Gross v. FBL Financial Services, Inc. (08-441), Forest Grove School District v. T.A. (08-305) and Yeager v. United States (08-67)

June 25, 2009 Supreme Court Update

Greetings, Court fans!

Welcome back for Part III, which will cover three significant decisions: Gross v. FBL Financial Services, Inc. (08-441), resolving the burden of proof in a "mixed motives" case under the Age Discrimination in Employment Act ("ADEA"); Forest Grove School District v. T.A. (08-305), discussing the circumstances under which reimbursement of private school expenses is permitted under the Individuals with Disabilities Education Act; and Yeager v. United States (08-67) , considering the Double Jeopardy ramifications of a hung jury on whether the jury necessarily decided an issue critical to charges the government wants to retry.

In Gross v. FBL Financial Services, Inc. , the Court ruled 5-4 that a plaintiff bringing an ADEA disparate treatment claim must prove that age was "the ‘but for' cause" of the challenged employment action, rejecting application of the burden-shifting framework applied to mixed motives cases under Title VII (and making it a heck of a lot harder for plaintiffs to prevail on these claims). Jack Gross claimed that he was demoted by FBL based "at least in part" on age. FBL, on the other hand, claimed the reassignment was part of a corporate restructuring. The district court instructed the jury that, to prevail, Gross needed to establish that "age was a motivating factor in FBL's decision to demote him," defining a "motivating factor" as one that "played a part or a role" in the employment decision. If Gross succeeded, the burden shifted to FBL to prove that it "would have demoted Gross regardless of his age." The jury returned a verdict for Gross, but the Eighth Circuit reversed and remanded, holding that because Gross had failed to present "direct evidence" that the demotion was based on a discriminatory motive, he was not entitled to the mixed-motives instruction.

The Court granted cert to determine the type of evidence necessary for a mixed-motives instruction, but the majority, led by Justice Thomas, ended up concluding that a mixed motives burden shifting instruction is never appropriate under the ADEA. To get there, it had to get past Price Waterhouse v. Hopkins, its 1989 decision adopting the burden shifting framework for mixed-motives claims under Title VII—based on identical statutory language. The majority clearly wasn't a fan of Price Waterhouse, and implied that it would have decided the case differently, but it did come up with a plausible basis for distinguishing Title VII from the ADEA. In the wake of Price Waterhouse , Congress amended Title VII to expressly allow discrimination to be established when race, color, religion, sex, or national origin was a "motivating factor" behind an employment practice. Congress did not similarly alter the ADEA even though it contemporaneously amended it in other respects. The majority took this as strong evidence that Congress did not intend to allow ADEA claims where age was only a motivating factor, rather than the cause. The text of the ADEA confirmed this conclusion because the plain meaning of "because of" age meant that age must be the "but for" cause of the employer's action. And plaintiff, not defendant, bears this burden of proof.

Justice Stevens, joined by Souter, Ginsburg, and Breyer, dissented. In their view, the best reading of "because of" age was that age was a motivating factor in the decision—the same conclusion reached in Price Waterhouse, when the Court interpreted identical language in Title VII. Congress's ratification of the Price Waterhouse motivating factor interpretation of Title VII cut in favor, not against, applying it to the ADEA (especially since the reason for the amendment was to make the law even more favorable to plaintiffs than Price Waterhouse did). The dissent also criticized the majority for raising the mixed-motives issue on its own initiative, when the issue had not been adequately briefed. Justice Breyer dissented separately (joined by Souter and Ginsburg) to add that the burden-shifting approach is appropriate because the employer is in a better position to answer the "hypothetical inquiry" of what would have happened if the forbidden motive had not played a part in the employer's decision.

Next, in Forest Grove School District v. T.A., the Court revisited (after a 4-4 split with no opinion in Board of Ed. of City School Dist. of New York v. Tom F. in 2007) the thorny question of whether the Individuals with Disabilities Education Act (IDEA) authorizes reimbursement for private school expenses when a child has not previously received special education services in the public schools. In 2001, Forest Grove School District determined that T.A. did not have ADHD and did not qualify for special education services. But T.A. continued to struggle, and in 2003, his parents took him to a private psychologist who diagnosed T.A. with ADHD and other learning disabilities and recommended that he attend a private residential school for children with special needs. T.A.'s parents followed this advice and then initiated an administrative due process hearing seeking a determination that T.A. was eligible for special education services under the IDEA. The District continued to contend that T.A. was not sufficiently disabled to qualify for services, but the hearing officer disagreed. Further, since the District had refused to provide any individualized education plan (IEP) to T.A., the hearing officer found that it had failed to provide T.A. a free and appropriate public education (FAPE) as required by the IDEA and ordered the District to reimburse T.A.'s parents for the costs associated with the private school, which the hearing officer found to be an appropriate placement. On review, the district court accepted the hearing officer's finding of facts, but found that the1997 Amendments to IDEA, which expressly authorized reimbursement of private school tuition for a child that has "previously received special education . . . services under the authority of [the] agency," implicitly barred such reimbursement for those who had not previously received such services in the public schools. The Ninth Circuit reversed. It did not believe the Amendments categorically barred reimbursement in this circumstance, finding that two earlier Supreme Court cases—School Comm. of Burlington v. Dept. of Ed. of Mass. and Florence County School Dist. Four v. Carter —which had found reimbursement justified under "appropriate" circumstances were unaltered by the Amendments.

