claims, and the Third, Fifth, and Eighth Circuits have expressly rejected them.

In Thompson, a woman filed a sex discrimination charge with the EEOC.  Three weeks later, the employer terminated the woman's fiance, who it also employed.  The fiance filed his own EEOC charge and, eventually, a lawsuit, and alleged that his termination amounted to retaliation for his fiance's EEOC charge.  In response, the employer argued, among other things, that there is no cause of action under Title VII for retaliation against associated third-parties.  The trial court agreed and dismissed the case.  The plaintiff appealed, and the EEOC filed an amicus ("friend of the court") brief in support of associational retaliation claims.

In a 2-1 decision, the Sixth Circuit reversed, holding that “Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer’s action.” The Court included the fiancé of an employee filing an EEOC charge in the newly-expanded protected class.

In reaching its decision, the Sixth Circuit acknowledged that the plain language of Title VII does not support associational retaliation claims. The Court nonetheless ignored the text and looked to the “plain purpose of the statute,” reasoning, based on language in U.S. Supreme Court decisions, that the statute is intended to protect against any retaliatory action that might “dissuade[] a reasonable worker from making or supporting a charge of discrimination.” (Quoting the U.S. Supreme Court’s decision in Burlington Northern and Santa Fe Railway Co. v. White, 126 S.Ct. 2405 (2006).) The Sixth Circuit therefore concluded that retaliation against a family member would dissuade a reasonable employee from engaging in protected activity (in this case, filing an EEOC charge), thus meeting the Supreme Court’s definition of retaliation. The Sixth Circuit turned to the EEOC Compliance Manual for further support for its interpretation.

Not surprisingly, the majority’s decision prompted a lengthy dissent. In a nutshell, the dissent reasoned that, if Congress intended to protect third-parties from retaliation, it would have written the statute differently. Instead, Congress intended to protect only third-parties who participated, assisted, or testified in connection with another employee’s charge. Expanding retaliation claims in this way will, the dissent has predicted, lead to a flood of frivolous lawsuits for third-party retaliation.

It is unlikely the U.S. Supreme Court will long allow the split in circuits raised by the Thompson decision to stand, and additional guidance is likely. In fact, the Court recently heard arguments on retaliation cases under two different anti-discrimination statutes that provide it with an opportunity to shed additional light on this issue. Although the issues are not precisely the same, in CBOCS West v. Humphries, the Court must decide whether Section 1981 provides a cause of action for retaliation despite the fact that the statute is silent on the issue. Similarly, in Gomez-Perez v. Potter, the issue is whether the ADEA prohibits retaliation against federal workers despite not expressly providing such protection. Rulings in these cases should at least suggest how the Court is likely to resolve the split in circuits resulting from Thompson.

Until then, employers should be aware of the potential for third-party retaliation claims and take steps to protect themselves from liability. In particular, when faced with an EEOC charge or discrimination complaint from an employee who is associated with or related to other employees in the employer’s workforce, the employer should proceed cautiously in making any hiring, promotion, discipline, or termination decisions.
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