5th Circuit Rules Employer Can Be Unreasonable When Terminating Employees

 

 

On May 13, 2022, the U.S. Court of Appeals for the Fifth Circuit affirmed summary judgment in favor of an employer, finding that a terminated employee failed to create a genuine dispute of material fact as to pretext.  The case is Owens v. Circassia Pharmaceuticals, Inc., where the court affirmed summary judgment despite recognizing that the former employee had presented “substantial evidence” that could lead a reasonable jury to conclude that the employer’s stated reason for termination—her poor job performance—was false.  Importantly, the court noted, that the employee’s case critically lacked evidence that the employer “was motivated in any way by discrimination or retaliation.”

 

Background

Grace Owens worked for Circassia Pharmaceuticals, Inc. from 2010 to 2018.  Circassia terminated her employment in 2018 for poor performance —just three days shy of the expiration of her performance improvement plan (PIP).  Thereafter, Owens, who is Asian, was replaced by a worker – a Caucasian male – meaning the dispute focused on pretext.  In response, Ms. Owens filed a lawsuit again Circassia where she alleged multiple discrimination-based claims   Upon review, the district court granted summary judgment in favor of Circassia.  Owens appealed, arguing that she put forth sufficient evidence of pretext to survive summary judgment.  During the appeal, the only claims at issue were those of race, national origin, gender discrimination, and retaliation.

 

As part of her appeal, Owens challenged Circassia’s explanation for the termination of her employment as “unworthy of credence.” Additionally, Owens presented six different categories of evidence to raise a material fact issue as to pretext, including:

1. Alleged disparate treatment.
2. An inadequate investigation of Owens’s internal complaints and the alleged performance deficiencies resulting in the termination of her employment.
3. Circassia’s inconsistent and illogical reasons for Owens’ discharge.
4. Circassia’s use of subjective criteria to evaluate Owens’s performance.
5. Circassia’s discharge of Owens on the fifty-seventh day of the sixty-day PIP.
6. Circassia’s offering of a severance agreement to Owens during the period of the PIP.

 

The Fifth Circuit’s Ruling

In its decision, the Fifth Circuit clarified that pretext was the crux of the appeal.  As a result, in order to be successful, Owens had to present “substantial evidence” that Circassia’s asserted reason for terminating her was pretext for discrimination.  “Evidence is substantial if it is of such quality and weight that reasonable and fair-minded [triers of fact] in the exercise of impartial judgment might reach different conclusions.”  Going further, the court stated that because Circassia’s “reasons for [Owens’] termination were her poor performance and demonstrated lack of effort to change her behavior[,] to prevail at this stage, [Owens] must show that reasonable minds could disagree that these were, indeed, the reasons for her discharge.”

 

When reviewing her evidence, the Fifth Circuit noted that Owens’s most potent argument was related to “illogical” and “inconsistent” reasons given for her termination. Specifically, Owens had presented “substantial evidence” through declarations from her former subordinates that contradicted at least three of the underlying reasons for placing her on a PIP, and eventually terminating her employment. “[A] reasonable trier of fact could find that Circassia’s proffered justification for terminating Owens is false. But that alone is not enough.” Instead, to avoid summary judgment, Owens was required to “produce sufficient evidence of implausibility to permit an inference of discrimination, not merely an inference that Circassia’s proffered reason is false.”

 

In affirming the lower court’s summary judgment for Circassia, the Fifth Circuit stated:

 

There is a gray area between firing an employee for obvious performance deficiencies and firing an employee for discriminatory reasons. But under Title VII [of the Civil Rights Act of 1964] and 42 U.S.C. § 1981, discrimination is what matters. Even when an employee presents evidence that would allow a jury to conclude that an employer’s proffered justification for an adverse action is false, that does not necessarily permit a rational inference that the real reason was discrimination.

 

Key Takeaways

The court’s decision in Owens represents a strong reinforcement of the Fifth Circuit’s long-standing view that “[e]mployers are ‘entitled to be unreasonable’ in terminating their employees ‘so long as [they] do[] not act with discriminatory animus.'” (Brackets in original.)

 

---