Gender identity protection: the inadequacy of shareholder action to amend corporate employment discrimination policies.

Author:Dale, Danielle R.
 
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  1. INTRODUCTION II. BACKGROUND A. Gender Identity Disorder B. Title VII C. Interpretation of Title VII in Cases 1. Ulane v. Eastern Airlines and the Interpretation That "Sex" Does Not Encompass Gender Identity and Does Not Protect Transsexuals 2. Sex Stereotyping and Price Waterhouse v. Hopkins 3. Smith v. City of Salem, Ohio and the Application of Sex Stereotyping to Claims by Transsexuals 4. Creed v. Family Express and Hope For Plaintiffs Framing Their Claim Under Price Waterhouse's Sex-Stereotyping Theory 5. Etsitty v. Utah Transit Authority and the Binary Conception of Sex 6. Schroer v. Billington and the Possibility That Sex Might Possibly Extend to Include Gender Identity D. Gender Identity and the Corporate Response E. The Business Judgment Rule III. ANALYSIS A. Shareholder Apathy B. Shareholder Power to Adopt or Amend Bylaws C. The Difficulty for Shareholders to Get Gender Identity onto Shareholder Proposals 1. What is a Shareholder Proposal? 2. "Unless Otherwise Significantly Related to the Company's Business" and Whether That Includes Social Issues 3. Interpretation of 17 C.F.R. [section] 240.14 by Courts in Instances Where Shareholders Have Submitted Proposals to Amend the Corporation's Employment Discrimination Policy a. Apache Corp. v. New York City Employees' Retirement System b. New York City Employees' Retirement System v. SEC D. Difficulty for Shareholders Once They Put the Initiative on the Ballot IV. RECOMMENDATION V. CONCLUSION I. INTRODUCTION

    Under current interpretations of Title VII, transsexuals (1)--those who feel a disconnect between the sexual organs that they were born with and the gender with which they best identify (2)--cannot assert employment discrimination claims against corporations who terminate their employment based solely on their transsexual status. (3) Federal courts interpreting Title VII claims are reluctant to say that transsexuals are a protected class under the statute. (4) Thus, federal law subjects a class of people to the possibility of blatant employment discrimination without any type of federal protection. (5)

    Since courts have not yet adopted a bright-line rule that protects individuals with gender identity disorder as a class under Title VII, the question becomes whether there is an alternative route to provide employment discrimination protection for individuals with gender identity disorder. (6) This Note analyzes whether shareholders have the necessary power and tools to influence corporate employment discrimination policies by amending policies through the adoption of shareholder proposals. shareholders are of particular interest because Delaware law provides shareholders with a direct method to amend corporate policy. (7)

    Part III.A of this Note addresses the concern of whether shareholders are aware of company policies and the likelihood that shareholders will participate in either proposing or voting for shareholder proposals. Part III.B details the power that Delaware law provides shareholders to amend corporate policies. Part III.c addresses the difficulties that shareholders face when trying to put gender identity protection on shareholder proposals included in the corporation's proxy materials. Last, Part III.D discusses the hardship shareholders face in attempting to garner enough support to pass a proposal once it is included in the proxy materials.

    Based on this analysis, this Note concludes that shareholders lack the requisite power to change a company's employment discrimination policies. The deference that courts give to decisions that can be cast in terms of the business judgment rule, coupled with the fact that most shareholders are rationally apathetic, makes it difficult for shareholders to effectively implement these policies through shareholder proposals. Thus, if individuals with gender identity disorder are to gain protection from employment discrimination, protection must come from the courts rather than through shareholder proposals.

