Cynthia D. Pajak v. Under Armour, Inc. Case No. 21-0484 (Apr. 22, 2022) May an employer that does not meet the West Virginia Human Rights Act definition of “employer” be held liable to its own employee as a “person” as defined in the Act? The West Virginia Supreme Court of Appeals in a unanimous decision said No.

What the Court was Asked to Decide: In this case, a discharged employee, attempted to hold her former employer liable under the West Virginia Human Rights Act (“WVHRA”) under the statute’s definition of a “person” even though the employer did not meet the definition of an “employer.” This case came to the Court from the United States District Court for the Northern District of West Virginia on a certified a question regarding the WVHRA and the potential liability of an employer. Specifically, the Court answered the following: May an entity that does not meet the West Virginia Human Rights Act definition of “employer,” as set out in West Virginia Code § 5-11-3(d) (eff. 1998), be potentially liable to its own employee as a “person,” as defined in West Virginia Code § 5-11-3(a), for an alleged violation of West Virginia Code § 5-11-9(7) (eff. 2016)?

What the Court Decided: Facts: In this case, Cynthia Pajak (“Ms. Pajak”) was hired by Under Armour in November 2012 to serve as director of Under Armour’s East and Canada regions. She worked remotely from Bridgeport, West Virginia. In 2018, Ms. Pajak began receiving reports of incidents of inappropriate workplace conduct from female employees. As such, she collected statements describing the misconduct, and provided them to her superior. She claims her superior minimized the conduct and told her to “move on.” In June 2018, Ms. Pajak underwent a mid-year review and there were no concerns about her job performance; however, nine days later, she was asked to voluntarily leave her position. After being placed on a performance improvement plan that she claims did not comport with company policy, Ms. Pajak was dismissed from her employment in December 2018.

Ms. Pajak filed a lawsuit against Under Armour and asserted claims for wrongful discharge, negligent hiring, intentional infliction of emotional distress, and violations of the WVHRA, among other claims. After a series of motions were filed, questions arose as to whether Under Armour was an “employer” as defined in the WVHRA. The district court determined, for purposes of this matter, that Under Armour did not meet the definition of “employer” as it is defined in the WVHRA because Under Armour did not meet the requirement needed to qualify as an “employer” (any person employing twelve or more persons within the state for twenty or more calendar weeks). However, the district court did raise questions as to whether Under Armour could be subject to liability under the WVHRA as a “person.” The district court certified its question to the West Virginia Supreme Court of Appeals. The Supreme Court was tasked with determining, in the context of an employee/employing entity, whether the term “person” as used in the WVHRA was intended by the Legislature to include an entity that does not meet the WVHRA definition of “employer.”

After a deep dive into the statutory language, the Supreme Court concluded that the Legislature gave the term “employer” a specific definition when used in the WVHRA, and that that definition includes “any person,” but only when such person meets the remaining criteria set out in the definition, i.e., “employing twelve or more persons within the state” during the requisite period of time and not being a private club. The plain language of the definition of “employer” excludes a “person” when that person does not meet the remaining elements of the definition, but necessarily includes “any person” that does meet those elements. To find otherwise would ignore a plaintiff’s status as an employee and allow such an employee to circumvent the Legislature’s plain intent that only employing entities who meet the WVHRA definition of “employer” are subject to liability thereunder.

Holding: The Supreme Court answered the certified question in the negative, and held that an entity that does not meet the WVHRA definition of “employer,” as set out in West Virginia Code § 5-11-3(d) (eff. 1998), may not be potentially liable to its own employee as a “person,” as defined in West Virginia Code § 5-11-3(a), for an alleged violation of West Virginia Code § 5-11-9(7) (eff. 2016).

Impact on Business: This case limits an employer’s liability under the West Virginia Human Rights Act. For an employee to maintain claims against its employer under the WVHRA, the employer must meet the WVHRA’s definition of “employer”—there is no loophole where the employer can fail to meet the definition of “employer,” but then be held liable for the same behavior under the definition of “person.” As the Opinion stated, to do so, would give employees the power to broaden the WVHRA and to circumvent the narrow constraints of the WVHRA intended by the Legislature.

Majority Opinion

The U.S. Supreme Court’s decision in West Virginia v. EPA limits the power of the EPA, stating that it overstepped its authority in 2015 when it attempted to limited emissions from power plants. The EPA’s authority to regulate such emissions is effectively limited until Congress legislates such authority. This was a 6-3 ruling of the Court and a significant rebuke of the EPA’s effort to regulate power plant emissions.

