Court Declines to Find Discrimination Based on "Shareholder Preference" in Alaska

In a case brought by an employee against an Alaska Native Corporation, in which the employee alleged that an employment preference given to the Corporation’s shareholders constitutes unlawful discrimination, the Ninth Circuit Court of Appeals refused to find any illegal discrimination had occurred. Conitz v. Teck Alaska Inc., 2011 WL 1869957 (May 17, 2011).

The employee in question worked for Teck Alaska Incorporated at the Red Dog Mine and sought a promotion that he did not get. Red Dog Mine is operated through a joint venture between Teck and the NANA Regional Corporation, which is an Alaska Native Corporation formed under the Alaska Native Claims Settlement Act (ANCSA). Teck has a policy in place to give an employment preference to NANA shareholders when two or more equally qualified candidates are being considered for a promotion. When the employee did not get the promotion he wanted, he sued alleging racial discrimination because NANA shareholders are Alaska Natives. The lower court held that the shareholder preference was not racially based, but based on political status, and that the employee was not as qualified for the position as the person who won the promotion.

The Ninth Circuit affirmed the lower court’s decision. Because Teck’s policy of favoring employees was based on shareholder status, as opposed to giving preference based on status as an Alaska Native, the Ninth Circuit found the policy was not discriminatory on its face. The Court thus examined whether the employee could demonstrate the policy had been applied to him in a discriminatory manner under the test set forth in McDonnell Douglas Corporation v. Green, 411 U.S. 792, 802 (1973). To establish discrimination under McDonnell Douglas, the employee has to show (1) he belonged to a protected class, (2) he was qualified for the job he sought, (3) he was subjected to an adverse decision, and (4) similarly situated employees not in his protected class received more favorable treatment. The Ninth Circuit found the employee in question could not prove the policy had been applied to him in a discriminatory way because he was not qualified for the position to which he wanted to be promoted.

Moreover, because the employee was not qualified, the Court declined to consider his argument that Teck’s shareholder preference policy constitutes racial discrimination in violation of Title VII of the Civil Rights Act, which prohibits employment discrimination based on race, color, religion, sex and national origin.

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