Workplace Class Action Blog

Is The EEOC’s Role To Enforce The Law, Or Make New Law?

Posted in Uncategorized

By Gerald L. Maatman, Jr.

Today I had the privilege of attending the 6th Annual Forum on Defending Employment Discrimination Litigation hosted by the American Conference Institute in New York, New York (I spoke on defense strategies for defending high stakes, multi-party age discrimination lawsuits).

Constance Barker, one of the five Commissioners at the Equal Employment Opportunity Commission, gave the keynote address at the program. Her presentation was fascinating, and focused largely on the swirling controversy relative to the EEOC’s recent issuance of new enforcement guidance on the Pregnancy Discrimination Act (which we blogged on previously here). Commissioner Barker made public statements about the PDA Guidance - immediately after the EEOC posted the Guidance on its website – questioning the wisdom of the EEOC’s action on procedural and substantive grounds. She asserted that in adopting the new Guidance, the Commission sought to legislate changes to, rather than interpret, Title VII (her written comments dated July 14, 2014, are here.

In broader terms, this squarely raises the issue of the proper role and responsibility of the EEOC. Should it enforce the law or expand the law to maximize the reach and public policies within employment discrimination prohibitions? Many critics of the EEOC have cited the new Guidance as further evidence that the Commission is an activist agency that is result-oriented and willing to do whatever it takes to pursue litigation enforcement strategies it deems appropriate.

In response to questions from floor at today’s program in New York, Commission Barker agreed that there is some truth to the criticism that the EEOC has sought to use its enforcement power and enforcement litigation to, in a sense, “legislate” behavior in the employer community. She agreed that while societal goals and aspirations might counsel that a law like the PDA should be interpreted in the manner the new Guidance advocates, the role of the EEOC is not to engage in “social engineering.” Instead, the role of the EEOC is to enforce the law as written, and leave policy decisions about the expansion of the law to Congress. In this respect, she reiterated her position that the new PDA Guidance represented an effort by the Commission to “jump ahead” of Congress and the courts in fashioning the contours of employer obligations and employee rights under the law.

Commissioner Barker predicted that the EEOC’s action may become “an embarrassment” for the Commission depending on how the U.S. Supreme Court adjudicates certain issues in Young v. United Parcel Serv., 707 F.3d 437 (4th Cir. 2013), in its next term (and may well grant the new Guidance no deference or criticize how the EEOC went about issuing the Guidance).

This issue is sure to heat up further. Stay tuned.

Readers can also find this post on our EEOC Countdown blog here.

 

The Need For Vigilance: The EEOC Comes Back For A Second Bite Of An Employer After A Settlement

Posted in Settlement Issues

By Chris DeGroff and Brian Wong

In the world of EEOC systemic enforcement, court-imposed injunctive relief accompanies nearly every settlement of Title VII claims. The parties memorialize this relief in the form of a consent decree to be approved by the Court and entered as an enforceable order. Though the parties and the public tend to focus primarily on the dollar value of systemic action settlements, employers bound by consent decrees must remember that failure to comply with agreed-upon injunctive mandates could result in significant exposure for the company.

In EEOC v. Supervalu, Inc. and Jewel-Osco, Case No. 1:09-CV-05637 (N.D. Ill. July 15, 2014), the EEOC tried to send this very message to employers.

Background

On September 11, 2009, the EEOC sued Supervalu, Inc. and Jewel-Osco (collectively “Jewel”) in the U.S. District Court for the Northern District of Illinois, alleging Jewel engaged in a pattern or practice of violating Title I of the Americans with Disabilities Act.  Specifically the EEOC alleged Jewel prohibited disabled employees from returning to work after disability leaves unless they could return without accommodation, and that Jewel terminated such employees at the end of their one-year leave period.

On January 14, 2011, the EEOC and Jewel entered into a three-year Consent Decree to resolve the case. Among other provisions, the Consent Decree required Jewel to make monetary payments to eligible claimants, provide training to certain employees who administer disability leaves, and engage a “job description consultant” and “accommodations consultant” to improve job descriptions and assist in identifying possible accommodations for disabled employees.

The case was over. But was it?

The next year, on March 26, 2012, the EEOC filed a motion seeking civil contempt sanctions against Jewel for failing to follow the requirements of the Consent Decree as to three former employees. The EEOC also sought limited discovery on the issue, which the Court initially denied, but thereafter granted following written objections by the parties. After the parties engaged in limited discovery, the Court conducted evidentiary hearings on March 17 and 18 and April 7, 2014, before U.S. Magistrate Judge Michael T. Mason.

The Magistrate Judge’s Recommendation

Judge Mason filed his Report and Recommendation on July 15, 2014, determining that Jewel violated the terms of the Consent Decree by failing to accommodate and ultimately terminating three disabled employees.  According to the Court, Jewel failed to follow its own interactive process guidelines and declined to consider a list of possible accommodations generated by the accommodations consultant the company itself had appointed per the Consent Decree.  According to Magistrate Judge Mason, “[q]uite simply, the evidence [was] overwhelming that the company did not do what it was supposed to do under the Decree.” Id. at 46.

