Workplace Class Action Blog

The Defense Amicus Briefs Submitted To The SCOTUS In EEOC v. Mach Mining

Posted in Class Action Litigation

By Gerald L. Maatman, Jr., Lorie Almon, Rebecca Bjork, and Christopher DeGroff

Today Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining v. EEOC, No. 13-1019 (S. Ct.), perhaps the most important EEOC-related case to reach the SCOTUS in years. For our loyal blog readers interested in our amicus brief, a copy is here.

Mach Mining’s opening brief was filed last week – a copy is here if you missed it.

We have blogged on this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the U.S. Court of Appeals for the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). Readers can find the previous posts here and here. In a game-changing decision for employers, in December 2013, the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the Commission. In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed. Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations.

Our amicus brief questioned the underpinning of the Seventh Circuit’s decision – that employers asserting the failure-to-conciliate defense deflect judges from the merits and that there need not be any judicial review of the Commission’s conduct because the EEOC follows its obligations. We argued that the modern American judicial system does not work in that manner and that the Seventh Circuit’s ruling should be reversed.

Insofar as the Seventh Circuit’s ruling forbids judicial review of the EEOC’s satisfaction of its statutory obligation to conciliate discrimination claims in good faith, this undermines the ability of employers and insurers to reasonably assess settlement issues. When Congress enacted Title VII of the Civil Rights Act of 1964 (“Act”), it mandated that the EEOC engage in conciliation proceedings with employers prior to bringing lawsuits. 42 U.S.C. §2000e-5(b), (f)(1). While the language of the Act does not specify how conciliation proceedings must be conducted or the quantum of information that must be disclosed or exchanged, it clearly requires that the EEOC engage in good faith proceedings before bringing lawsuits. Id. Congress enacted this requirement in the interests of judicial economy, providing both the EEOC and employers with an avenue to resolve disputes confidentially, voluntarily, informally and without burdening the dockets of federal courts.

First, contrary to this clear Congressional intent that courts have followed over the last several decades, in EEOC v. Mach Mining, LLC, the Seventh Circuit held that this obligation is not judicially reviewable, and that, in essence, the EEOC may skip the statutory requirement of conciliation without any consequence. The Seventh Circuit opined that “failures by the EEOC in the conciliation process simply do not support an affirmative defense for employers charged with employment discrimination.” 738 F.3d at 181.  In support of its conclusion that employers may not use failure-to-conciliate as an affirmative defense, the Seventh Circuit noted “as a practical matter, there is little reason to expect the potential for dismissal to promote conciliation. The employer in a dismissed case has little incentive to resume talks, of course. The next employer the EEOC investigates will have seen the benefit of using the conciliation process as a strategic defense rather than a chance to settle.” Id. at 184-85. Contrary to Congress’s view that conciliation proceedings must be conducted as a vehicle to foster judicial economy, the Seventh Circuit decided that the requirement of conciliation proceedings was merely a formality that mostly benefitted employers who sought the dismissal of claims when the EEOC neglected to follow mandatory procedure.

Second, while the Seventh Circuit focused on critiquing certain employers’ potential defense strategies, it failed to account for the practical realities of its holding. The Seventh Circuit’s ruling encourages the EEOC to abstain from the procedural requirement of meaningful conciliation established by Congress and ignores the fact that employers and their insurance carriers – along with alleged victims of discrimination who may be desirous of settling – have both financial and business-reputation reasons to resolve litigation as quickly and cost-efficiently as possible. In reality, an insurer needs the EEOC’s help before it can authorize payment, due to insurers’ fiduciary obligations to their stockholders and legal obligations to regulators not to pay claims unless there is sufficient indicia that they have merit.  In this way, the Seventh Circuit failed to consider how the ruling impacts multiple constituents, including already over-burdened federal courts, which will now face more EEOC litigation; employers who face such claims; and the insurance industry, which bears the cost of defending the time-consuming and expensive litigation through employment practices liability insurance. In short, when the EEOC cooperates, alleged victims receive compensation more quickly, whether because insurers gain some leverage over employers who are otherwise resistant to settle, or because the carrier and the employer are better equipped to assess the EEOC’s demands and their litigation costs and risks. Employers always benefit, as fulsome information regarding the EEOC’s claims and settlement demands is necessary to make an informed and intelligent decision about whether to settle a claim or accept the reality of having to defend an EEOC lawsuit in federal court.

