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Employers likely to prevail in LGBT cases at Supreme Court with Kennedy retirement

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Employers will likely have an easier time combating claims of Title VII sexual orientation discrimination in front of a U.S. Supreme Court without Justice Anthony Kennedy, but he took more conservative positions on other key labor and employment issues, meaning the overall environment for employers may not change much, experts say.

Justice Kennedy — the high court’s swing vote on major cases involving abortion, affirmative action, provisions of the Affordable Care Act, voting rights, gay marriage and rights, and immigration — announced Wednesday he is retiring effective July 31.

In terms of labor and employment law, Justice Kennedy’s absence is likely to have a major impact on cases involving sexual orientation and gender identity discrimination because the Supreme Court is likely to consider the issue due to a split in the lower circuit courts, experts say.

In February, the 2nd U.S. Circuit Court of Appeals in New York held that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation. The 10-3 en banc ruling in Melissa Zarda et al. v. Altitude Express was based on a case involving Donald Zarda, a gay skydiver, who sued his former employer, Calverton, New York-based Altitude Express Inc., alleging he was fired from his job as a skydiving instructor because of his sexual orientation.

In April 2017, the 7th U.S. Circuit Court of Appeals in Chicago also held in Kimberly Hively v. Ivey Tech Community College that sexual orientation is protected under Title VII, in a case filed by a lesbian college instructor.

But these rulings conflict with a 2-1 ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in March 2017 in Jameka K. Evans v. Georgia Regional Hospital, which held that Title VII does not cover sexual orientation. That lawsuit was filed by a lesbian security guard, who charged she was denied equal pay or work, harassed and physically assaulted or battered while at her job at Georgia Regional Hospital in Savannah.

“That issue is going to go before the Supreme Court for sure in the next year or two,” said Jack Lord, co-chair of Foley & Lardner L.L.P.’s labor and employment practice group and chair of the firm’s LGBT affinity group. “If Justice Kennedy had stayed, I think odds are it would have been a 5 to 4 ruling saying that Title VII sex (discrimination) also includes gender identity and sexual orientation discrimination. I think now it’s going to be a 5-4 decision, but the other way.”

The Supreme Court declined to hear an appeal in the Evans case, likely because of procedural issues, but could accept an appeal on the Zarda case, said Brian Paul, a Chicago-based partner in Michael Best & Friedrich L.L.P.’s labor and employment group.

“Eventually, the issue will get to the Supreme Court because it’s too fundamental an issue not to,” he said.

Among LGBTQ Americans, 20% reported they have personally experienced discrimination because of their sexuality or gender identity when applying for jobs, while 22% said they were discriminated against in being paid equally or considered for promotion, according to a 2017 survey conducted for National Public Radio, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health.

Justice Kennedy “has been a consistent voice in expanding the rights of the LGBT community,” said Rich Meneghello, partner in the Portland, Oregon, office of Fisher & Phillips L.L.P. “Many assumed he would have been the author of the eventual decision that would have expanded or confirmed that sexual orientation should be a protected class under Title VII. If you read tea leaves, the concern for employee advocates is that either the court will not accept any of the cases up for review and leave this hodgepodge at the various state and local levels, or they will accept one of those cases and the conservative bloc will say sexual orientation is not included in the statute and therefore we’re not going to read it into the statute.”

But Justice Kennedy was a reliably conservative vote in other rulings critical to the business community, experts note. For example, the Supreme Court on Monday in Janus v. American Federation of State, County, and Municipal Employees, Council 31 overturned its 1977 decision in Abood v. Detroit Board of Education, which allowed public-sector unions to collect fees from workers who had not joined the union but benefit from the union’s contract and other services. Justice Kennedy joined the 5-4 majority in ruling that the application of public-sector union fees to nonmembers is a violation of First Amendment rights.

“Even though Kennedy has always been more reliably moderate when it comes to social issues, he has ended up tilting on the conservative side in those 5-4 cases more often than not,” Mr. Meneghello said.

“Employers have enjoyed the benefit of having the court on their side for the better part of the last decade and I don’t think that will change any time soon,” he added.

And in May, in National Labor Relations Board v. Murphy Oil USA, Epic Systems Corp. v. Lewis, and Ernst & Young v. Morris, the justices, including Justice Kennedy, sided 5-4 with a growing practice by companies to compel workers to sign arbitration agreements waiving their right to bring class action claims on issues such as overtime wages or gender-based pay disparities, either in court or before private arbitrators.

In April 2017, Neil Gorsuch was confirmed to fill the Supreme Court seat vacant since the February 2016 death of Justice Antonin Scalia via the “nuclear option,” meaning U.S. Senate rules were changed to allow his confirmation with 51 votes rather than the 60 votes needed to overcome a filibuster — an option likely to be utilized again to fill Justice Kennedy’s seat given the Republicans one-vote majority in the Senate and the expectation that President Donald Trump will nominate a conservative judge similar to Justice Gorsuch to replace him.

“We all know the president is going to replace Justice Kennedy with someone who is even more conservative,” Mr. Lord said. “For businesses, that means that the labor and employment landscape almost assuredly will be an easier one to deal with.”

In previewing the 2018-19 court term, however, Mr. Meneghello said there were no blockbuster cases on the labor and employment horizon.

Employers “got their two huge victories in the past month in the class action waiver case and the Janus case,” he said. “I actually predict employment law might take a back seat for the next year or two.”