After determining clear and convincing evidence showed Jewel violated the Consent Decree, the Court recommended: (i) a finding of contempt on the part of Jewel; (ii) compensatory sanctions of over $82,000 in back pay for the three aggrieved individuals; (iii) a one year extension of the term of the Consent Decree; (iv) retention of a company-paid “special master” to review prospective accommodation decisions made by Jewel in the future; and (v) company payment of reasonable fees and costs incurred by the EEOC in pursuing its contempt motion.

But the saga continues.  Jewel has until July 29, 2014 to file objections to Judge Mason’s Report and Recommendations.  So blog readers, please stay tuned.

Implications For Employers

Regardless of the outcome of the ongoing briefing, this action brought by the EEOC serves as a cautionary tale for any employer living under the terms of an EEOC consent decree. Companies bound by consent decrees must remain vigilant, as the EEOC frequently looks for opportunities to retake the spotlight by making allegations about supposed compliance issues. As EEOC Chicago Regional Attorney John Hendrickson has warned, “Consent decrees have teeth.” The attraction of these compliance actions for the EEOC is clear:  tag-along actions like those discussed here have all of the publicity elements of an actual lawsuit, while expending minimal governmental resources. Because consent decrees often contain exhaustive injunctive mandates, robust documentation of those efforts can be a critical safeguard against aggressive EEOC allegations of non-compliance.

Readers can also find this post on our EEOC Countdown blog here.

 

Iowa Supreme Court Dismisses Long-Fought Race Discrimination Class Action

Posted in Class Action Litigation, Uncategorized

By Gerald L. Maatman, Jr. and Gina R. Merrill

It is a truism that complex litigation often becomes a battle of the experts, and this applies with full force to class action employment discrimination cases. Skilled counsel will anticipate this fact and early on identify and develop not only the right experts, but thoroughly assess what data and information is available for analysis.

In one high-profile discrimination suit, Pippen v. State of Iowa, et. al., Case No. 12-0913 (Iowa July 18, 2014), the Supreme Court of Iowa last week dismissed plaintiffs’ race discrimination class claims because they had failed to challenge any particular employment practice and failed to demonstrate that they were unable to isolate any particular employment practice as problematic using the available data. The end result is the dismissal of what is believed to be the largest and most high profile employment-related class action ever filed in Iowa.

Background

The plaintiffs in Pippen v. State of Iowa, who are African-American, filed suit in 2007 alleging that the State failed to enforce its own statutory and regulatory policies and thereby denied African-Americans equal opportunities for employment. The plaintiffs did not contend that the discrimination was intentional, but rather alleged that it was a “natural unintended consequence of the State’s failure to follow rules.” Id. at 5. A class was certified by stipulation in 2010 with respect to disparate impact in hiring and promotion, and ‒ unlike the great majority of class discrimination cases ‒ the case went to trial in 2011. After a 17-day trial, the lower court found in favor of the State and dismissed the claims, and plaintiffs appealed. On July 18, 2014, the Supreme Court of Iowa affirmed the decision of the lower court.

The Court’s Decision

At issue in Pippen were the hiring practices of 37 different departments within the executive branch of the State of Iowa, each with its own hiring authority. In discovery, the State produced electronic data from a central database containing information on every applicant for hire and promotion, as well as paper files maintained by each department. The case turned on whether plaintiffs had analyzed a specific employment practice as opposed to an overall hiring system, and, if not, whether the plaintiffs were incapable of doing so with the data produced by the State.

After a lengthy description of the history of civil rights employment legislation, the Court explained that the Civil Rights Act of 1991 requires a plaintiff to challenge a particular employment practice or, in the alternative, to “demonstrate why an employer’s decision-making process is ‘not capable of separation for analysis.’” Id. at 39. Plaintiffs conceded that they had not challenged a specific employment practice, but Plaintiffs argued that defendants had failed to maintain records on each separate employment practice such that “statistical analysis of any separate element was impossible.” Id. at 32. According to Plaintiffs, the data did not reflect whether a particular candidate was screened or scored, for example, so it was impossible to analyze a particular employment practice. The State, on the other hand, argued that plaintiffs had performed a system-wide analysis by their own choice and not because the data was incapable of being broken down.

In analyzing the question, the Court acknowledged that “the fact that the plaintiffs were provided with lots of [electronic] data that can mechanically be sliced and diced in numerous ways proves nothing; massive data can always be divided into countless different piles.” Id. at 44. The pertinent question was whether plaintiffs had demonstrated that the data “could not be divided into smaller, better defined subsets of specific employment practices with sufficient decision points to be capable of statistical analysis.” Id. at 45. Applying this standard, the Court found that plaintiffs failed to satisfy this burden because they had not shown that the departmental paper files were incapable of analysis with respect to particular employment practices. In fact, plaintiffs’ own social science expert, Anthony Greenwald, testified that the paper files were “a gold mine that hasn’t been analyzed.” Id. at 48. The Court therefore affirmed the judgment and dismissed the case.