Implications For Employers

An eventual ruling by the Supreme Court on these issues will be important for any employer dealing with the EEOC.  If federal district courts cannot review its pre-lawsuit conciliation efforts, the EEOC will have free reign to pay mere lip service to its conciliation obligations and approach any negotiations in a “take-it-or-leave-it” manner. It remains to be seen whether the Supreme Court will agree with the Seventh Circuit’s approach. Stay tuned.

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

Different Experiences Of Navy Chaplains Doom Effort To Certify A Rule 23 Class For “Institutional Reform” In Workplace Bias Case

Posted in Class Action Litigation

Sometimes, class certification decisions read to us like checklists, where a judge will recite line and verse the requirements under Rule 23 one by one, and often find that all of them are satisfied with little discussion of the evidentiary basis for the rulings.  At other times, however, a decision will be released that represents a more nuanced and fully-reasoned analysis of not only the requirements of the rule and its sub-parts, but also the underlying policy purposes of class action litigation.  A fine example of the latter – for the defense side, anyway – was issued on September 4 by U.S. District Judge Gladys Kessler in the District for the District of Columbia in a class action involving chaplains in the U.S. Navy.

The Case

In In Re Navy Chaplaincy, No. 07-MC-269 (GK), 2014 U.S. Dist. LEXIS 122913 (D.D.C. Sept. 4, 2014), which you can read here, Judge Kessler admittedly had an lengthy record and history of litigation before her that informed her decision.  But her analysis of why the plaintiffs did not satisfy the commonality requirement under Rule 23(a) in particular, reveals that focusing on the factual experiences of the named plaintiffs can be a solid approach for defense practitioners to take to resist certification, particularly in multi-named plaintiff cases.

The plaintiffs, who were 65 current and former Navy Chaplains and a coalition of Evangelical Christian church organizations, alleged that the system by which the Navy appoints and promotes chaplains allows for bias against “non-liturgical” protestant chaplains to operate, thus violating their religious liberty and the U.S. Constitution.  Id. at 6-7.  (This was not a Title VII case, but rather, the plaintiffs sued under the Religious Freedom Restoration Act and the Constitution. Id. at 10.  Nonetheless, as our loyal readers know, many non-Title VII class cases shed light on how to defend them, so we like to keep up with all kinds of class cases.)  These plaintiffs sought to represent a class numbering approximately 2,500 Navy Chaplains, including those serving all the way back to 1976.  Id. at 24.

PlaintiffsClass Certification Theory

The plaintiffs alleged that the assignment and promotion process for Navy Chaplains, when analyzed statistically, revealed a pattern of religious preferences favoring liturgical protestants (those arising from the protestant Reformation, such as Lutherans and Episcopalians) and Roman Catholics over non-liturgical protestants.  Id. at 6-9.  They also challenged procedures such as secret balloting and an alleged quota system, which they said resulted in a disparate impact against Evangelicals, who they contended should be represented more strongly in the Chaplaincy Corps due to the alleged presence of more Evangelical Christians in the general population than other Christian, Jewish, or other religious groups.  Id.   They also alleged instances of individual discriminatory treatment they alleged stemmed from their faith.  Id. at 9-10. Their class theory was that, in addition to statistical evidence purporting to show systemic bias against non-liturgical protestant Chaplains over time, the boards who selected members of the Chaplain Corps and who recommended Chaplains for promotions were given discretion to make those decision without adequate and specific guidelines to ensure they were not based on impermissible religious preferences.  Id. at 32-33.  This allowed bias against non-liturgical protestants to infect their decisions.

The plaintiffs sought what Judge Kessler described as “sweeping injunctive and declaratory relief that would place this Court in an essentially perpetual oversight role with respect to the Navy’s personnel practices.”  Id. at 10.  Specifically, they sought an injunction requiring the Navy to enact policies they enumerated that would, among other things, “match religious representation in the general population” by granting preferences to Evangelical Christians, who they contend are the majority.  Id. at 10-12 & n.6.

The Court’s Decision

Plaintiffs’ theory of commonality was rejected by Judge Kessler as identical to the failed theory presented in Wal-Mart Stores, Inc. v. Dukes.  She relied on evidence in the record to show that decisions were dispersed amongst 500 officers in different geographical regions, and that the Chief of Chaplains does not control those “local” decisions about individual Chaplains’ placements.  Id. at 34-35.  She also noted the Navy Chaplaincy’s official policy documents that expressly forbid religious preferences, along with an oath decision-makers took to affirm their commitment to avoid preferences, as counter to the plaintiff’s evidence that the Navy Chaplaincy’s “culture” was biased against non-liturgical protestants.  Id. at 33-34.

