Facts: Coneisha Sherrod (“Sherrod”) worked at United Way of Tarrant County (“UWTC”) as Vice President of Human Resources. In her role, Sherrod alleged that UWTC failed to pay employee benefits and comply with the reporting requirements of the Employee Retirement Income Security Act (“ERISA”.) As well, at the time Sherrod was hired, she was told by UWTC’s CEO that he would retire within four years and already had a replacement selected. Sherrod was later told by an African American executive at UWTC that she was interested in replacing the CEO. Sherrod claimed that she made UWTC aware that failing to post the CEO position before hiring a replacement could expose UWTC to a discrimination claim.
A committee was thereafter formed to hire a new CEO. Sherrod was not a part of that committee. When the African American executive that Sherrod had talked with was not selected to be the new CEO and filed a racial discrimination complaint, Sherrod claimed she was prohibited from investigating the complaint. UWTC apparently settled this discrimination claim by giving the executive a pay raise and a promotion to another position.
After it was determined that the CEO would get a raise but some UWTC employees would not, Sherrod objected. According to Sherrod, those complaints were ignored. After the CEO’s pay raise was approved by UWTC’s Board, the African American executive again complained of racial discrimination and retaliation on the grounds that she had not received her raise. In a meeting with a UWTC attorney and the CEO, Sherrod was told that any settlement with the African American executive must include her no longer be allowed to work at UWTC.
In addition, Sherrod claimed that four women complained of mistreatment by UWTC’s finance manager. When Sherrod attempted to investigate, she was told by UWTC’s COO that he would handle it himself and that Sherrod was not capable of investigating it.
Sherrod proceeded to complain to United Way Worldwide (“UWW”). (UWTC is a member of UWW.) Sherrod also filed a complaint with the Equal Employment Opportunity Commission (“EEOC”), but did not include UWW in that complaint. After telling UWTC’s CEO of the EEOC complaint, she was terminated a day later on the grounds that she failed to attend meetings. Sherrod proceeded to file suit on the grounds that UWTC and UWW violated Section 510 of ERISA by “discharging, suspending, expelling, or discriminating against Sherrod because she gave information and was willing to testify about violations of ERISA related to employee benefit plans,” and Section 1981 by “discriminating and retaliating against Sherrod” because of her race. Sherrod’s complaints against UWTC were settled by a joint stipulation after trial; the complaints against UWW were dismissed prior to trial. Sherrod appealed and sought reinstatement of the complaints against UWW.
Holding: The Court of Appeals recognized that it would separately analyze each of Sherrod’s points of appeal in order.
ERISA Retaliation Claim
Section 510 of ERISA provides “It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this chapter of the Welfare and Pension Plan Disclosure Act.” In this case, the Court held that Sherrod’s complaint was devoid of any claim that UWW discharged, fined, suspended, or expelled her. As UWW had filed a motion to dismiss on those grounds, the Court could not read anything into the claims as asserted by Sherrod. In addition, the Court held that Sherrod failed to assert any facts that established that UWW discriminated against her.
Section 1981 Claim
Section 1981 provides that “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts,...as is enjoyed by white citizens.” Section 1981 includes “the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” While the Fifth Circuit had not yet decided whether Section 1981 created liability for a non-contracting party (in this case, UWW) who interferes with making and enforcing a plaintiff’s contract. Assuming this was a recognizable claim in the Fifth Circuit, the Court held that Sherrod had again failed to assert any facts to establish this claim.
To support a claim of discrimination under Section 1981, it must be shown that 1) the plaintiff is a member of a racial minority; 2) there was an intent to discriminate on the basis of race by the defendant; and 3) the discrimination concerns one or more of the activities enumerated in Section 1981. In this case, the Court held that Sherrod failed to establish discriminatory intent on the part of UWW. Her claim that UWW “participated” in “should have prevented” her termination was held to be insufficient to establish liability.
To support a claim of retaliation under Section 1981, it must be shown that 1) the plaintiff engaged in activities protected by Section 1981; 2) an adverse action followed; and 3) a causal connection between the protected activities and adverse action existed. The Court posited that even if Sherrod could establish the first two factors, she had failed to establish the existence of the third. While she could rely on temporal proximity to support a causal nexus, Sherrod had failed to allege any facts would would support an inference that UWW actually did anything to affect her employment.
Judgment: The Fifth Circuit Court of Appeals affirmed the dismissal of the employee’s ERISA claims on the grounds that she had failed to allege sufficient facts to establish actionable discrimination or retaliation claims.
The Takeaway: As the Court of Appeals did, I think it is important to recognize each portion of Sherrod’s appeal. In regard to the ERISA retaliation claim, Sherrod had simply failed to allege sufficient facts to establish that UWW discharged, fined, suspended, or expelled her, as provided by Section 510. In essence, game over.
As for her Section 1981 claims, Sherrod failed to allege sufficient facts (or any facts, really) that showed that UWW intended to discriminate against her because of her race. She also failed to allege any facts that established a valid retaliation claim. As with the Section 510 claim, Sherrod’s case against UWW fell apart because of her lack of facts to establish actionable causes of action.
Majority Opinion Judge: Per curiam
Date: July 30, 2020
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