Implications For Employers

The Pippen decision is helpful and persuasive authority for employers seeking to remind courts that plaintiffs have the burden of challenging a particular employment practice or demonstrating that it would be impossible to do so. And in an area of law where cases often rise or fall on expert analysis, Pippin is stark reminder for parties to carefully assess and strategically consider the available data.

Calling All Readers Of The Workplace Class Action Blog: We’re In The Running For The 100 Best Legal Blogs And We Need Your Vote!

Posted in Class Action Litigation

Seyfarth’s Workplace Class Action Blog is a one-of-a-kind reference site and thought leadership forum that analyzes the latest trends in complex employment litigation. The Workplace Class Action blog is also one of the primary vehicles for disseminating Seyfarth’s Annual Workplace Class Action Litigation Report. We were honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”).

Here is what EPLiC said: “The Report is the singular, definitive source of information, research, and in-depth analysis on employment-related class action litigation. Practitioners and corporate counsel should not be without it on their desk, since the Report is the sole compendium of its kind in the United States.” Further, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

Help us gain some extra recognition by casting your vote in the ABA’s annual 100 best legal blogs competition.

When: Voting is open until August 8, 2014.

Where: Click the link here to vote. Simply provide a short explanation of why you like this blog.

Why: Check out some of the competition criteria:

  • The author is recognizable as someone working in a legal field or studying law in the vast majority of the posts. √
  • The majority of the blog is written with an audience of legal professionals or law students — rather than potential clients or potential law students — in mind. √
  •  The majority of the blog’s content is unique to the blog and not cross-posted or cut and pasted from other publications. √

Hurry over to the polls, and cast your vote!

Despite Wal-Mart Stores v. Dukes, Court Certifies Hostile Work Environment Class Of Current And Former African-American Employees

Posted in Class Certification

By Gerald L. Maatman, Jr., and Alexis P. Robertson

On July 5, 2014, Judge Matthew F. Kennelly of the U.S. District Court for the Northern District of Illinois certified a class of current and former African-American employees alleging claims of racial discrimination against Comcast, Inc.  In Brand v. Comcast, Case No. 11 C 8471 (N.D. Ill. July 5, 2014), Judge Kennelly found that plaintiffs’ proposed class of employees who work or worked at a single Comcast facility located on the South Side of Chicago satisfied the requirements of Rule 23(b)(3).

The ruling is significant for employers, as most judges cast a doubting eye at efforts to certify hostile environment claims after Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).

Background To The Case

Twelve named plaintiffs, comprised of current and former employees of a Comcast facility located on South 112th Street in Chicago, sued Comcast alleging that it discriminated against the employees of that facility due to the race of the employees and the customers. Plaintiffs alleged that the facility was infested with cockroaches, dilapidated, and dangerous. Plaintiffs asserted that their repeat requests for new equipment were ignored and that they were forced to use outdated a defective equipment. Additionally, Plaintiffs alleged that they were denied adequate training, were the subject of racial epithets, paid less than similarly-situated white Comcast employees, and were more likely to be placed on disciplinary performance improvement plans.

Plaintiff’s filed suit alleging discrimination under 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964. Plaintiffs moved to certify a hostile work environment class. In addition, Plaintiffs moved to certify an additional “terms and conditions class” as well as a handful of sub-classes.

The Court’s Decision

The Court primarily focused on Plaintiffs’ request for certification of a hostile work environment class “consisting of all African-American employees who work or worked at Comcast’s 112th Street facility between January 2005 and the present.” Id. at 3. Plaintiffs alleged that the class consisted of at least 350 members.

The Court concluded that Plaintiffs had provided sufficient evidence of commonality per Wal-Mart Stores, Inc. v. Dukes when the majority, 11 out of 12 of the representative Plaintiffs and 80 percent of the declarant plaintiffs, testified that they had heard or been subject to racial epithets. The Court found that the high percentage of Plaintiffs and putative class member who had heard epithets constituted a common injury that was sufficiently “severe and pervasive” for class certification purposes. Id. at 30. Therefore, Plaintiffs had sufficiently alleged a common question among the workers about “whether they [had] heard racially offensive terms during the course of their employment to the extent that they constituted hostile work environment.” Id at 31.

Further, the Court found that the inclusion of allegations related to the infested and dilapidated condition of the office, as well as the used and defective equipment, further contributed to the “common question of whether  there was a hostile work environment. . . .” Id. at 32. The Court reasoned that “by its nature, the issue of the condition of the 112th Street facility presents a concern common to any employee working there.” Id. Additionally, the manner in which Comcast handled complaints about the facility was also a part of the common question of whether the “facility constitutes a hostile work environment.” Id. at 33. Ultimately, the Court found that the Plaintiffs had shown “significant proof of a common question among members of the class regarding whether there was a hostile work environment at the 112th street facility.” Id. at 34.

