Archive for June, 2006

Ignoring Limits on Harassment Liability

Back in 1999, in Davis v. Monroe County Board of Education, the Supreme Court laid down a test for when sexual harassment rises to the level of “discrimination” for purposes of Title IX, the federal law banning sex discrimination in schools. Recognizing the fact that students frequently insult and tease one another in ways that would be intolerable in the workplace, the court set the bar higher for plaintiffs suing schools rather than employers. Instead of having to show just that harassment was “severe or pervasive” enough to create a “hostile or offensive environment,” as employees do, students have to show that harassment was severe and pervasive enough to interfere with access to an education.

Oddly, this protection against lawsuits has been overlooked not just by some lower court judges, but also by the very schools that benefit from it. In Jennings v. University of North Carolina, the Fourth Circuit Court of Appeals is rehearing en banc a recent panel decision which ruled 2-to-1 against a harassment claim based on inappropriate sexual discussions between a male coach and female athletes, which the plaintiff witnessed.

The panel majority argued that the conduct was not “severe or pervasive” enough to create a “hostile environment,” since the discussions were seldom aimed at the plaintiff. (Courts have typically given little weight to such “second-hand harassment”). The dissent argued that the conduct was severe or pervasive enough to create a hostile environment. The University seems not to have disputed that the “severe or pervasive” standard applied, or that the plaintiff could prevail merely by showing the existence of a “hostile environment,” even though other courts have recognized that harassment of students by school employees must be both severe and pervasive enough to interfere with access to an education.

But the standard for harassment claims against schools is more exacting, by design. In the higher education context, there are additional reasons for a more demanding standard. As Justice Kennedy observed in his dissent in the Davis case, the lower courts have repeatedly invalidated college harassment codes on First Amendment grounds. Most of the cases Justice Kennedy cited involved codes that banned speech that creates a hostile environment, much like workplace harassment law.

While a single offensive utterance doesn’t create a hostile work environment all by itself, a complainant can allege a hostile environment based on the offensive utterances of many different speakers, even if none of them individually make many offensive statements or intend to create a hostile environment. That effectively forces many employers to adopt “zero tolerance” policies banning racist or sexist speech.

By contrast, the Fourth Circuit’s own ruling in Iota Xi Chapter of Sigma Chi Fraternity v. George Mason University, 993 F.2d 386 (4th Cir. 1993), prevented a university from prohibiting racist and sexist student speech that allegedly created a “hostile and distracting learning environment.”

Moreover, students routinely have R-rated discussions in college dorm rooms that might give rise to a sexual harassment claim under the PG-rated standards of the workplace. As the Eleventh Circuit observed in Sparks v. Pilot Freight Carriers, 830 F.2d 1554, 1561 n.13 (11th Cir. 1987), “most complaints of sexual harassment are based on actions which, although they may be permissible in some settings, are inappropriate in the workplace.”

By relying on workplace standards, the university may well lose a case it would otherwise win. As a result, colleges in the Fourth Circuit may end up having to police private sexual conversations among students in ways that are difficult to enforce, especially if the full Fourth Circuit rejects the panel’s reasoning and treats comments overheard by a plaintiff, but not aimed at her, as harassment.

Spitzer, Faso, and the New York high court

I’ve got an op-ed today in the New York Post about one of the less obvious issues in the high-profile race for Governor of New York: whoever wins will get to reshape the state’s highest court, the Court of Appeals, with implications long into the future for the state’s legal well-being. Would a Gov. Spitzer appoint anti-business crusaders to the court? (Walter Olson, “N.Y. Judge Wars: Hidden ’06 Issue”, New York Post, Jun. 30)(cross-posted at Point of Law) (& welcome readers of Prof. Bainbridge, who says kind things).

“Making Civil Justice Sane”

In the Manhattan Institute’s City Journal, Philip K. Howard, president of Common Good and a longtime friend of this site, contributes an essay on fixing our litigation system. Among his topics: the need for a robust principle of assumption of risk; lessons from the U.K., where a “compensation culture” has spread despite a set of legal procedures that is the dream of reformers on this side of the Atlantic; the role of summary judgment and Daubert review; and the role of predictable law in maintaining the principle of the rule of law (Spring).

