Supreme Court Asked to Rule that Title VII Covers Owners of Law Firms

July 27, 2021 Executive Litigation

Law firm owners face a challenge in pursuing Title VII gender and race discrimination and retaliation claims against their firms.  Most law firms are structured as partnerships or professional corporations.  Firms typically have two layers of attorneys called “partners”: junior or non-owner partners and equity partners or shareholders, depending on the structure.  The few women and Blacks who are accepted into the ownership level in a law firm can face a surprising consequence – they may not have protection under Title VII from race or gender discrimination or harassment by the firm or firm clients. 

Shawna Lemon is urging the Supreme Court to overrule a Fourth Circuit decision finding that she should not even have “expected” that she, as a minority owner in a law firm, would be protected by Title VII.  Lemon, a Black, female IP attorney, joined defendant Myers Bigel PA in September 2001 as an associate.  The agreement that Lemon signed when she was hired stated that she was an “at-will” employee who could be terminated “without cause and at any time.”  Although she became a shareholder in 2007, she did not sign a new agreement and continued to be paid as an employee through a W-2. 

Lemon alleged in her complaint that she started to suffer retaliation when Myers Bigel hired an outside counsel to investigate several claims of gender discrimination at the firm.  She alleged that, when she was interviewed by outside counsel, she candidly provided information that supported the firm employees who were asserting discrimination claims.  Outside counsel provided a summary of the investigation to the firm’s board of directors that included Lemon’s statements during her interview.

Lemon asserts in the petition that, after they received the memo, other shareholders “openly excoriated Lemon, calling her statements ‘idiotic’ and screaming at her to ‘grow up’ and ‘stop complaining.’”  Another shareholder said Lemon “played the Black card too much.”  She further alleged that a shareholder in her practice group asked her what would happen “if somebody pushed her off the cliff.”  Lemon alleges that, because of her statements in the investigation, she was denied short-term leave and threatening with financial “punishment” for, among other things, hiring counsel to represent her in the investigation.  She resigned from the firm in December 2016.

Lemon filed a lawsuit in federal district court in April 2018 alleging that the firm retaliated against her for participating in the investigation in violation of Title VII.  The firm moved to dismiss her claims, arguing that she could not sustain a claim under Title VII because she was not an “employee” of the firm.  In March 2019, the district court granted the firm’s motion to dismiss, finding that Lemon was not an “employee” under the standards adopted by the Supreme Court in Clackamas Gastroenterology Assos. v. Wells, 538 U.S. 4400 (2003), for claims of disability discrimination under the ADA.

The Fourth Circuit affirmed the district court’s decision, finding that “the protections of Title VII’s anti-discrimination and anti-retaliation provisions extend only to employees.”  The Fourth Circuit further found that that Clackamas factors were “manifestly well-suited” to the determination of whether an individual is an “employee” entitled to protection under Title VII.  The Fourth Circuit ruled that the determination that she was not an employee was a “result . . . to be expected” because she was “an equity partner in a conventionally-structured law firm.”

Counsel for Lemon lays out a persuasive argument that the Clackamas factors should not be applied in Title VII cases.  Clackamas only addresses the ADA’s definition of “employee” – not the determination of whether an individual is a “personal aggrieved” or “individual” entitled to raise a claim under Title VII.  Title VII, unlike the ADA, prohibits discrimination “against any individual” because of “such individual’s” race, color, religion or national origin.  Also, Title VII provides a private right action to any “person aggrieved” by such discrimination.  Person is defined in the statute as “one or more individuals.”  Congress did not exclude from the definition of “person” or “individual” partners, owners or members of employers, even though it included other categories of individuals, such as elected officials.  Also, the Fourth Circuit’s ruling runs counter to the broad remedial purposes of Title VII, which is aimed to “strike at the entire spectrum of disparate treatment of men and women in employment”.  Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 78 (1986).

In the petition, Lemon’s attorneys argued that, as a result of the Fourth Circuit’s ruling:

The result is that equity holders of professional businesses like law firms have been left unprotected from discrimination in the workplace. This is completely contrary to both the plain language and broad remedial purpose of Title VII. The time has come for this Court to correct this ongoing error which is contrary to the plain meaning of Title VII’s text and Congress’s purpose in adopting it: to “eliminat[e] the effects of discrimination in the workplace[.]” Johnson v. Transp. Agency, Santa Clara Cnty., Cal., 480 U.S. 616, 630 (1987). The erroneous distinction which courts nationwide have applied to deny shareholders of professional corporations the protections of Title VII—a direct result of the continued misapplication of Clackamas—contravenes this Court’s admonition “that Title VII should not be read to thwart such efforts.” Id.

Hopefully, the Supreme Court will take this opportunity to properly align federal courts with the broad remedial purposes of Title VII.  There is no reason why owners – whether shareholders, partners or members – should be left unprotected from discrimination, harassment and retaliation in the workplace.  Less than twenty percent of owners at our largest law firms are women.  Less than five percent of equity partners are Black.  After spending years fighting their way into the ownership ranks of a firm, they cannot be left without a voice and, importantly, a claim to back it up.  If, like Lemon, they observe discrimination, they should be able to report it and not fear that they will suffer potentially career-destroying retribution.  We should all stand behind Lemon in her journey to the Supreme Court.

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