After concluding that the Plaintiffs had satisfied the commonality requirement, the Court was easily able to find that typicality had been satisfied. The Court determined that its analysis of commonality “also explains why the named plaintiffs’ claims are typical of those with the class: not only did the vast majority of the named plaintiffs encounter racially offensive language and work with problematic equipment, but all of them worked in the same facility.” Based on this, the Court concluded that “the claims of the named plaintiffs are typical of those of the class for purposes of Rule 23(a)(3).” Id. at 36.

Further, the Court determined that certification under Rule 23(b)(3) was appropriate because the Plaintiffs were seeking money damages. The Court rejected Comcast’s argument that individual damages calculations would overwhelm the common questions to the class, because “common proof of damages for class members is not required.” Id. at 41 (internal citations and quotations omitted). Reiterating that the “common question is whether conditions at the 112th Street presented a hostile work environment for the African-American employees there,” the Court held that the Plaintiffs proposed class satisfied the predominance requirement of Rule 23(b)(3) and that certification was, therefore, proper. Id. at 40.

The Court went on to deny Plaintiffs’ request for certification of a number of ancillary classes, finding that the proposed pay, promotion, and termination classes did not meet the commonality requirement.

Implications For Employers

Brand v. Comcast is a significant decision for employers. This case illustrates that the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), did not ring the death knell for hostile work environment class actions, at least according to Judge Kennelly. According to Brand v. Comcast, a class based on the environment at a single facility may surmount the commonality barrier created by Wal-Mart Stores and gain certification. It remains to be seen whether the Seventh Circuit will agree with this interpretation, as the ruling represents a distinct minority view of Wal-Mart Stores in the federal courts.

 

New Guidance From The EEOC Requires Employers To Provide Reasonable Accommodations Under The Pregnancy Discrimination Act

Posted in Uncategorized

By Paul Kehoe 

Today, without the fanfare of a public meeting, the U.S. Equal Employment Opportunity Commission published Guidance on its website addressing the treatment of pregnancy under Title VII. Once again, it appears as if the EEOC adopted a position exceeding the statutory mandate that Congress bestowed upon it. Requiring employers to provide a reasonable accommodation under Title VII of the Civil Rights Act of 1964 for all pregnant employees finds no statutory basis in the text of Title VII, the Americans With Disabilities Act, as amended, or the Pregnancy Discrimination Act (the “PDA”). Indeed, the overwhelming majority of the Circuit Courts of Appeals that have reviewed the issue have held that the PDA does not include a reasonable accommodation requirement.  Despite that, a majority of the EEOC’s Commissioners determined otherwise. Commissioners Barker and Lipnic both issued statements – immediately after the EEOC posted the Guidance on its website – questioning the wisdom of the majority’s actions on procedural and substantive grounds, each recognizing that in adopting the new Guidance, the Commission sought to legislate changes to, rather than interpret, Title VII.

Controversy

This is a controversial issue for employers. One might reasonably argue that when the U.S. Supreme Court reviews Young v. United Parcel Serv., 707 F.3d 437 (4th Cir. 2013), in its next term, it should grant this Guidance the deference it deserves – none.

This bald attempt to jump over a pending Supreme Court case and federal legislation, however, may backfire against the EEOC as the Supreme Court has rather routinely rejected EEOC guidance in recent years. See, e.g., Vance v. Ball State University, 133 S. Ct. 2434 (2013) (rejecting the EEOC’s definition of “supervisor” and held that an employee is a supervisor only where the employer has empowered the employee to take tangible employment actions against the employee rather than the EEOC’s more expansive definition); Univ. of Texas Southwestern Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013) (rejecting the EEOC’s position that retaliation claims under Title VII were subject to the “motivating factor” causation standard); Hosanna-Tabor Evangelical Lutheran Church v. EEOC, 132 S. Ct. 694, 707 (2012) (rejecting the EEOC’s position that the ministerial exception did not apply to ADA retaliation cases). The Supreme Court’s decisions were often based on the lack of statutory support for the EEOC’s positions.  Like all regulatory agencies, the EEOC does not operate in a vacuum or in pursuit of policies which it may desire to implement but rather may act only pursuant to the authority given to it.

Without a doubt, given the broad expansion of covered disabilities under the ADAAA, many more pregnancy-related impairments now likely rise to the level of an ADA-covered disability (e.g., anemia, pregnancy-related sciatica, pre-eclampsia, gestational diabetes).  In these instances, a pregnant employee would be afforded the same right to reasonable accommodation under the ADA as any other individual with a disability, regardless of whether the impairment was related to pregnancy.  In addition, twelve jurisdictions have adopted pregnancy accommodation statutes or ordinances. However, the Guidance asserts that the reasonable accommodation requirement applies even for those pregnant employees whose impairments do not rise to the level of a disability under the ADA (e.g., those with a “normal” pregnancy) notwithstanding that under the ADA, pregnancy is not an impairment.

The standards adopted in the Guidance are currently proposed in the Pregnant Worker’s Fairness Act (the “PWFA”), S. 942 and H.R. 1975.  The PWFA, if enacted, would make it an unlawful employment practice to not provide a reasonable accommodation to the known limitations related to pregnancy or force a pregnant employee to take leave, among other things. Rather than waiting until the legislative process is complete, the Guidance preemptively reaches the same conclusion under the theory that the reasonable accommodation requirements of the Americans with Disabilities Act of 1990 were incorporated into the PDA, which was enacted in 1978.

