Employee Misconduct Does not Eliminate Discrimination Liability

October 12, 2007 (PLANSPONSOR.com) - The 9th U.S. Circuit Court of Appeals has held that an employer does not necessarily escape liability under the Civil Rights Act of 1866, 42 U.S.C. § 1981 by proffering a legitimate reason of theft by the employee for the alleged discriminatory decision.

According to SHRM, the 9th Circuit rejected the so-called “mixed-motive defense” in Section 1981 cases and reversed a grant of summary judgment for the Screen Actors Guild (SAG) by a district court. The district court held that SAG’s legitimate reason for terminating Patricia Heisser Metoyer, namely her admitted misappropriation of funds, precluded liability for any attendant discriminatory animus.

However, the 9 th Circuit said SAG failed to establish that Metoyer was terminated because of her misconduct as an undisputed fact, and concluded that Metoyer presented enough evidence to require a trial on both her discrimination and retaliation claims, SHRM reported.

The Screen Actors Guild (SAG) hired Metoyer, a black woman, as executive administrator of affirmative action in 1998 with the promise it would create a director of affirmative action position for her, and her title and salary would be changed to reflect the higher position. When Metoyer requested that SAG fulfill this alleged promise, Linda Shick, SAG’s national director of human resources, allegedly informed Metoyer there were “no people of color on senior staff” and “it’s very unlikely that there will be.”

Metoyer repeatedly brought employees’ complaints of racial discrimination to SAG’s senior staff, and claimed Schick and Leonard Chassman, Metoyer’s immediate supervisor, responded with blatantly racist comments such as, “I want to keep an eye on them because black people like to party and eat and don’t do their work.” In addition, following a 2000 open letter from SAG’s minority employees to the guild’s senior staff detailing employee concerns about workplace discrimination, Chassman accused Metoyer of promoting discontent within the organization.

When Metoyer confronted Shick about the organization’s EEO-1 report fraudulently overstating the number of minority employees in high-level positions during a department head meeting, Chassman chastised Metoyer as being “out of line.” Metoyer also began complaining that several of SAG’s independent contractors were improperly using Industry Advancement Cooperative Fund (IACF) grant money to pay for personal expenses and projects, and that SAG’s slashing of the affirmative action department’s budget prevented her from hiring an employee to help administer the grants.

Consequently, with Chassman’s approval, Metoyer contracted with Loyola Marymount University to escrow the funds and pay them out on Metoyer’s order. Three affirmative action department workers soon alerted Vicki Shapiro, SAG’s lawyer, that Metoyer had dispersed funds to pay for department events that had not actually occurred.

A PricewaterhouseCoopers investigation revealed Metoyer had dispersed IACF funds to friends, relatives, and business partners for work that could not be verified, and fabricated two invoices in an effort to conceal the payments’ purpose. Although Metoyer admitted to the misconduct, she again complained of racial discrimination, accusing SAG of ignoring her complaints about white independent contractors’ alleged misuse of IACF funds.

Metoyer was suspended with pay pending further investigation of these charges, however, when she refused to participate in SAG’s investigation, she was terminated.

The opinion in Metoyer v. Screen Actors Guild Inc. is here .