Supreme Court Update: Staub v. Proctor Hospital (09-400), Wall v. Kholi (09-868), Skinner v. Switzer (09-9000) and CSX Transportation, Inc. v. Alabama Department of Revenue (09-250)

March 21, 2011 Supreme Court Update

Greetings, Court fans!

We're back with the last installment of cases from the past two weeks: Staub v. Proctor Hospital (09-400), upholding the so-called "cat's paw" theory of employment discrimination; Wall v. Kholi (09-868), holding that sentence reduction motions under state law toll the time for filing a federal habeas petition; Skinner v. Switzer (09-9000), holding that state prisoners may seek DNA testing of crime-scene evidence though §1983 actions; and CSX Transportation, Inc. v. Alabama Department of Revenue (09-250), on the discriminatory taxation of rail carriers.

The term "cat's paw" comes from a fable in which a monkey tricks a cat into reaching into a fire to extract roasting chestnuts, then runs away with the chestnuts, leaving the cat with burnt paws. In employment law, it refers to cases in which employees seek to hold employers liable for the discriminatory animus of a supervisor who does not make the ultimate employment decision. (If the connection is not clear to you, it is not clear to Justice Scalia either. He takes a swipe at the reference as "relevant only marginally, if at all" to employment law.) In any event, in Staub v. Proctor Hospital (09-400), the Court held that an employer will be liable for discrimination if a supervisor performs an act motivated by discriminatory animus that is intended by the supervisor to cause an adverse employment action, and the act is a proximate cause of the ultimate employment action – even if that action is officially taken by another decisionmaker without discriminatory animus.

Staub was a technician at Proctor Hospital, as well as a member of the Army Reserve. Staub's supervisors at the hospital were hostile toward his military obligations, making derogatory remarks about his absences, scheduling him for additional shifts without notice, and indicating that they would like to "get rid of him." Critical to this case, one of these supervisors issued Staub a "Corrective Action" warning for purportedly violating a company rule requiring him to stay at his desk when he was not working with a patient. Several months later, the other supervisor told the hospital's VP of human resources that Staub had left his desk, in violation of the Corrective Action. The VP relied on the supervisor's accusation and terminated Staub. Staub challenged the firing through the hospital's grievance process, arguing that his supervisor had fabricated the allegations underlying the Corrective Action out of hostility to his military obligations. The VP stuck to her decision. Staub sued, and a jury found that Staub's "military status was a motivating factor in [the hospital's] decision to discharge him," in violation of the Uniformed Services Employment and Reemployment Rights Act. The Seventh Circuit reversed, and held that the hospital was entitled to judgment as a matter of law. Under Seventh Circuit precedent, employers were not liable for the animus of a supervisor who did not make the ultimate employment decision, unless the supervisor exercised such "singular influence" over the decisionmaker that the decision to terminate was the product of "blind reliance."

The Court reversed, 6-2. (Justice Kagan did not participate.) Writing for the Court, Justice Scalia reasoned that under traditional tort principles, a supervisor's discriminatory actions could be a proximate cause of an adverse employment decision, even if another officer exercised judgment in making the employment decision. The other officer's decision would not be a superseding cause of the harm, where it was foreseeable to (and indeed, desired by) the supervisor with discriminatory animus. The Court rejected the hospital's argument that an employer should be able to negate the effect of prior discrimination so long as the decisionmaker conducts an independent investigation. If the employer can show that it took an adverse action for reasons unrelated to the discrimination, then the employer will not be liable. But an employer cannot avoid liability simply by conducting an independent investigation if the decision is still influenced by the discrimination. Here, a reasonable jury could have found that Staub's supervisors intended for him to be fired, and that their discriminatory actions caused him to be fired.

Justice Alito, joined by Justice Thomas, concurred in the judgment only. In their view, discrimination must be present within the mind of the person who makes the adverse employment decision. The Court need not worry that this would allow employers to escape liability by assigning a formal decisionmaker to rubberstamp the recommendation of others, however – in those cases, the employer would have actually delegated decisionmaking to the person making the recommendation or placing the discriminatory information in the file. In this case, for example, there was sufficient evidence to support a finding that the hospital actually delegated part of the decisionmaking authority to one of the supervisors with discriminatory animus, because the VP of human resources accepted his accusations at face value.

We now turn to a pair of cases on post-conviction review. State prisoners have one year from the time their judgment becomes final to file a federal habeas petition. That time is tolled by an application for state "post-conviction or other collateral review." In Wall v. Kholi (09-868), the Court held that a motion to reduce a sentence under state law constitutes "collateral review" and thus qualifies for tolling. Justice Alito wrote for a unanimous Court. In both ordinary usage and the Court's prior usage, the term "collateral" means a form of review that is not part of the direct appeal process. "Review" refers to a judicial reexamination. The case at hand concerned a Rhode Island Rule of Criminal Procedure that allows a court to reduce any sentence "on reflection or on the basis of changed circumstances that the sentence originally imposed was, for any reason, unduly severe." The Court had little difficulty concluding that a proceeding under this rule would be "collateral," and that it would involve a "review" of the sentence. While the Court has used the phrase "collateral review" to refer to proceeding that challenge the "lawfulness" of a prior judgment, the Court has not limited it to such proceedings. As a policy matter, tolling the limitation period for all "collateral review" motions provides litigants with more opportunity to resolve objections at the state level, potentially obviating the need to resort to federal court.