Implications For Employers

As a practical matter, employers will feel the greatest impact of the Guidance in the area of light duty and leave as applicable to female employees with “normal” pregnancies. Currently, under federal law, where an employer’s policy provides leave or light duty for employees injured or otherwise medically limited in their ability to work for any reason, a pregnant employee is entitled to such leave – the fact that her limitation arises from a normal pregnancy, rather than an injury or medical condition – is irrelevant. Conversely, as was permissible in Young, where an employer’s light duty or leave policy limits eligibility to those with a disability or those with on the job injuries, an employee with a normal pregnancy would not be eligible for light duty. Under the Guidance, employers would be required to provide light duty and/or leave for all pregnant employees, regardless of whether they were “disabled” under the ADA.

Notably, the EEOC’s process in adopting the anticipated Guidance ignored the standards articulated by the Office of Management and Budget (“OMB”) in its “Final Bulletin for Agency Good Guidance Practices” (No. M-07-07, January 18, 2007). That document — which “establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies” — sets forth a number of recommendations for significant guidance documents.  While it stops short of requiring agencies to provide pre-adoption notice and comment on all significant guidance documents, it recognizes that “it is often beneficial for an agency to do so when they determine that it is practical.  Pre-adoption notice and comment can be most helpful for significant guidance documents that are particularly complex, novel, consequential, or controversial.”

As this Guidance adopted a standard that is currently pending before Congress and the Supreme Court, a standard overwhelmingly (though not unanimously) rejected by the Circuit Courts of Appeals, and one which essentially eviscerates the EEOC’s prior position that pregnancy is not a disability (which was issued during a notice and comment rulemaking), all without public comment or an opportunity for dissenting Commissioners to publicly object to the Guidance, its adoption casts a pall over its legitimacy. Unfortunately, the EEOC has decided that the legislative and judicial processes are not necessary when rewriting the statutes that it enforces.

Readers can also find this post on our EEOC Countdown blog here.

Seventh Circuit Marginalizes Comcast And Rules That “Common Damage” Is Not Required For Class Certification In Products Cases

Posted in Class Certification

By  Gerald L. Maatman, Jr. and Jennifer A. Riley

On July 2, 2014, the U.S. Court of Appeal for the Seventh Circuit entered its opinion in IKO Roofing Shingle Products Liability Litigation, No. 14-1532 (7th Cir. July 2, 2014), and vacated a district court’s decision denying class certification.

A Seventh Circuit panel of Judges Wood, Easterbrook, and Kanne found that the district court erred when it interpreted the Supreme Court’s decisions in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), as requiring plaintiff to demonstrate “commonality of damages.” Instead, the Seventh Circuit held that these SCOTUS decisions merely require plaintiffs to match their theory of loss to their theory of liability – a fact that is “equally true in a suit with just one plaintiff.” Id. at 7.

We have previously blogged about the Seventh Circuit’s limiting interpretation of Comcast (read more here). The Seventh Circuit went further in IKO and essentially found the fact that Comcast involved a Rule 23 class action beside the point.

Although the IKO decision arose outside the employment context, we anticipate that plaintiffs’ counsel will argue that it spells bad news for employers faced with class claims, particularly in the Seventh Circuit, and that it further limits defendants’ ability to use disparate damages as grounds to oppose class certification.

Factual Background

Purchasers of organic asphalt roofing shingles brought suit against IKO Manufacturing contending that it falsely told customers that the shingles met an industry standard known as ASTM D225. Id. at 1. Plaintiffs asked the district court to certify a class that would cover IKO’s sales in eight states since 1979. Id. at 2. The district court denied the motion.

The district court noted that Comcast and Wal-Mart require proof that plaintiffs “will experience a common damage” and that their claimed damages “are not disparate.” Id. at 6. The district court found that the inevitable differences in consumers’ experiences with IKO’s tiles prevented class certification. Subsequently, Plaintiffs sought interlocutory review under Rule 23(f), which the Seventh Circuit granted. Id. at 2.

The Seventh Circuit’s Opinion

The Seventh Circuit disagreed with the district court’s reading of Wal-Mart and Comcast.  It noted that, if the district court’s reading is correct, class actions about consumer products are “impossible.” Id. at 6.

With respect to Wal-Mart, the Seventh Circuit explained that the case “has nothing to do with commonality of damages.” Id. at 6. Instead, at least according to the Seventh Circuit, Wal-Mart deals with the need for “conduct” common to members of the class.  Id.  In that case, damages differed but only because the underlying conduct differed. Id. at 7. The Seventh Circuit reasoned that “[i]n a suit alleging a defect common to all instances of a consumer product, however, the conduct does not differ.”  Id.

