Employee threshold on federal antidiscrimination statutes

Abstract

In Arbaugh v. Y & H Corporation, the United States Supreme Court considered whether the number of employees required for an employer to be covered by federal antidiscrimination statutes is a jurisdictional matter or a question that speaks to the merits of a claim. Resolving a split among the federal circuit courts of appeal, the Court held that the employee numerosity threshold is an element of a plaintiff's claim, not an issue that determines federal court subject matter jurisdiction. The facts and history of the Arbaugh case reveal that the characterization of the issue involves questions of fairness and judicial efficiency. Arbaugh had litigated her Title VII case, received a verdict in her favor, only to see the verdict vacated when the defendant belatedly raised the paucity of employees as a basis for a motion for summary judgment. The United States Court of Appeals for the Fifth Circuit upheld the district court's ruling, finding that the employee numerosity issue was a question of subject matter jurisdiction that could be raised at any time. In reversing the appellate court's decision, the Supreme Court noted three reasons that support characterizing the issue as one going to the merits of a claim rather than as one of subject matter jurisdiction. First, the Court found it improbable that Congress intended courts to raise such issues themselves, as they would be required to do if the issue were characterized as one of subject matter jurisdiction. Second, the Court found that issues such as employee numerosity often involve fact intensive inquiries, thereby making the issue one better solved by a jury than a judge. Finally, the Court reasoned that dismissing a case for want of subject matter jurisdiction based on the number of employees, would unduly interfere with pendent state claims that had been fully tried to a jury.
The Court's decision has important implications for litigants and federal courts. Since the Supreme Court issued its opinion in Arbaugh, several lower courts have discussed and applied the holding, extending the Court's reasoning to cases involving not only other federal antidiscrimination statutes, but also to RICO and federal statutes regulating securities. These cases illustrate that the Arbaugh decision has caused the federal courts to reconsider how they have treated various elements of claims in the past and to assess the congressional intent behind requirements that were previously, sometimes carelessly, characterized as jurisdictional.