Ultimately, the evidence pertaining to each individual named plaintiff’s experiences as a Navy Chaplain essentially doomed any effort to show there was a common thread tying them all together, necessary for commonality under Rule 23(a).  As Judge Kessler opined, after enumerating in a lengthy footnote the individualized issues and challenges each Chaplain testified affected his career, “while Plaintiffs may have suffered individual instances of religious intolerance, there is no evidence to suggest their experiences reflect a culture that is consistent across time and space and common to the entire class.”  Id. at 36.

Implications For Employers

This decision is well worth reading because in our view, it reveals the vulnerabilities in the increasingly common post-Wal-Mart dual track plaintiffs’ strategy, whereby they challenge a company’s “culture” with statistical evidence, coupled with anecdotal allegations of discrimination, and pronounce that a certifiable class exists.  Defendants who focus like a laser on individual reasons behind employment decisions for each class member will be more likely to reach a favorable result like the one in this case.

The EEOC Continues To Struggle To Overcome Case Law Rejecting Its Open-Ended Litigation Strategy

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

The nightmare scenario for a corporate counsel is being on the receiving end of an EEOC lawsuit where the Commission sues on behalf of a class of allegedly injured individuals based on a purported discriminatory pattern or practice. More often than not, the EEOC does not limit the temporal scope of its claims, and sues for relief since the “inception” of the alleged discriminatory pattern or practice. This pleading theory poses significant risks and financial exposure to an employer, since such a litigation position is unencumbered by any statute of limitations. Indeed, having briefed this issue multiple times, the refrain I have heard from the government is “We [the EEOC] don’t have a statute of limitations for our lawsuits…”

Employers have racked victory after victory in challenging this litigation strategy by invocation of the 300-day statute of limitations in Title VII of the Civil Rights Act of 1964 (i.e, claims can only be asserted that arise within 300 days of the initial EEOC administrative charge that triggered the subsequent EEOC investigation and lawsuit). We have blogged on these decisions previously (here, here, and here). We also recently published a law review article in the ABA Journal of Labor & Employment Law on this body of case law.

This issue surfaced again this week in one of the key lawsuits brought by the EEOC over the past year – EEOC v. Freeman, a case now pending in the U.S. Court of Appeals for the Fourth Circuit. Our previous blog posts on this litigation are here and here. The case is currently pending for oral argument over the EEOC’s appeal of a summary judgment order granted to the employer (on various grounds, including previous rulings rejecting the EEOC’s litigation strategy relative to the statute of limitations).

Most recently, after briefing was concluded, the EEOC submitted an additional letter brief to the Fourth Circuit on the statute of limitations issue. The letter brief is here.

The district court’s ruling in EEOC v. Freeman seems us to have been on very solid ground, so one wonders if the EEOC has selected a poor candidate in which to raise the statute of limitations issue at the appellate level.

Implications For Employers

The growing body of case law favors the defense arguments in this area on the statute of limitations defense in EEOC lawsuits. Courts have overwhelmingly rejected the notion that the EEOC should have carte blanche to litigate in derogation of Title VII’s statute of limitations. Stay tuned for further adjudication of this issue in the Fourth Circuit.

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

Court Upholds Jury Verdict That EEOC Is Not Entitled To Award Of Punitive Damages

Posted in Class Action Litigation

By Courtney K. Bohl and Laura J. Maechtlen

On August 21, 2014, in the case EEOC v. Swissport Fueling, Inc., Case No. CV-10-02101-PHX-GMS (D. Ariz. Aug. 21, 2014) (a case we previously blogged about here), Judge G. Murray Snow of the U.S. District Court for the District of Arizona denied the EEOC’s motion to set aside the jury’s answers regarding its rejection of an award of punitive damages.  The Court also denied the EEOC’s motion for judgment as a matter of law or new trial with respect to Swissport Fueling, Inc.’s (“Swissport”) affirmative defense to punitive damages under Kolstad v. Amer. Dental Ass’n, 527 U.S. 526 (1999).

This ruling is a good read for employers faced with a trial on employment discrimination claims where the EEOC is seeking punitive damages.  The ruling provides insight into how courts handle seemingly inconsistent jury verdicts, and also provides employers tools for defending against a motion for a judgment as a matter of law on the Kolstad affirmative defense.