With respect to Comcast, the Seventh Circuit recognized that the case “does discuss the role of injury under Rule 23(b)(3), though not in the way the district court thought.” Id. The Seventh Circuit explained that, there, plaintiffs specified four theories of liability, and their damages expert estimated harm resulting from all four. Because the district judge certified a class limited to one of the four theories, plaintiffs lacked a theory of loss that matched the theory of liability. Id. at 7.

The Seventh Circuit held that, in IKO by contrast, plaintiffs had two “theories of damages that match[ed] their theory of liability” and, therefore, plaintiffs did not run afoul of Comcast. Id. at 7-8. The Seventh Circuit noted that, although a buyer-specific remedial approach (i.e., purchasers whose tiles actually failed are entitled to recover damages if non-conformity to the D225 standard caused the failure) “would require confining any class certification to questions of liability,” it “is not hard to frame liability issues suited to class-wide resolution.” Id. at 8.

Implications For Employers

The Seventh Circuit’s ruling is plaintiff-friendly and cuts back on defenses that other jurisdictions have utilized to cabin class actions. In Comcast, the Supreme Court noted that, to meet the predominance requirement, plaintiffs must show that damages resulting from the alleged injury are “measureable ‘on a class-wide basis’ through use of a ‘common methodology.’” Comcast, 133 S. Ct. at  1430. The Supreme Court went on to hold that plaintiffs’ model fell short of establishing that damages were “capable of measurement on a class-wide basis” and that, without another methodology, plaintiffs could not show Rule 23(b)(3) predominance:, “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” Id. at 1433.

Despite the Supreme Court’s language, in IKO, the Seventh Circuit specifically held that a plaintiff need not demonstrate “commonality of damages” to obtain class certification under Rule 23(b)(3). It remains to be seen whether the Seventh Circuit’s interpretation is faithful to the Supreme Court’s intent, and whether this interpretation will be applied to workplace class actions.

 

SCOTUS Agrees To Consider Whether Pregnant Workers Must Be Able To Perform The Essential Functions Of The Job

Posted in Uncategorized

By Laura Maechtlen and Julie G. Yap

Last week, in Young v. United Parcel Service, Inc.,the U.S. Supreme Court agreed to answer the question of whether an employer is required to accommodate an employee who is unable to perform the essential functions of her job due to pregnancy-related restrictions. The Supreme Court’s resolution of this case could provide helpful clarification for employers regarding the types of pregnancy-related accommodations they must provide.

The Fourth Circuit’s decision, which is the subject of review, provided that — where an employer has a policy restricting work limitations that treats both pregnant workers and non-pregnant workers alike — an employer has complied with the Pregnancy Discrimination Act.  See 707 F.3d 437 (4th Cir. 2013).  In Young, the essential function of the plaintiff’s job required her to lift, lower, push, pull, leverage, and manipulate packages weighing up to 70 pounds. The employer also had a policy of offering light duty only to those employees injured while on the job or suffering from a permanent impairment cognizable under the American With Disabilities Act. The plaintiff sued after her employer placed her on an extended unpaid leave of absence because the plaintiff’s mid-wife imposed a 20 pound lifting restriction.

The plaintiff’s “core contention” was that her employer’s policy limiting light duty work to some employees — those injured on-the-job or disabled within the meaning of the ADA — but not to pregnant workers, violated the Pregnancy Discrimination Act’s command to treat pregnant employees the same as other employees. Id. at 445-46. The Fourth Circuit squarely rejected this position, characterizing it as “compelling employers to grant pregnant employees a ‘most favored nation’ status.” Id. at 446. The Fourth Circuit also rejected the plaintiff’s attempt to indirectly attack the pregnancy-blind policy as demonstrating “corporate animus.” Id. at 449. Specifically, the Fourth Circuit concluded that because the light-duty accommodations for certain employees were created by a “neutral, pregnancy-blind policy,” the plaintiff could not establish that similarly situated employees received more favorable treatment than she did.  Id. at 450.  Accordingly, the Fourth Circuit affirmed the decision of the district court, dismissing the plaintiff’s claims.

In her Petition for Review, the plaintiff reasserted her argument that the essential functions of the job, as well as the employer’s neutral policy regarding light duty work, be disregarded and replaced with a policy granting more favorable treatment to pregnant employees. In its Opposition, the employer noted that the plaintiff’s construction would, as the Fourth Circuit concluded, grant “most favored nation status to pregnant workers above all others,” including allowing courts to override the terms of collective bargaining agreements. (Opp’n Brief at 15-16.)

Notably, the U.S. Solicitor General stepped into the fray, asserting that the question presented in this case did not warrant review at this time. The Government’s brief requested that the Supreme Court defer review of this issue, since this case did not implicate amendments to the ADA made in 2008 (that only applied prospectively). The Government also noted that the need for review in this case was diminished by the EEOC’s potential adoption of new enforcement guidance on pregnancy discrimination.

However, despite even the Government’s argument against review, the Supreme Court agreed to review the case in its October Term of 2014.

Implications For Employers

While not a class action, the issue in Young implicates issues arising in EEOC enforcement litigation. Alleged violations of the ADA and PDA are a significant area of focus by the Commission in its systemic litigation program.

