Who qualifies as a supervisor in cases where an employee sues for workplace harassment?

How the Supreme Court’s Latest Decision Affects Employers and Employees For companies that employ 15 or more employees beware: Title VII of the 1964 Civil Rights Act gives employees the right to sue if they suffer workplace discrimination based on race, color, religion, sex, national origin, or gender identity.

This past week, the U.S. Supreme Court made an important decision regarding employer liability for employee harassment under Title VII by holding that the definition of a “supervisor” is someone who is “empowered by the employer to take tangible employment decisions affecting the victim.”

What does the Supreme Court’s decision mean for employers? The court’s ruling potentially limits the circumstances in which an employer can be held strictly liable for discriminatory acts by employees.

Title VII provides that if a harassing employee is a coworker of the victim, the employer is liable only if it was negligent, i.e., if the employer knew or reasonably should have known about the harassment but failed to take remedial action in controlling working conditions.

In cases in which the harasser is a “supervisor” of the victim, different rules apply. If the supervisor’s harassment results in a so-called “tangible employment action” (such as firing, demotion, reassignment, reduction in benefits, etc.), then the employer is strictly liable. If no “tangible employment action” is taken, the employer may only escape liability by establishing that (1) the employer exercised reasonable care to prevent and correct any harassing behavior and (2) that the plaintiff unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided.

Of major concern to employers, therefore, is whether the harassing employee is a “supervisor” or merely a “coworker” of the victim. Until this week, courts disagreed about the meaning of “supervisor” in this context. Some courts treated an employee as a “supervisor” if he or she had the ability to inspect and exercise significant direction over another’s daily work. Other courts held that the definition should be narrower in scope, confined only to those who had the power to hire or fire their subordinates.

In the case brought before the Supreme Court, the plaintiff, an African-American woman (Vance), sued her employer (Ball State University) under Title VII on the basis that her higher-ranking coworker harassed her and created a racially hostile work environment. The nature and scope of the harassing employee’s duties was the subject of dispute, but the parties agreed that the harassing employee did not have the power to hire, fire, demote, transfer, or discipline Vance. It was on that basis that the Court found Ball State University was not strictly liable for the harassment. The Court rejected the broader, more open-ended definition of “supervisor,” ruling that an employer may only be held legally responsible for an employee’s unlawful harassment if the harassing employee has the power to effect a significant change in the employment status of the victim, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits. Thus, the harassing employee, who could not take tangible employment actions against the victim, was not a “supervisor” under the law.

The Court’s ruling purports to harmonize the law with the reality that many modern organizations have abandoned a hierarchical management structure in favor of giving employees overlapping authority with respect to work assignments.

Critics fear that this rule will enable employers to insulate themselves from liability for workplace harassment by empowering only a handful of individuals to take tangible employment actions. However, the Court advises that its decision will not leave employees unprotected against harassment by coworkers who possess some authority to assign daily tasks. In such cases, a victim may still prevail against an employer simply by showing that the employer was negligent in permitting the harassment to occur.

Ninth Circuit Decides A Copyright Troll Has No Standing to Sue

“Trolls,” or intellectual property assertion entities, refer to business entities that purchase I.P. portfolios and file infringement lawsuits. Many are familiar with this concept in the patent context, but few recognize there are also assertion entities that purchase copyright assignments.

In a recent Ninth Circuit case, Righthaven LLC v. Hoehn, 2013 WL 1908876, the panel affirmed the district court’s decision that Righthaven, a non-practicing entity that sued for the unauthorized posting of articles online, did not have standing for the copyright infringement lawsuit.

Under Title 17, Section 501, a party has standing to sue for copyright infringement only when it is “the legal or beneficial owner of an exclusive right under a copyright.” The exclusive rights include the right: to reproduce, to prepare derivative works, to distribute, to publically preform, and to publically display.

Significantly, the “exclusive rights” of a copyright owner do not include the right to sue. At issue in Righthaven, was whether the assignment between Righthaven and the Author of the Work conferred more than just an “assignment of the bare right to sue for infringement, without the transfer of an associated exclusive right.” Such an assignment does not confer standing to sue. Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881, 890 (9th Cir. 2005).

Righthaven, of course, argued that the assignment conferred ownership of one or more exclusive rights under the Copyright Act. The agreement stated that Righthaven received “all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present, and future infringements of the copyright…in and to the Work.”

The Court disagreed with Righthaven. It emphasized “merely calling someone a copyright owner does not make is so.” The “substance and effect of the contract” did not in fact transfer any exclusive rights. The agreement between the parties stated that the Author would automatically receive an exclusive license in the Works—so that the Author could continue to exploit the Works. By doing so, Righthaven was left “without any ability to reproduce the works, distribute them, or exploit any other exclusive right…Righthaven was left only with the bare right to sue, which is insufficient for standing.”