Background Of The Case

The EEOC brought suit against Swissport alleging claims of race, national origin, and color discrimination on behalf of fourteen current or former Swissport employees (the “Claimants”).  Id. at 1.  The Court held a jury trial in March 2014.  Id.  At the conclusion of the trial, the Court instructed the jurors that they could only award punitive damages if they found Swissport’s conduct was malicious, oppressive, or in reckless disregard of the Claimants’ rights.  Id. at 2.

The jurors were then given a verdict form that asked the jury to decide for either the EEOC or Swissport.  Id. at 2-3.  The form instructed the jurors that if they find in favor of the EEOC on any of the Claimant’s claims, they need to (i) state the amount of compensatory damages, if any, and (ii) state whether Swissport acted with malice or reckless indifference to the federally protected rights of the Claimants.  Id.

The jury reached a unanimous verdict regarding six of the Claimants’ claims, but was unable to reach a unanimous verdict regarding the other eight Claimants’ claims.  For seven of the eight remaining Claimants (“Remaining Claimants”) the jury unanimously held that the EEOC was not entitled to punitive damages.  Id. at 1.

The EEOC moved to set aside the jury’s answers regarding punitive damages for the Remaining Claimants and also renewed its Motion for Judgment as a Matter of Law Under Rule 50 Or For a New Trial Under Rule 59 with respect to Swissport’s affirmative defense to punitive damages. Id.

The Court’s Ruling

The Court denied the EEOC’s motion to set aside the jury’s answers regarding punitive damages, finding that the jury’s verdict was not inconsistent and did not violate the Court’s express instructions.  Id. at 5-6.  The EEOC argued that the jury’s answers to the punitive damages question regarding the Remaining Claimants should be dismissed as surplusage because the jury should not have answered any damages questions once they failed to reach a unanimous verdict.  Id. at 2.  The Court first noted that the jury’s responses were not internally inconsistent because it is not illogical that the jury was unable to reach a unanimous decision on Claimant’s harassment or retaliation claim, but could determine Swissport had not acted with malice or reckless indifference to the Claimant’s rights.  Id. at 5.  Next, the Court held that the jury did not disobey the Court’s express instructions.  The Court reasoned that the jury was instructed that they could only award punitive damages if they first found for the EEOC on at least one of the Claimants’ claims.  Id.  The jury instructions did not reference whether or not the jury might determine whether Swissport acted with malice or reckless indifference even in the event they could not reach a unanimous decision on liability.  Thus, the Court found there was no violation of its instructions.  Id.

The Court also denied the EEOC’s motion for judgment as a matter of law with respect to Swissport’s affirmative defense to punitive damages.  Id. at 8.  In support of its motion, the EEOC argued that there was no legally sufficient basis on which a reasonable juror could have found that Swissport was entitled to the Kolstad affirmative defense (which holds that employers may not be vicariously liable for punitive damages if they make “good faith efforts” to comply with anti-discrimination law).  Id. at 7.  Specifically, the EEOC argued that the defense cannot be asserted regarding Jim Vescio’s, Swissport’s highest ranking official in its Arizona facility, purported improper conduct because a high ranking official is a proxy for the company.  The Court, however, held that a reasonable jury could have found Vescio’s testimony more credible than conflicting testimony and determined he acted appropriately responding to the complaints and made good faith efforts to comply with the law.  The Court also ruled that Swissport did not waive this affirmative defense by failing to specifically name it in its Answer or Final Pretrial Order.  Id.

Finally, the Court denied the EEOC’s motion for a new trial, holding that the EEOC failed to demonstrate that the jury’s verdict was against the weight of the evidence.  The Court noted that Swissport was entitled to the Kolstad defense and the jury did not actually reach the issue as the jurors did not find any punitive damages liability.  Id. at 8.

Implications For Employers

In the course of his opinion, Judge Snow showed his unwillingness to disrupt the jury’s findings on the issue of whether the EEOC is entitled to punitive damages.  This is helpful authority for employers faced with post-trial motions relating to punitive damages, as it outlines useful arguments employers can make when faced with inconsistent jury verdicts and/or a motion for judgment as a matter of law on the Kolstad defense.

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

Michigan Court Of Appeals Affirms Certification Of Class Of Male Corrections Officers Alleging Reverse Discrimination

Posted in Class Certification

1280px-Flag_of_Michigan.svg.png (1280×854)By Gerald L. Maatman, Jr., and Alexis P. Robertson

On August 19, 2014, in Nowacki v. Department of Corrections, Case No. 315969  (Mich. Ct. App. Aug. 19, 2014), the Michigan Court of Appeals affirmed the certification of a class of male corrections officers alleging that certain policies enacted at the Women’s Huron Valley Correctional Facility, the defendant’s only facility of all female prisoners, discriminated against male corrections officers in violation of Michigan Civil Rights Act.  The Michigan Court of Appeals affirmed the certification of a class of male corrections officers alleging that the Defendants’ bona fide occupational qualification (“BFOQs”) improperly denied men job opportunities by precluding men from certain job positions that were limited to females.

