On June 23, 2021, in Charlton v. Ed Staub and Sons Petroleum, Inc. and Quicksilver Contracting Company, the Oregon Court of Appeals reversed the dismissal of the plaintiff’s “aiding and abetting” discrimination and retaliation claim.  Applying the Oregon Court of Appeals’ recent decision, Hernandez v. Catholic Health Initiatives, the court concluded that “aiding or abetting” liability under ORS 659A.030(1)(g) is not limited to employers and employees, and that third parties, such as an employer’s customer, can be liable under the statute.

Background

The plaintiff worked as a fuel truck driver for defendant Ed Staub and Sons Petroleum, Inc. (“Ed Staub”).  While delivering fuel to one of Ed Staub’s customers, defendant Quicksilver Contracting Company (“Quicksilver”), the plaintiff noticed a dog on Quicksilver’s property that the plaintiff believed to be emaciated.  The driver of a logging shear pulled into the area where the dog was located, and the plaintiff notified the driver of his concern for the dog’s safety.  The driver told the plaintiff that the dog belonged to Quicksilver’s night watchman.  The plaintiff told the driver he was going to report the dog’s condition to the police, notified the local sheriff, and continued on with his delivery duties for the day.

Shortly thereafter, the plaintiff’s supervisor called him into his office.  Ed Staub’s district manager was also present, and the plaintiff was advised that Quicksilver decided to “take its fuel business elsewhere,” which the plaintiff alleged was a result of his complaint regarding the dog’s condition.  Later that day, Ed Staub informed plaintiff that he had been terminated from his employment “for poor customer service.”

The plaintiff filed suit against both Ed Staub and Quicksilver.  Plaintiff alleged that Ed Staub discriminated and retaliated against him in response to his complaint about the dog on Quicksilver’s property, and that Quicksilver aided and abetted the discrimination and retaliation by prompting Ed Staub to terminate the plaintiff’s employment.

Quicksilver filed a motion to dismiss the aiding and abetting claim, arguing that Oregon’s “aiding and abetting” statute, ORS 659A.030(1)(g), applies only to the plaintiff’s employer, coworkers, and supervisors.  Since Quicksilver neither employed the plaintiff nor was an employee of Ed Staub, Quicksilver argued that dismissal was proper.  The trial court granted Quicksilver’s motion.

Oregon Court of Appeals’ Decision

The plaintiff appealed the trial court’s decision granting Quicksilver’s motion to dismiss.  At issue was whether ORS 659A.030(1)(g)’s provision regarding aiding and abetting liability applied only to employers, employees, coworkers, and/or supervisors. The plaintiff argued that ORS 659A.030(1)(g) was intended to prohibit aiding and abetting by “all persons,” whether an employer, employee, or not. 

In reversing the trial court’s order, the Court of Appeals applied its recent holding in Hernandez v. Catholic Health Initiatives, in which it held, “aid-or-abet liability under ORS 659A.030(1)(g) is not limited to employers and employees.  Anyone qualifying as a ‘person’ under ORS 659A.001(9) may be an aider or abettor of an unlawful employment practice in a way that subjects them to liability under ORS 659A.030(1)(g).”  Therefore, here, the court held that Quicksilver, while merely a customer of the plaintiff’s employer, could be held liable for aiding and abetting Ed Staub’s alleged discriminatory and retaliatory conduct.  Accordingly, the Court of Appeals reversed and remanded the trial court’s decision granting Quicksilver’s motion to dismiss.

Practical Effect

The Court of Appeals’ decision expands the scope of potential liability under Oregon’s laws against discrimination and retaliation and requires employers to take a number of precautionary measures.  Precautions include:

• Educating managers and supervisors that complaints from third parties may have a discriminatory or retaliatory motive that is an impermissible basis for taking action against an employee.

• Ensuring that managers and supervisors understand that there is no limiting definition to what “any person” includes and acting on the complaints of customers, third-party benefits administrators, employee recruiting firms, and third-party human resources providers may be potential sources of liability.

• Investigating customer and vendor complaints to determine if they are based on impermissible discrimination or retaliation against an employee.

• Revising contracts to include commitments from customers and vendors that they will comply with Oregon’s laws against discrimination and retaliation.

• Double checking the indemnity provisions in contracts with customers and vendors to ensure they will protect the employer against unlawful conduct by third parties.

Employers must appreciate that the decision is a “two-way street” in the sense that employers must guard against unlawfully motivated allegations against the employer’s employees as well as guard against the employer’s employees making unlawfully motivated allegations against a third-party’s employees.  Appropriate precautions include:

• Requiring that all internal complaints by managers, supervisors and employees about a third party’s employees are directed to a knowledgeable internal resource for review before the complaints are forwarded to a third party.

• Revising employment policies to prohibit complaints about customers’ and vendors’ employees that are discriminatory or retaliatory.

The challenges posed by the decision to customer relations are substantial.  A third party that asks for an employee to be removed from the third party’s work site will put the employer of the employee in an awkward situation if the employer senses that the third party’s decision is based on impermissible considerations.  In order to avoid liability for removing the employee, the employer may have to educate the third party of the potential consequences of the third party’s decision and the employer’s disclaiming liability for that decision.  The employer may also have to make an extra effort to continue the employee’s employment at another location. 

Employers should also be aware that the Court of Appeal’s decision creates new challenges for employers, but the ultimate scope of “aiding and abetting” liability remains to be determined.  For example, whether Oregon courts’ application of “cat’s paw” liability will now apply to an employer when it innocently acts on the complaint of a third party as opposed to another employee of the employer remains to be seen. It is also unclear from the decision whether an employer will be liable for any adverse action taken against an employee when the employer relies in good faith on a third party’s representation that there is no impermissible discriminatory or retaliatory motive in the third party’s complaint about the employee.  Similarly, it remains to be seen whether a third party that made an unlawfully motivated complaint can be liable for adverse action taken against an employee when the employee’s employer is not liable.  Employers must exercise particular caution in acting on third-party complaints as the resolution of these issues evolves.