1. The Court rejected the Biden Administration’s argument that the issue before the court was moot because the Clean Power Plan was no longer in effect. This case remains justiciable. The Court said the Government fails to meet its burden and fails to show that if the case was decided in its favor, that this wrongful behavior would not recur.

2. The Court ruled that Congress did not grant the EPA in Section 111(d) of the Clean Air Act the authority to devise emissions caps based on the generation shifting approach the Agency took in the Clean Power Plan.

a. The EPA determines the best system of emission reduction (BSER) using a variety of factors that it finds “has been adequately demonstrated” and then quantifies “the degree of emission limitation achievable” if that BSER were applied to the covered source. Can the emission limit in the current case be the BSER within Section 111(d) of the Clean Air Act? To answer this, the Court said it must determine whether Congress conferred such authority on the agency to make such a determination—is this a major questions case?

b. The Court said ‘Yes’ this is a major questions case. The “major questions” doctrine is the premise that if Congress intended agencies to make sweeping, economy-wide changes with their regulations, the relevant legislation must say so specifically and clearly. Given the circumstances here, “there is every reason to ‘hesitate before concluding that Congress’ meant to confer on EPA the authority it claims under Section 111(d).”

c. Therefore, given the precedent that uses skepticism toward the EPA’s claims that Section 111 empowers it to devise carbon emission caps based on a generation shifting approach, the Government must point to “clear congressional authorization” to regulate this matter. The Court does not find the Government’s reliance on “cap and trade systems” to be persuasive— there is no “clear congressional authority” that it can point to.

As such, whether the “best system of emission reduction” identified by the EPA in the Clean Power Plan was within the authority granted to the Agency in Section 111(d) of the Clean Air Act—the Court answer is no. The Court ultimately concluded:

Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day.” New York v. United States, 505 U. S. 144, 187 (1992). But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.

Majority Opinion

The Potential Implications of West Virginia v. EPA Last week, the West Virginia Chamber of Commerce reported on the significant decision in West Virginia v. EPA handed down by the United States Supreme Court. The Court ruled that Congress did not grant the EPA, under the Clean Air Act, the broad authority to devise caps on power plant emissions. This decision will have far-reaching implications on other federal agencies. The Supreme Court’s ruling limiting the EPA’s ability to regulate carbon emissions could ultimately lead to decisions that impact the federal government’s ability to regulate everything from climate change to technology. All agency regulations are tied by the extent to which the government is allowed to regulate them. This puts the Supreme Court’s ruling on the EPA’s ability to regulate carbon emissions on par with the government’s ability to mandate vaccines, prevent evictions, and regulate the tech industry to include privacy issues as well as net neutrality. Under the “major questions” doctrine—that was central to the Court’s holding in West Virginia v. EPA—the Court looks at agency regulations and whether Congress intended to give that agency such authority. Now that the U.S. Supreme Court has explicitly used the “major questions” doctrine in a high-profile case, it seems that the Court will likely be faced with future cases seeking similar results with regard to rules made by other federal agencies.

In the one week since the West Virginia v. EPA opinion was released, a number of articles have been written about the potential implications of this case. It goes without saying that the “major questions” doctrine has a far-reaching grasp. Below is a snapshot of potential non-EPA agencies that have been written about since the issuance of the opinion.

Federal Communication Commission (“FCC”) and Technology

Using “major questions” as justification, the court may be less inclined to allow an agency such as the Federal Communications Commission (FCC) decide on its own what its authority is when it comes to regulation of internet access. Areas that could be impacted if the Supreme Court punts regulation of the tech sector back to Congress could include net neutrality or the concept that all information on the internet should be treated equally, privacy issues, artificial intelligence, and social media. See SCOTUS EPA Ruling May Be Bad News for Tech Regulators (investopedia.com)

Tax Regulations

It will be interesting to see how the Supreme Court’s recent decision will impact future challenges to tax regulations. In the not too distant past, Administrative Procedure Act challenges to tax regulations and other published guidance were rare, but the Supreme Court’s 2011 decision in Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44 (2011) changed the landscape. Some tax regulations are invariably based on policy decisions, and in appropriate cases, taxpayers may seek to challenge such regulations under the major questions doctrine. See Tax Regulations: What Is the Major Question Doctrine (natlawreview.com)

Securities and Exchange Commission (“SEC”)

The West Virginia v. EPA decision places a greater emphasis, and greater burden, on the SEC’s proposed mandatory financial disclosures regarding climate change, as that regulatory rule-making by the SEC remains an available tool for the Biden Administration to achieve its climate goals. The SEC’s proposed mandatory climate disclosures are yet another example of a far-reaching regulation apparently without explicit Congressional authorization–the precise scenario to which the Supreme Court’s current majority has expressed considerable skepticism.