The Court, led by Justice Stevens agreed. Burlington and Florence had found that reimbursement of private school tuition may be "appropriate" where a school district offers a deficient IEP. This conclusion certainly should not be altered by the fact that the District here "fail[ed] to propose an IEP of any kind." While the 1997 Amendments made clear that reimbursement of private tuition was permitted in the former circumstances, it did not exclude reimbursement here. Notably, the amendments did not modify the provision actually relied upon in Burlington and Florence —which was significant, since Congress is presumed to be aware of judicial interpretations of statutory provisions when revisiting them and "repeals by implication are not favored." Further, it would be "particularly strange" to allow reimbursement in situations where a school district offered inadequate special education services, but foreclose it where the district unreasonably denied a child access to such services altogether. The Court also was not moved by the potential financial burdens its decision might impose on school systems, since district courts would still need to determine the equities in each case, and a parent who unilaterally places their child in private school does so at the risk that reimbursement will not be deemed "appropriate" in their child's case.

Justice Souter, joined by Thomas and Scalia, dissented, noting that special needs education costs tens of billions of dollars – 20 of public schools' budgets – and that the costs rise dramatically when private placement increases. But his real beef was with the majority's "overstretch[ed]" statutory interpretation of the 1997 Amendments. Yes, he said, theoretically the "permissive" language regarding reimbursement could allow the majority interpretation, but this neglected the "natural sense," of the language, which often "prohibit[s] what it fails to authorize": "When a mother tells a boy that he may go out and play after his homework is done, he knows what she means." The majority's counter-intuitive reading would render the Amendment superfluous.

Finally, the Court served up an important Double Jeopardy decision in Yeager v. United States , involving a former Enron executive who made millions from trading his shares of Enron stock after allegedly deceiving the public about the company's real situation. Yeager was acquitted on securities and wire fraud charges, but related insider trading and money laundering charges resulted in a hung jury. In a 6-3 decision, Justice Stevens held that the government could not prosecute Yeager again on the hung charges of insider trading without violating Double Jeopardy. Under established case law, the government is precluded from relitigating an issue that was necessarily decided by the jury in acquitting the defendant. Here, the Fifth Circuit had found that in acquitting Yeager on the fraud charges, the jury necessarily determined that Yeager did not possess inside information that contradicted information that he presented to the public (a conclusion that ordinarily would bar retrial on the securities charges). But the Fifth Circuit went on to conclude that, as a result, no rational jury could have acquitted Yeager on the fraud charges without also acquitting, rather than hanging, on the insider trading charges. It was therefore impossible to determine what the jury "necessarily" had concluded in acquitting Yeager—and Double Jeopardy thus did not apply. The Court reversed, ruling that the Fifth Circuit erred by relying at all on the hung jury in its Double Jeopardy analysis, because the jury's inability to reach a verdict on the insider trading accounts was a "nonevent" that cannot be considered. A jury "speaks only through its verdict," and "there is no way to decipher what a hung count represents" without impermissible "guesswork." The majority nonetheless remanded to allow the Fifth Circuit, "if it chooses," to reconsider whether the jury necessarily determined that Yeager did not possess inside information in acquitting him on the fraud charges, or whether there were other possible bases for the jury's acquittal—e.g., a finding that Yeager did not cause any fraudulent statements to be made to the public.

Justice Scalia, joined by Justices Thomas and Alito, argued in dissent that the majority wrongly expanded existing precedent by applying Double Jeopardy within the same proceeding—because retrying a defendant on charges on which the jury did not reach a verdict is not a new proceeding exposing the defendant to a second jeopardy, but a continuation of the initial jeopardy. Justice Alito wrote separately to emphasize that, even assuming Double Jeopardy applies, the issue preclusion standard is extremely demanding. It requires a determination that an acquittal would have been irrational unless the jury found for the defendant on the factual issue the government seeks to relitigate, and the Court therefore should have more closely examined whether there was an alternative basis for the jury's acquittal on the fraud charges. Alito's dissenting opinion prompted Justice Kennedy to write a concurrence, to state that he would have required, rather than merely allowed , the Fifth Circuit to re-examine this issue on remand.

The Court clearly does not want me to get caught up, as it issued four more decisions today. I'll be back soon to bring you summaries of the three outstanding decisions as well as the four issued today. I expect that the few decisions yet to be issued—including the momentous Ricci v. Destefano —will come down on Monday, allowing the Court to wrap things up before the holiday weekend.


From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400