Arbaugh v. Y & H Corp.

Background

Jenifer Arbaugh sued her former employer, a New Orleans restaurant called the Moonlight Cafe, saying she was sexually harassed and constructively discharged. She brought claims under Title VII (federal law) and related Louisiana law. A jury found for Arbaugh and the trial court entered a $40,000 judgment. Two weeks later, the employer argued for the first time that it had fewer than 15 employees and so could not be sued under Title VII.

Reasoning

The Court addressed whether the 15‑employee rule in Title VII limits federal courts’ power to hear a case, or instead is just an element of a plaintiff’s claim. The Justices explained that jurisdictional limits can never be waived and that courts must dismiss cases that truly lack jurisdiction. But Title VII’s 15‑employee rule appears in the statute’s definitions, not in the jurisdictional grant. The Court also noted practical problems if courts treat the rule as jurisdictional, including erasing jury verdicts and dismissing state claims that were decided on the merits. The Court concluded the 15‑employee requirement is an element of the plaintiff’s claim to be raised before the end of trial, not a limit on federal jurisdiction, and reversed the lower court.

Real world impact

The decision means employers generally cannot raise the 15‑employee defense for the first time after trial. Factual disputes about who counts as an employee are for the factfinder when they bear on an essential element. Congress can still make such a threshold jurisdictional by saying so expressly, but the Court will treat it as a merits issue unless the statute clearly says otherwise.