It should be anticipated that a lawsuit challenging the legitimacy of these climate disclosures will be filed as soon as the regulation is issued, and only time will tell whether, and to what extent, the climate disclosures will withstand judicial scrutiny and survive as regulations. An expected surge of litigation will challenge agency rules anchored in broad statutory authority. See SCOTUS Decision On EPA’s Ability To Issue Regulations (natlawreview.com)

Consumer Financial Protection Bureau (“CFPB”)

The CFPB unveiled its UDAAP exam manual at the end of March 2022, announcing that it had decided to interpret the word “unfair” in Dodd-Frank to prohibit discrimination, even where specific statutes like the Equal Credit Opportunity Act do not apply. With the issuance of the West Virginia v. EPA decision, it seems self-evident that the Court’s analysis could be readily applied to the CFPB’s assertion that Congress’ enactment of the word “unfair” gave the Bureau the authority to prohibit discrimination in areas never mentioned by Congress, and that the policy judgment of where to prohibit discrimination — surely one of the most consequential economic and political questions facing the country — should be reserved to Congress, not given to an agency based on the use of the word “unfair” in Dodd-Frank. See Is CFPB’s UDAAP/Discrimination Announcement at Risk Under SCOTUS Decision in West Virginia v. EPA? | Consumer Financial Services Law Monitor

Other Potential Areas: Department of Transportation (“DOT”); Consumer Financial Protection Bureau (“CFPB”); Centers for Disease Control and Prevention (“CDC”)

The West Virginia v. EPA decision could restrict federal regulation across agencies that set standards for health and safety, and regulate financial markets, among other things.

Questions that have arisen: Can the Department of Transportation establish requirements for driverless cars under a 1966 vehicle safety law that was written without them in mind? Can the Consumer Financial Protection Bureau bar discrimination in the provision of financial services under a statute empowering them to prevent “unfair, deceptive, or abusive” acts in connection with consumer financial products? Can the Centers for Disease Control and Prevention require masks in airports and airplanes under a 1944 law giving the agency broad authority to curb the spread of communicable disease by adopting rules that “in [its] judgment are necessary”? A Florida judge recently invoked the major questions doctrine to say no, holding that if Congress intended to empower the CDC to implement measures like mask mandates, it would have clearly said so. See Supreme Court’s EPA ruling goes far beyond climate change – The Boston Globe

Majority Opinion

The West Virginia Supreme Court has ruled against a coal miner and reinstated the temporary suspension of his miner certifications after he tested positive for marijuana metabolites (“THC”) on a random drug screen. The coal miner contested his suspension by the WV Office of Miners Health, Safety and Training, claiming the positive drug screen was due to his use of CBD oils, a legal substance in West Virginia. The Court noted that this was its first opportunity to evaluate the “intent” argument as it relates to CBD products. In a narrow 3-2 decision, the Supreme Court held the coal miner had not properly contested the test results, and his claim that he had used CBD oils was not a defense to his positive drug test. The Court stressed that while the West Virginia Legislature has authorized the sale of CBD products, the applicable statutes and rules provided no authority to treat the consumption of a CBD product as a legal defense to a positive test for Cannabinoids/THC. Justice Armstead authored the majority opinion and was joined by Justices Walker and Wooton. Justices Hutchison and Moats dissented and, in a footnote, “encourage[d] the Legislature to study and rectify this issue because CBD products, contaminated with THC, are becoming common in the marketplace and accidental consumption of forms of THC are likely to become commonplace.”

Majority Opinion

Dissent

David Duff, II v. Kanawha County Commission, Case No. 23-43

In a procedural first, the West Virginia Supreme Court has overturned a decision of the Intermediate Court of Appeals. The opinion, authored by Justice John Hutchison, includes a new syllabus point clarifying workers’ compensation law. This is the first time the State’s highest court has overturned a decision of the ICA since the appellate court’s inception in July of 2022.

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