We will continue to follow developments as the parties and amicus groups file their merits briefs and keep our readers informed.

 

Bifurcation In The Wake Of Comcast

Posted in Class Certification

By Gerald L. Maatman, Jr. and Gina R. Merrill

Earlier this week, the U.S. District Court for the Southern District of New York certified a liability class in a Title VII suit brought against the United States Census Bureau. In Houser v. Pritzker, Case No. 10-CV-3105 (S.D.N.Y. July 1, 2014), Magistrate Judge Frank Maas found that five of eight named plaintiffs had standing to bring suit, and further held that the proposed class met the commonality and typicality requirements of Rule 23(a).

The judge declined, however, to certify a damages class. Analyzing the Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), which significantly raised the bar for predominance under Rule 23(b), Magistrate Judge Maas found that certification of a damages class was inappropriate given the highly individualized nature of each class member’s damages. Rather than reject certification entirely, the Court chose to exercise its discretion under Rule 23(c)(4) to bifurcate the liability and damages phase, and proceed to adjudication of the liability questions.

As such, the decision is Houser is of significant importance to all employers in the workplace class action context.

Background

The United States Census Bureau (“Census Bureau”) conducts a nationwide census every ten years, known as the Decennial Census. The 2010 Decennial Census created 1.3 million temporary employment positions between October 2008 and September 2010, and the Census Bureau received approximately 3.8 million applications for these positions.

In screening job applicants, the Census Bureau required all applicants with a criminal record to provide “official court documentation” of their prior arrests and convictions within thirty days of receipt of a demand letter. Once the documentation was received, staff members would review and determine whether to treat the applicant as available for hire, or to request further information.

In 2010, eight individuals filed a purported class action suit challenging these procedures as non-job related and discriminatory because they negatively impacted the hiring of African-Americans and Latinos for obtaining employment.

The Court’s Decision

Magistrate Judge Maas focused primarily on two issues – subject matter jurisdiction and class certification under Rule 23 – in his ruling.

Subject Matter Jurisdiction  

The Census Bureau moved to dismiss the suit for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). The Court examined whether the named plaintiffs had standing to bring suit and whether a favorable decision could redress their injuries.

First, the Court concluded that five of the eight named plaintiffs individually possessed Article III standing to bring suit because they met the bare minimum qualifications for employment. Even though the Census Bureau established that the candidates would not have been hired due to a variety of factors ‒ geography, test scores and availability, among others ‒ the Court rejected the notion that Title VII plaintiffs must show that they ultimately would have secured employment.  Rather, “the question here is whether the Census Bureau’s allegedly discriminatory practices place any of the named plaintiffs on an unequal footing in terms of their ability to compete for employment.” Id. at 25. In answer to this question, the Court determined that the “five plaintiffs have established that they were eligible to be considered for employment but were denied the opportunity to compete with other applicants.  That showing is sufficient to confer standing under Title VII.” Id.

The Court also held that the requested relief could redress the injuries of the same five plaintiffs. The Court rejected the Census Bureau’s argument that each plaintiff was “precluded from selection for reasons entirely independent of the challenged policies and procedures” and therefore had no injuries that could be redressed by the relief sought. Id. at 28. The Court noted that these arguments were simply “repackaged” arguments relating to standing, and it denied the Census Bureau’s motion to dismiss. Id.

Class Certification

Next, the Court examined certification of the class. The Court found without hesitation that the class met the standard for commonality under the Supreme Court’s decision in Wal-Mart Stores v. Dukes, 131 S.Ct. 2541, 2562 (2011), and commented that Dukes seemed to address the very situation at bar, where there was a “’testing procedure to evaluate [all] applicants for employment’” and ‘”a class action on behalf of every applicant or employee who might have been prejudiced.’” Id. at 35 (citing Dukes). The Court found that the parties had all but agreed that the “central questions in the case have a common, classwide answer; [and] the only point on which the parties disagree is the answers themselves.” Id. at 36.

In examining typicality, the Court noted that the only two Latino class representatives were not among the five plaintiffs with standing, and therefore the Court declined to certify a class including Latino class members. This class definition seems unlikely to hold, however, as the Court noted that Plaintiffs will have an opportunity to identify other Latino representatives, and the Court may in its discretion amend the class definition at that time. Id. at 41.

Finally, the Court examined the predominance requirement of Rule 23(b) and found no bar to certification with respect to injunctive relief. The Court’s analysis of damages sub-classes, however, was quite different. The Court explained that “[t]he Supreme Court recently emphasized the stringency of the predominance requirement in Comcast Corp. v. Behrend” which requires that plaintiffs offer a damages model capable of calculating damages across the class. Id. at 53-54. Given the “highly individualized nature” of analyzing damages as to any individual class member in this case, the Court found that individual questions would predominate and the stringent requirements of Comcast were not met. Id. at 55.