Sarbanes-Oxley Challenged in Court

In 2002, Congress passed the Sarbanes-Oxley Act in response to the Enron scandal, greatly expanding regulation of American business. It sharply increased criminal penalties for securities law violations, and created an extremely broad new cause of action for employees seeking to sue over alleged retaliation. It also set up the Public Company Accounting Oversight Board (PCAOB) to regulate the accounting firms that audit America’s public companies. The PCAOB has generated endless red tape. Its rules micromanaging companies’ internal controls, which require auditors to examine such minute details as which employee has access to which computer password, cost the American economy billions of dollars, contributing to an overall price tag for Sarbanes-Oxley of at least $35 billion a year.

A small accounting firm, assisted by the Competitive Enterprise Institute, recently filed a lawsuit challenging the PCAOB as a violation of the Constitution’s Appointments Clause. The lawsuit points out that PCAOB’s board is neither appointed by the President with the consent of the Senate, as the Appointments Clause requires for the nation’s principal officers, nor is it picked by the head of an executive branch department, as the Clause requires for “inferior” officers. Yet the board exercises significant authority under federal law, including the power to investigate accounting firms and fine them up to $2 million for inadvertent violations of PCAOB rules. One of Sarbanes-Oxley’s sponsors candidly admitted that the PCAOB would effectively wield “massive, unchecked powers.” PCAOB board members are accountable only to the SEC, whose five commissioners, acting as a group, pick them to serve for a period of five years.

The PCAOB has moved to dismiss the lawsuit on procedural grounds, alleging that the constitutional arguments should have been presented first to the SEC rather than the courts, and that the accounting firm and its co-plaintiff, the Free Enterprise Fund, lack standing to challenge the manner in which the PCAOB’s board is appointed. Today, a federal district judge in Washington, D.C., will hear arguments on the PCAOB’s motion to dismiss.

“Middle-class peeves cost more money than exists”

Via R.J. Lehmann (Mar. 27), here are some figures indicating that the sum total of the alleged costs of other people’s bad behavior may well exceed the total sum of money in existence. To be more specific: start by adding up the claimed health expenses, productivity losses and other social costs of such indulgences as alcohol ($185 billion a year, it’s said with spurious precision), overeating ($115 billion), gambling ($54 billion), and so forth. Then throw in categories such as the costs of crime, time wasted by employees visiting web sites and watching sports events, and so forth. By the time you’re done, Lehmann says, you can “come up with a grand total of $7.39 trillion – well in excess of the $6.70 trillion that actually exists” — at least if you’re willing to include a few dodgy entries in the catalog, such as taxes. (Thomas C. Greene, The Register (UK), Mar. 16).

It’s not hard to see the relevance of this line of logic to themes often dealt with in this space. In the utopia of the litigators we would succeed in charging the social costs of our overeating to the food business, the costs of our gambling to the casinos and lotteries that led us on, the costs of 9/11 to assorted banks, airlines, building owners and Saudi nabobs, the costs of street crime to deep-pocketed entities guilty of negligent security, and so on and so forth for the costs of auto accidents, pharmaceutical side effects, failure to learn in school, domestic violence, etc. It would not be surprising if the sum total of all the different injuries, insults and indignities dealt out to the human race, if monetized at the rates prescribed by advocates, handily exceeded the sum total of wealth on hand to pay, even were the whole wealth of the world placed at the courts’ disposal.

From anti-gun litigation to hunter advocacy?

It seems Robert Ricker, active as an expert witness on the plaintiff’s side in lawsuits against the firearms industry, has now reinvented himself as a “sportsmen’s advocate”. David Hardy, at Arms and the Law, begs to differ with the notion that Ricker is a former “chief lobbyist for the NRA” [National Rifle Association]. (Jun. 25; see Phil Bloom, “New group defies NRA, Brady outfit on gun issues”, Fort Wayne Journal-Gazette, Jun. 25). At Washington Monthly, Christina Larson is promoting Ricker’s activities, but has met with some skepticism from commenters (Jun. 18 and Jun. 20).