Case Background

In the wake of several lawsuits against the Department of Corrections (“Department”), alleging that prison staff were sexually abusing female prisoners, the Department and the Michigan Civil Service Commission approved the use BFOQs, which ensured that only women would be employed for certain positions.  Plaintiff, a male guard, filed suit alleging that the Department’s application of the BFOQs was overbroad and improperly denied him, and other men, opportunities for various job assignments and overtime work.  Plaintiff alleged that the BFOQs were applied in bad faith, relying on evidence that, for example, the Department administration “had inserted strip searches as core duties in most positions in order to deny those assignments to male offices.” Id. at 3.

Plaintiff moved for class certification and the trial court granted the motion without oral argument, instead deciding the motions solely upon the written submission of the parties.  The trial court found that Plaintiff satisfied the requirements for class certification.  Defendant moved for reconsideration, arguing that the trial court erred by granting the motion without oral argument and without providing specific finding on the requirement for class certification.  The trial court denied the motion, stating that it had adopted Plaintiff’s pleadings to set forth the basis for the granting of class certification. Defendant appealed, arguing that Plaintiff failed to establish the requirements for class certification.

The Decision Of The Court Of Appeals

The Court of Appeals reviewed the requirements for class certification under MCR 3.501(A)(1): numerosity, commonality, typicality, adequacy, and superiority.  It found that the 87 potential class members satisfied the numerosity requirement. Next, the Court of Appeals found that the commonality and typicality requirements were satisfied easily because determining whether the Department used BFOQs in the manner alleged by Plaintiff would “resolve any issue that is central to the validity of each of the claims. . .” Id. at 4. Regarding the adequacy determination, the Court of Appeals was not convinced that the fact that certain class member may have had antagonistic or conflicting interests, because they may have been in competition for the same job assignments, to be compelling because the class members’ claims were not highly individualized as they all relied on a common contention. The Court of Appeals ultimately found that any potential conflict did not did “not affect the crux of the class members’ contention — the Defendant is improperly applying the BFOQs.” Id.

Finally, regarding superiority, the Court of Appeals held that over 80 actions “all seeking to show that Defendant pursued a specific discriminatory policy or practice based on the same evidence would be unnecessarily duplicative and would place needless demands on the resources of the court system,” and potentially lead to inconsistent adjudications. Id. Given these findings, the Court of Appeals concluded that a class action was the superior form of proceeding with the litigation.  On this basis, the Court of Appeals held that the trial court did not err in finding that Plaintiff had established the requirements for class certification.

Implications For Employers

This case is a reminder that cases seeking to certify a class of individuals affected by a common policy, such as BFOQs, are difficult to attack using a framework underWal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). The uniformity of the job requirement makes BFOQs and other, similar types of uniform policies highly susceptible to certification, and difficult to attack on appeal.

 

Round One – Texas Loses Its Suit Against The EEOC Over Its Criminal Background Guidance

Posted in EEOC Litigation

By Gerald L. Maatman Jr. and Howard M. Wexler

There continues to be growing firestorm of litigation initiated by the EEOC over hiring checks based on criminal backgrounds. In one of the most high profile cases addressing this issue (that we previously blogged about here and here,) Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas issued an decision in State of Texas v. EEOC, Case No.5:13-CV-255 (N.D. Tex. Aug. 20, 2014), granting the EEOC’s motion to dismiss a lawsuit brought against it by the State of Texas regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.”

Texas argued that the EEOC did not have the authority to issue the Guidance and that the EEOC’s position that Title VII trumps conflicting state laws violates its state sovereignty. Judge Cummings rejected the State’s arguments in this first-of-its-kind attack on the EEOC’s authority.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories.  In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.” Id. at 2. In March of this year, Texas amended its complaint to include more specific allegations of injury. Id. For example, Texas alleged that the EEOC’s issued a right-to-sue letter to an applicant who had been rejected by the Texas Department of Public Safety after disclosing on his application that he had been convicted of a felony (unauthorized use of a motor vehicle). Texas claims that the job involved “access to sensitive personal information for all 26 million Texans.”