Nevertheless, the Court found that Comcast did not mandate denial of class certification in its entirety. Rule 23(c)(4) allows a court in its discretion to maintain a class action only with respect to particular issues, and Magistrate Judge Mass opined that “nothing in the [Comcast] ruling seems appears to have taken that option off the table in future lawsuits.” Id. at 58. The Court noted that although Comcast did not bifurcate the issues under Rule 23(c)(4), the plaintiffs in that suit did not request that relief.

Implications For Employers

Courts have disagreed as to the effect of Comcast on class certification. Some courts have held that the decision requires a class-wide model for calculating damages in order to certify a class for any purpose, while other courts have bifurcated liability and damages phases and granted certification only with respect to the former. Indeed, district courts in the Second Circuit have reached different conclusions, and the Court of Appeals for the Second Circuit seems poised to decide the issue. Employers should be watching carefully.

 

California Appellate Court Holds Arbitrators, Not Courts, Must Decide Whether Arbitration Agreement Prohibits Class Arbitration When Agreement Silent On Issue

Posted in Class Action Litigation

By Courtney Bohl and Laura Maechtlen

On June 25, 2014, in Sandquist v. Lebo Automotive, Inc., Case No. B244412 (Cal. App. Ct. June 25, 2014), the California Court Of Appeal for the Second Appellate District reversed a trial court’s order dismissing class claims with prejudice, holding that whether the parties agreed to class arbitration was an issue that should be decided by the arbitrator, not the trial court.

This decision is a reminder for employers to include an express prohibition on arbitration of class action claims in their arbitration agreements. Otherwise, employers may find themselves arguing the arbitrability of class claims in front of an arbitrator, not a court.

Factual Background

Plaintiff Timothy Sandquist filed suit on behalf of a putative class of people of non-European descent, or “employees of color,” in 2012 against Lebo Automotive, Inc. (“Lebo”) alleging violations of California’s Fair Employment and Housing Act and Unfair Competition Law. Id. at 3-4. Sandquist sought damages as well as injunctive and declaratory relief. Id. at 4.

After the suit was filed, Lebo filed a motion to compel arbitration pursuant to multiple arbitration agreements Sandquist entered into with Lebo at the start of his employment. Id. at 5. Notably, the arbitration agreements at issue were silent on the permissibility of class arbitration. Id. 

On August 14, 2012, the trial court granted Lebo’s motion (“August 14th Order”). The trial court also dismissed Sandquist’s class allegations without prejudice, finding that since Sandquist was subject to individual arbitration, there is no longer a class representative. Id. at 5. The trial court gave plaintiff 60 days to amend the complaint to bring forth a class representative, noting if plaintiff failed to do so, defendant could request dismissal of the case with prejudice. Id. 

Plaintiff was unable to find any Lebo employee that had not entered into the same arbitration agreements as Sandquist, and thus on October 5, 2012, the trial court dismissed the class claims with prejudice (“October 5th Order”). Id. at 6.

Sandquist appealed the August 14th Order, but did not include a notice of appeal of the October 5th Order.

The Appellate Court’s Ruling

The Appellate Court first held that under the “death knell” doctrine—a doctrine which allows a plaintiff to appeal any order that is “tantamount to a dismissal of the action as to all members of the class other than the plaintiff”—the October 5th Order was appealable. Id. at 9. The Appellate Court noted that although the August 14th Order compelling arbitration was not appealable because it did not finally terminate the class claims, it was clear that Sandquist intended to appeal the underlying judgment, i.e., the October 5th Order. Id. 

The Appellate Court next held that the arbitrator, not the trial court, should determine whether the arbitration agreement entered into between Sandquist and Lebo provides for class arbitration. Id. at 15. The Appellate Court, citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002), distinguished between situations where contracting parties would likely have expected a trial court to decide the gateway matter, such as the issue of whether the parties are bound by a given arbitration clause, and situations where the parties would not likely expect that an arbitrator would decide the gateway matter, such as procedural questions which grow out of the dispute and bear on its final disposition. Id. at 11. The Appellate Court stated that only in the former can a trial court decide the gateway matter. Id. 

The Appellate Court then noted that the U.S. Supreme Court has yet to determine whether the issue of class arbitration, when an arbitration agreement is silent on the issue, is a gateway question for the court or for the arbitrator. The Appellate Court elected to follow the reasoning of a plurality of four justices in Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003). Id. at 11-12. Citing Bazzle, the Appellate Court concluded that when an arbitration agreement is silent on class arbitration, but where the parties agreed to submit “all disputes, claims or controversies arising from or relating to this contract” to the arbitrator, the arbitrator decides whether the agreement precludes class arbitration. Id. The Appellate Court noted that this ruling is consistent the idea that a class action is a procedural device, which under Howsam is presumptively “not for the judge but for the arbitrator to decide.”  Id. at 13.

Implications For Employers

The Lebo decision is an important one for employers as it shows that an arbitrator, with limited judicial review, may decide the issue of whether class claims can be arbitrated if the employer’s arbitration agreement is silent on the issue.  Accordingly, employers should ensure that their arbitration agreements are clear and leave no procedural issues, especially class arbitration, up for interpretation.