Tick tock: Employees don't have forever to file state claims

Many employers are aware that when an employee files a lawsuit alleging unlawful discrimination, state tort (wrongful act) claims such as intentional infliction of emotional distress are usually tacked on. Although tort claims spring out of the same set of facts, the burden of proof may be different, and monetary penalties can vary greatly. Usually, that leads to increased costs and time spent on litigation.

Well, in good news for New York employers, the 2nd Circuit recently held that filing discrimination charges with the Equal Employment Opportunity Commission (EEOC) does not toll the statute of limitations for state-law tort claims. Employers should keep this ruling in mind when engaging in litigation.

Employers gone wild?

Patricia Castagna quit her receptionist job at Majestic Kitchens, Inc., because of a fear for her safety. She alleged that the company's owner swore and screamed at her and shoved a computer monitor at her. According to her, the owner routinely subjected women to an abusive work environment characterized by lewd, racial, and sexual comments and innuendo; profanity; offensive physical contact; and other inappropriate behavior.

Approximately 3½ months after she resigned, Castagna filed a discrimination charge with the EEOC alleging sex discrimination. She described the computer monitor episode in her charge. On August 14, 2009, she received a right"to"sue letter from the EEOC. On November 9, 2009, she filed a lawsuit in federal district court asserting a discrimination claim under Title VII of the Civil Rights Act of 1964 as well as claims for intentional infliction of emotional distress, assault, and battery under New York law. The claims were based on the alleged harassment and the incident involving the computer monitor.

Majestic Kitchens asked the court to dismiss Castagna's state tort claims on the grounds that they were barred by the one-year statute of limitations. Castagna argued that the statute of limitations was tolled when she filed her EEOC charge. (Tolled means the statute of limitations has been legally suspended. In other words, the clock stops running on an employee's ability to file a claim for a period of time.) The district court rejected that argument and dismissed the claims as time-barred. Castagna appealed to the 2nd Circuit.

Appeals court's decision

The 2nd Circuit agreed with the district court's decision. The 2nd Circuit rejected Castagna's argument that the statute of limitations for the tort claims should be tolled because to preserve their claims, employees would be forced to file a tort lawsuit in state court while the matter was being resolved by the EEOC. Employees would then have to file a discrimination claim in federal court. According to Castagna, that would thwart the goal of judicial efficiency and eliminate the EEOC's opportunity to facilitate dispute resolution before litigation commences.

The 2nd Circuit looked to the only two federal appellate courts that had previously addressed the issue — the 7th and 9th Circuits. The 2nd Circuit noted that both courts rejected similar arguments on the tolling of state tort claims. The 2nd Circuit agreed with the other appellate courts and reasoned that when Congress implemented Title VII, it did not intend to delay the filing of state tort claims while the EEOC considers a discrimination charge.

The 2nd Circuit pointed to a case in which the U.S. Supreme Court held that the filing of a Title VII employment discrimination claim did not toll the statute of limitations for lawsuits filed under 42 U.S.C. § 1981, which created a federal claim for individuals asserting intentional race discrimination. In that case, the Court reasoned that Title VII's legislative history demonstrated that Congress intended to allow individuals to pursue their rights under both Title VII and other state and federal statutes despite the EEOC's determination. Although EEOC proceedings "often are beneficial" in resolving workplace disputes, the Supreme Court recognized that Congress did not intend to impede independent avenues of legal redress.

The 2nd Circuit noted that although its decision was not a "highly satisfactory" response to Castagna's dilemma, "'the fundamental answer to [her] argument lies in the fact' that she always had 'an unfettered right' to pursue her tort claims." According to the court, "Castagna does not argue that she could not have brought [her] claims within the applicable statute of limitations. She simply failed to do so." Thus, the 2nd Circuit upheld the dismissal of her state tort claims. Castagna v. Bill Luceno, Majestic Kitchens, Inc. (2nd Cir., Mar. 5, 2014).

Implications for New York employers

What does the 2nd Circuit's decision mean for you? Paying attention to statutes of limitations may help avoid costly litigation. While a lot of allegations may spring up from the same set of facts, employees must establish different elements of each charge in their complaint. Although an employee may not be able to prove that you intentionally discriminated against her, she may be able to demonstrate that you are liable under a different legal theory with a much lower burden of proof. Therefore, knocking out as many allegations in the complaint as possible is a good strategy. In fact, slimming down a complaint is really helpful in getting to the heart of a controversy, negotiating a settlement, or mounting a defense.

As a result of the 2nd Circuit's decision, employees may file lawsuits while the EEOC is considering their charge in an attempt to preserve their state claims. However, that will create more work for the employee's attorney and may cause the attorney to carefully consider what she wants to include in the complaint.