Two pending cases give federal appeals courts openings to reassess the “honest belief” rule, a tool courts use to let companies off the hook for allegedly biased employment actions if they offer legitimate reasons based on incorrect information they trusted at the time.
Courts are inconsistent and case law is vague on applying the honest belief rule to discrimination cases, legal observers say. And plaintiffs’ attorneys argue that it gives employers an off-ramp to escape lawsuits via a judge’s conclusion that should be left to a jury.
Even if the circuit courts stick with their approaches to the rule, they could clarify their doctrines for allowing employers to avoid employment discrimination liability based on their honest reliance on faulty facts.
The U.S. Court of Appeals for the Eighth Circuit is considering whether it was appropriate to dismiss an age and sex bias lawsuit under the honest belief rule when the information a supervisor believed was his own perception of a worker’s behavior, rather than a report from a third party.
The Eleventh Circuit, meanwhile, will weigh a broader challenge to the rule in a case involving discrimination allegations against
The judicially created honest belief rule has emerged as a potent defense to discrimination and retaliation claims that hinge on indirect evidence. For instance, employers prevailed in nearly seven in 10 Family and Medical Leave Act lawsuits from 2011 to September 2018 based on their honest belief that a worker was misusing leave.
The basic framework for proving deliberate bias absent direct evidence comes from the U.S. Supreme Court’s 1973 decision in McDonnell Douglas v. Green. Under that structure, a worker first makes an initial showing of discrimination, then the employer gives a legitimate reason for its actions, and finally the worker attempts to debunk that reason as a pretext hiding bias.
The battle over whether an employer’s reason was true or a bogus excuse for discrimination is where the honest belief rule can come in. One classic example is an employer that fires a worker based on too many absences, even though personnel records reveal that the worker had a perfect attendance record. Under the honest belief rule, just because the employer was wrong doesn’t necessarily mean its reason for the termination was pretextual.
Case Law Lacking
Courts are “all over the map” in how they apply the honest belief rule, varying in the extent that they take employers at their word versus requiring evidence that they attempted to verify the information they relied on, said Paul Mollica, an attorney with the plaintiff-side firm Outten & Golden.
Although the rule operates as it should in a small subset of cases, it’s problematic because judges in many cases inappropriately invoke the rule to throw out lawsuits even when there’s evidence that the employer didn’t really believe their stated reasons, said Sandra Sperino, a University of Cincinnati law professor who’s written extensively on discrimination law.
“I haven’t seen many cases explaining the proper and improper uses of the doctrine,” Sperino said. “One of the striking things is appellate courts have developed the honest belief rule and the Supreme Court hasn’t intervened—even though there seems to be a lot of Supreme Court precedent suggesting it shouldn’t exist or exist in a small fraction of cases.”
Courts haven’t wrestled with the inherent tension between the honest belief rule and pretextual analysis portion of the McDonnell Douglas framework, Sperino said. The rule also appears at odds with the Supreme Court’s 1993 ruling in St. Mary’s Honor Center v. Hicks and its 2000 decision in Reeves v. Sanderson Plumbing, which both say a jury’s disbelief of an employer’s explanation can be enough to establish discrimination, she said.
Critics of the honest belief rule say that credibility determinations generally are left to juries or judges in bench trials and not judges at the summary judgment phase.
But the civil justice system couldn’t function if courts couldn’t toss lawsuits before trial based on an employer’s honestly believed reason, said attorney Spencer Silverglate of Clarke Silverglate, who co-wrote a brief for the International Association of Defense Counsel defending the rule.
“Our system wouldn’t survive if trial judges didn’t serve as gatekeepers,” Silverglate said. “It can’t handle everybody getting jury trials.”
FedEx at Heart of 11th Circuit Case
The brief from the IADC argues that the Eleventh Circuit should uphold a Georgia federal judge’s ruling that threw out Roddie Melvin’s age discrimination lawsuit against FedEx. The judge believed that the company fired Melvin for insubordination and leadership failure.