In Skinner v. Switzer, the Court considered whether state prisoners could seek DNA testing of crime-scene evidence though §1983 actions. Skinner was convicted for a triple-murder in Texas in 1995. Some of the DNA and fingerprinting evidence from the crime scene implicated him, but one item did not, and the State left some items untested. Skinner's petitions for state and federal habeas relief were unsuccessful. Skinner also made two motions under Article 64, a Texas statute that allows prisoners to obtain post-conviction DNA testing in limited circumstances. Skinner's first motion was denied, for failure to demonstrate a reasonable probability that he would not have been convicted if the DNA test results were exculpatory. His second motion was also denied, for failure to demonstrate that the evidence was not tested previously "through no fault" on his part. Specifically, the Texas court noted that Skinner's trial counsel had admitted that he had not asked for testing because he was afraid the DNA would turn out to be Skinner's. Skinner then filed for injunctive relief under §1983, alleging that Texas had violated his Fourteenth Amendment right to due process by refusing to provide the DNA testing he requested. The District Court dismissed the suit, and the Fifth Circuit affirmed, on the ground that post-conviction requests for DNA evidence are cognizable only in habeas corpus, not under §1983.

The Court reversed, 6-3. Writing for the Court, Justice Ginsburg emphasized that the Court was not deciding the merits of Skinner's claim, only holding that it was cognizable under §1983. The Court understood Skinner to challenge Article 64 "as construed" by the Texas courts to foreclose requests by any prisoner who could have sought DNA testing prior to trial but did not. Skinner was not challenging the decisions against him per se. Thus, contrary to the State's arguments, Skinner's challenge was not barred by the Rooker-Feldman doctrine. That doctrine only bars federal suits which seek review and rejection of a state court decision; it does not bar suits challenging the statute or rule governing the decision. Turning to whether Skinner could present his challenge in a §1983 action, and not just through a habeas petition, the Court adhered to its prior holdings that §1983 is available where a judgment in the plaintiff's favor would not "necessarily imply the invalidity of his conviction or sentence." Even if Skinner succeeded in getting DNA testing, it would not "necessarily imply" the invalidity of his conviction: the results might be inconclusive or even inculpatory. Thus, he was entitled to proceed under §1983. The Court dismissed the dissent's concern about a proliferation of §1983 actions seeking post-conviction relief. The Court had previously rejected a substantive due process right to DNA testing, and left "slim room" for a prisoner to show a procedural due process violation. Nothing in the present opinion changed that.

Justice Thomas dissented, joined by Kennedy and Alito. Given that the Court has rejected §1983 challenges to state trial procedures, the dissenters saw no principled reason to allow §1983 challenges to state procedures for reviewing the validity of convictions. Congress and the Court have placed restrictions on federal habeas review of state convictions and habeas decisions, out of concerns for federal-state comity. The majority's decision would allow unsuccessful state habeas petitioners to make an end-run around these restrictions by artfully pleading an attack on state habeas procedures rather than state habeas results. The dissent asked: "What prisoner would not avail himself of this additional bite at the apple?"

Our last case, CSX Transportation, Inc. v. Alabama Department of Revenue, is the most scintillating of the bunch – that is, if you're a railroad tax practitioner. The Railroad Revitalization and Regulatory Reform Act of 1976, affectionately known as the "4-R Act," restricts state and local governments from imposing discriminatory taxes on rail carriers. Section 11501(b)(1)-(3) of the Act expressly prohibit states and local governments from assessing taxes on railroad property at a higher rate than other commercial and industrial property. Subsection (b)(4) prohibits the imposition of "another tax that discriminates against a rail carrier." Alabama charges general sales and use taxes, which railroads pay when they purchase or consume diesel fuel. But the railroads' main competitors, interstate motor and water carriers are generally exempt from paying sales and use taxes on their fuel. Rail carrier CSX complained that Alabama thereby discriminated against rail carriers, in violation of the 4-R Act. The District Court dismissed CSX's suit as not cognizable under the 4-R Act, and the Eleventh Circuit affirmed.

The Court reversed, 7-2, led by Justice Kagan. The sales and use taxes at issue were clearly "another tax" under §11501(b)(4). The key question was whether a tax could be said to "discriminate" against a railroad just because the State had granted exemptions to other entities. Looking to Black's Law Dictionary, "discrimination" is the "failure to treat all persons equally where no reasonable distinction can be found between those favored and those not favored." An exemption does just that (assuming that the groups are similarly situated and there is no justification for the difference in treatment). Thus, state sales and use taxes that apply to railroads but exempt their interstate competitors are subject to challenge under §11501(b)(4). The Court distinguished the case before it from an earlier decision in which it held that railroads could not sue states under subsection (b)(4) for imposing property taxes on railroads while exempting certain other commercial property. That decision turned on the fact that subsections (b)(1)-(3) expressly addressed property taxes and compared only property that was actually taxed, not all property that was taxable. The Court acknowledged that distinguishing between property tax exemptions and other tax exemptions made "not a whit of sense." But that choice was not the Court's to make: "Congress wrote the statute it wrote." As to the merits of CSX's argument, the Court left them for the lower courts on remand.

Demonstrating that this case did not push any ideological hot buttons, Justice Thomas was joined by Justice Ginsburg in dissent. In their view, §11501(b)(4) reaches only tax exemption schemes that target or single out railroads as compared to other commercial and industrial taxpayers. As the majority noted, subsection (b)(1)-(3) prohibit taxing railroad property at a higher rate than other commercial and industrial property. Thus, when subsection (b)(4) speaks of "another tax that discriminates," context suggests that it is concerned with discrimination vis-a-vis commercial and industrial property. By detaching (b)(4) from the rest of §11501, and failing to define the comparison class, the majority's position would allow railroads to challenge any exemptions they did not receive, setting them up for a "surprising windfall: most-favored taxpayer status."

Thanks for hanging in there with us as we worked our way through the first large batch of the season. We'll be back when the Court returns with orders and decisions this coming week.

Kim and Jenny

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