  2. BACKGROUND

    1. Gender Identity Disorder

      The American Psychological Association defines being transgendered as "an umbrella term used to describe people whose gender identity (sense of themselves as male or female) or gender expression differs from that usually associated with their birth sex." (8) Simply put, people suffering from gender identity disorder usually feel a disconnect between the sexual organs that they were born with and the gender to which they most relate. (9) While there are no actual statistics regarding the prevalence of gender identity disorder, "current estimates of the prevalence of transsexualism are about 1 in 10,000 for biological males and 1 in 30,000 for biological females." (10)

    2. Title VII

      Title VII of the 1964 Civil Rights Act states that employers may not "fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." (11) Additionally, the Act makes it unlawful for an employer "to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin." (12) The Act extends to regulate the actions of many organizations, including private employers. (13)

    3. Interpretation of Title VII in Cases

      Employment discrimination claims brought by transsexuals center around the interpretation of "sex" in Title VII. (14) Initially, courts refused to accept any claim for employment discrimination brought by transsexuals under Title VII. (15) over the years, courts opened up to the possibility of allowing claims by transsexuals if they could fashion their claims under the sex-stereotyping theory developed in Price Waterhouse v. Hopkins. (16) The following cases shed light on courts' interpretive history.

      1. Ulane v. Eastern Airlines and the Interpretation That "Sex" Does Not Encompass Gender Identity and Does Not Protect Transsexuals

        Kenneth ulane started working at Eastern Airlines in 1968 where he served as a Second Officer--later moving up the ranks to a First Officer--and flight instructor. (17) In 1979, ulane received a diagnosis as a transsexual. (18) since early childhood, ulane identified more as a female, despite the fact that he possessed male organs. (19) As a way to treat the diagnosis, ulane started taking female hormones and underwent sex reassignment surgery in 1980. (20) Eastern Airlines did not know of Ulane's intentions to undergo sex reassignment surgery--or even that ulane identified as a transsexual and was taking female hormones--until ulane returned to work as a female. (21)

        At the initial trial, the United States District Court for the Northern District of Illinois held that Eastern Airlines terminated Ulane's employment due to his transsexual status and that Title VII prohibited such discrimination. (22) The district court found protection for transsexuals by relying on the fact that transsexuals are people with sexual identity problems. (23) The court viewed this as significant because prior court decisions stated that Title VII did not extend to protect sexual preference. (24) Whereas these prior decisions rendered homosexuals and transvestites as unprotected classes under Title VII, the district court held transsexuals--whose Title VII claims revolve around gender identity rather than sexual preference--as a distinguishable class Title VII could extend to protect. (25)

        While the United States District Court for the Northern District of Illinois held that Title VII protected ulane's claim from dismissal because Ulane was a transsexual, on appeal the Seventh Circuit Court of Appeals reversed, holding that Title VII does not extend to protect transsexuals from employment discrimination. (26) The Seventh Circuit relied on the plain meaning of the statute, in addition to looking to the legislative history of the statute, and reasoned that while some may interpret "sex" to also include sexual identity, this was not Congress's intent while constructing the statute. (27) In fact, the Seventh Circuit noted that subsequent attempts by Congress to amend the statute to include sexual orientation had failed. (28) Moreover, Congress did not attempt to amend the statute after circuit courts held that Title VII did not protect transsexuals. (29) The Seventh Circuit concluded that any expansion of the definition of "sex" to include transsexuals would have to come from Congress. (30)

        Not only did the Seventh Circuit refuse to accept Ulane's Title VII

        claim surrounding her transsexual status, but the court also stated that ulane could not claim that her employer discriminated against her for being a female. (31) The court hinted that transsexuals could potentially make the case that Title VII protected them if they alleged that their gender was the reason for which their employer had terminated them. (32) However, because the evidence clearly indicated that Eastern Airlines terminated Ulane due to her transsexual identity--rather than Ulane's gender--Ulane received no Title VII protection. (33)

      2. Sex Stereotyping and Price Waterhouse v. Hopkins

        The United States Supreme Court developed a new doctrine in Price Waterhouse v. Hopkins that opened the door for some relief for transsexual individuals who suffered from employment discrimination. (34) In this case, an accounting firm proposed a senior manager in the firm, Ann Hopkins, for partnership. (35) After refusing to make a decision to confirm or deny her partnership candidacy, the firm decided to hold over the decision until the following year. (36) The following year, the firm refused to reconsider Hopkins for a partnership position. (37) After the firm refused to reconsider, Hopkins...

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