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Perhaps seeing ‘writing on the wall,’ 7th Circuit vacates panel decision that Title VII doesn’t cover sexual orientation

By Lisa Milam-Perez, J.D. and Cynthia L. Hackerott, J.D.

When it issued its July 2016 decision holding that sexual orientation is not a protected category under Title VII, the Seventh Circuit panel conceded that “perhaps the writing is on the wall” that the time of lawful employment discrimination on the basis of sexual orientation is near an end. Still, the panel concluded that sexual orientation is beyond the current scope of Title VII, remaining steadfast “[u]ntil the writing comes in the form of a Supreme Court opinion or new legislation.” Today, however, the full Seventh Circuit issued an order vacating its panel opinion in Hively v. Ivy Tech Community College—a decision that, while firmly grounded in circuit precedent, had caused a considerable stir—and granted en banc rehearing.

“It seems unlikely that our society can continue to condone a legal structure in which employees can be fired, harassed, demeaned, singled out for undesirable tasks, paid lower wages, demoted, passed over for promotions, and otherwise discriminated against solely based on who they date, love, or marry,” the panel majority had observed in July. “The agency tasked with enforcing Title VII does not condone it; many of the federal courts to consider the matter have stated that they do not condone it; and this court undoubtedly does not condone it.” But at that time, that was not enough for the Seventh Circuit to hold that Title VII protections cover discrimination based solely on sexual orientation.

Vacated decision. The underlying case was brought by a part-time adjunct professor who alleged that a community college denied her full-time employment and declined to renew her part-time teaching contract due to her sexual orientation. In its July decision, the Seventh Circuit referenced two cases, released two months apart in 2000, in which it held that Title VII offers no protection from, nor remedies for, discrimination based on sexual orientation. These cases—Hamner v. St. Vincent Hosp. & Health Care Ctr., Inc. and Spearman v. Ford Motor Co.—held that harassment based solely upon a person’s sexual preference or orientation is not an unlawful employment practice under Title VII. The Seventh Circuit has cited those cases in ruling, “without exception,” that the Title VII prohibition on discrimination based on “sex” extends only to discrimination based on a person’s gender and not that aimed at a person’s sexual orientation.

In line with other circuits? Not only has Seventh Circuit precedent been unequivocal in holding that Title VII does not redress sexual orientation discrimination, its precedent is in line with all other circuit courts to have decided or opined about the matter, the appeals court had observed, citing decisions from the First, Second, Third, Fourth, Fifth, Sixth, Eighth, Ninth, and Tenth Circuits, as well as the D.C. Circuit. These holdings reflect the fact that despite multiple efforts, Congress has repeatedly rejected legislation that would have extended Title VII to cover sexual orientation, even in the face of “an abundance of judicial opinions recognizing an emerging consensus that sexual orientation discrimination in the workplace can no longer be tolerated,” the appeals court wrote.

EEOC decision in Baldwin v. Foxx. Judges Rovner and Bauer went on to consider the EEOC’s July 2015 decision in Baldwin v. Foxx, where the Commission concluded, for the first time, that sexual orientation is inherently a “sex-based consideration,” and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII. Even though the holding in Baldwin applies only to federal government employees, its reasoning would be applicable in private employment contexts too, the Seventh Circuit said, adding that although EEOC rulings are not binding on the federal courts, they are entitled to some level of deference. Nevertheless, whatever deference the court might owe to the EEOC’s adjudications, it still concluded that Title VII, as it stands, does not reach discrimination based on sexual orientation.

Yet the majority acknowledged that other federal courts are taking heed of the reasoning behind Baldwin and “beginning to question the doctrinaire distinction between gender non-conformity discrimination and sexual orientation discrimination and coming up short on rational answers.” The majority further “[took] to heart” the EEOC’s criticism of the Seventh Circuit’s lack of recent analysis and took a fresh look at the issue in light of recent legal developments and changing workplace norms.

The Price Waterhouse conundrum. In an exhaustive analysis, the panel majority highlighted the dilemma facing district courts in addressing the distinction between gender nonconformity discrimination and sexual orientation discrimination, and queried “whether the sexual orientation-denying emperor of Title VII has no clothes.” Disentangling gender stereotyping from sexual orientation discrimination may be difficult, the judges noted, but case law demonstrates it is not impossible.

As such, the majority observed that its understanding of Title VII left it with “a somewhat odd body of case law that protects a lesbian who faces discrimination because she fails to meet some superficial gender norms—wearing pants instead of dresses, having short hair, not wearing make-up—but not a lesbian who meets cosmetic gender norms, but violates the most essential of gender stereotypes by marrying another woman. We are left with a body of law that values the wearing of pants and earrings over marriage.”

Associational discrimination quandary. There was also an uncomfortable inconsistency in courts’ application of Title VII to sex as opposed to race—specifically,the way courts have addressed associational discrimination claims, the appeals court pointed out. Given that courts have consistently protected from discrimination a white woman who is fired for romantically associating with an African-American man, then logically courts “should also protect a woman who has been discriminated against because she is associating romantically with another woman, if the same discrimination would not have occurred were she sexually or romantically involved with a man,” the panel majority had reasoned.

Supreme Court decisions. The panel majority also discussed the High Court’s more recent decisions in Oncale v. Sundowner Offshore Servs., Inc. (1998), which held that a sexual harassment claim is cognizable under Title VII regardless of the sexual orientation of the parties involved, and Obergefell v. Hodges (2015), where the Court ruled that under both the Due Process and Equal Protection Clauses of the Fourteenth Amendment, same-sex couples have the right to marry in every state.

Although Obergefell and other recent High Court decisions addressing the constitutional rights of gays and lesbians do not “directly impact the statutory interpretations of Title VII,” the majority bemoaned the “paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act.” Oddly, despite Price Waterhouse and Oncale, the Supreme Court made no mention in Obergefell “of the stigma and injury that comes from excluding lesbian, gay, and bisexual persons from the workforce or subjecting them to un-remediable harassment and discrimination.”

Congress is silent. Moreover, “[i]n addition to the Supreme Court’s silence, Congress has time and time again said ‘no,’ to every attempt to add sexual orientation to the list of categories protected from discrimination by Title VII.”

Rehearing. The panel majority was clearly frustrated by the incongruities between existing Title VII law and the rapidly changing societal norms and emerging legal rights for LGBT individuals outside the employment context. With its decision to reconsider the case en banc, the Seventh Circuit has signaled that it might well be looking to move the needle a bit in this regard itself.