Melvin didn’t provide enough evidence for a jury to reasonably conclude the termination was based on his age, making summary judgment for FedEx appropriate, the defense attorney group said. The Supreme Court said in Reeves that an employer would win as a matter of law if the worker raised “only a weak issue of fact as to whether the employer’s reason was untrue” and there was abundant independent evidence showing no bias, IADC noted.
Plaintiffs’ attorney groups challenging the honest belief rule also cited Reeves to argue an employer’s honest belief defense is always a question for a jury. That ruling said courts should only give credence to evidence favorable to an employer’s summary judgment motion that comes from disinterested witnesses.
Only juries should determine the weight given to managers’ testimony about the honesty of their beliefs because of the personal, professional, and potentially financial interest they have, said the Florida and Georgia chapters of National Employment Lawyers Association.
In their briefs, Melvin’s attorneys didn’t directly argue against the honest belief rule. But Benjamin Stark of Barrett & Farahany, one of Melvin’s lawyers, said the rule is often wrongly applied at the summary judgment phase.
“In the Melvin case, for instance, FedEx merely asserts that Stephens (the decision-maker) believed Melvin committed certain infractions and asks the Court of Appeals to accept his asserted belief,” Stark said via email. “At no point does FedEx discuss whether a jury could believe the contrary evidence—set forth in our briefs—and decide Stephens did not honestly believe his asserted justifications.”
FedEx said in its brief that the honest belief rule isn’t necessary to support summary judgment for the company. No credibility determination is needed because Stephens didn’t rely on erroneous information to fire Melvin, the company said.
A FedEx spokeswoman declined to comment.
Rule Application at Issue in 8th Circuit
Meanwhile, the Eighth Circuit is considering a case that could change or clarify how the honest belief rule works when it’s based completely on a manager’s subjective beliefs. The issue arises in Sheila Main’s appeal of a summary judgment ruling that tossed her age and sex bias lawsuit against Ozark Health Inc.
Ozark said it sacked Main because of her history of unprofessional behavior that culminated in her rudeness toward a client representative in a meeting. Main’s evidence to rebut the company’s depiction included testimony from coworkers and the client representative saying she wasn’t rude during the meeting.
U.S. District Judge
“In this case, where only the evidence supporting the employer’s decision is the decision-maker’s observation, the honest belief rule does not fit because there is nothing for the decision-maker to ‘believe in’ except his own perception, and that has to be subject to a reasonable jury’s determination of whether his view of events is accurate,” Main said in her brief.
Main’s attorney, Carolyn Wheeler of Katz Marshall & Banks, said the honest belief rule is “pernicious” but that she made a narrower argument about the rule based on the facts of the case.
Ozark countered that Main waived her honest belief argument because she didn’t raise it before the district court. As to the substance of Main’s argument, the company said courts shouldn’t invite second-guessing of an employer’s lawful decisions by qualifying the honest belief rule based on the source of the belief.
Ozark’s attorneys didn’t respond to a request for comment.
The honest belief rule has proved durable. The Seventh Circuit’s 2015 decision in Hutchens v. Chicago Board of Education revived a bias case that had been tossed based on the employer’s honest beliefs about the plaintiff’s performance. Deciding whether the employer was honest or whether the plaintiff was actually fired because of her race “are factual issues for a jury to resolve,” the court said.
That opinion by now-retired Judge Richard Posner looked at first like it might be enough to kill the honest belief rule in the Seventh Circuit, said Robert Kearney, a professor of business and employment law at Illinois Wesleyan University. But the rule remains alive, he said.
The rule’s persistence despite the Hutchens decision is partly a function of Posner leaving the bench, as well as the fact-specific nature of the ruling, Kearney said. Moreover, it goes against a wave of other decisions that built the rule over time.
“The honest belief rule didn’t emerge overnight from a single leading case,” Kearney said. “I don’t think you’re going to get a case that announces the end of the rule. There wasn’t a case that announced the beginning of it.”