The EEOC offered three primary arguments as to why Texas’ lawsuit should be dismissed, including: (1) lack of jurisdiction because the EEOC’s guidance is not legally binding and does not constitute a final agency action; (2) Texas lacks standing to pursue its claims given that the guidance has no binding authority; and (3) Texas’ claims are not ripe. Id.

The Court’s Decision

Judge Cummings based his decision entirely on a lack of subject matter jurisdiction. Because “Texas does not allege that any enforcement action has been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance,” Judge Cummings held that there is not a “substantial likelihood” that Texas “will face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance.” Id. at 7. As standing to bring suit “cannot be premised on mere speculation” Judge Cummings determined that Texas lacked the necessary standing to maintain its suit against the EEOC.

While acknowledging that the EEOC did in fact issue a right-to-sue letter to an applicant who was rejected by the Texas Department of Public Safety who believed he was discriminated against based on a prior felony conviction, that was still not enough for the Court since “there are no allegations that any enforcement action has been taken by the EEOC or Department of Justice” based on Texas’ “felony conviction” rule. Id. Accordingly, since the Guidance is not a final agency action and because no enforcement proceeding is pending against Texas, Judge Cummings dismissed the case as “seeking a premature adjudication in the abstract without any actual facts and circumstances relating to the employment practices at issue.” Id. at 7-8.

Implications For Employers

While Judge Cummings’ decision is a blow to one of the most high profile challenges to the EEOC’s Guidance, the dismissal is solely based on procedural grounds and is in no way an acceptance of the Guidance and/or the litigation initiated by the EEOC over hiring checks based on criminal backgrounds.

Furthermore, while the EEOC may have won the battle in round one of this lawsuit, the war is likely far from over. To this end, employers obtained strong ammunition to use going forward based on certain arguments advanced by the EEOC in pursuing the dismissal of Texas’ case.  In furtherance of its lack of standing argument, the EEOC admitted that the Guidance is neither “legally binding” nor does it carry with it any “legal consequences.” As such, to the extent the EEOC attempts to rely upon the Guidance moving forward as the basis for prosecuting disparate impact cases focused on criminal background checks, particularly in cases where the EEOC alleges that an employer willfully violated Title VII, employers need only turn to the EEOC’s representations to the U.S. District Court for fodder in their own defense. It remains to be seen whether Texas will appeal this ruling. Stay Tuned!

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

EEOC Signals More Widespread Use Of Summary Judgment Tool To Obtain Relief And Defeat Affirmative Defenses

Posted in EEOC Litigation

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

On August 7, 2014, the U.S. District Court for the Western District of Oklahoma entered its decision in EEOC v. Midwest Regional Medical Center, LLC, No. CIV-13-789-M (W.D. Okla. Aug. 7, 2014), and granted partial summary judgment in favor of the EEOC.

In a rare partial summary judgment win, the EEOC obtained a ruling as a matter of law that the individual on whose behalf it filed suit was disabled within the meaning of the ADA because she had a record of having skin cancer prior to her termination.

The EEOC also sought summary judgment on the defendant’s affirmative defenses of failure to conciliate and failure to mitigate damages. Although the defendant withdrew its conciliation defense, and the Court found an issue of material fact with respect to its mitigation defense, the motion may foreshadow a shift in tactics by the EEOC.

Once fairly rare, employers litigating with the EEOC should anticipate motions for summary judgment on merits issues, as well as affirmative defenses such as failure to conciliate, and plan their litigation strategy with an eye toward anticipating and defeating such motions.

Factual Background

On July 13, 2013, the EEOC filed suit against Midwest Regional Medical Center, LLC (“MRMC”) on behalf of Janice Withers, a former employee, claiming that the company discriminated against her in violation of the ADA when it terminated her employment.  Id. at 1-2.

On November 17, 2011, Withers was diagnosed with skin cancer.  She informed her supervisor, Susan Milan, of her diagnosis. Id. at 1. Withers started radiation treatments on December 9, 2011, and concluded the treatments on January 5, 2012. At the conclusion of her treatments, her physician noted that “the patient tolerated the procedure well and there was no evidence of recurrent or residual disease at the end of the therapy.” Id. at 2. Withers never returned for a follow up.

Thereafter, Withers was periodically absent from work.  She called in sick on February 9, 2012, and failed to report as scheduled on February 10, 12, 13, 14, 28, and March 2, 3, and 4, 2012. On March 5, 2012, Milan placed Withers on a leave of absence. Id. at 2. Milan issued a letter that stated, “[y]ou must bring a work release without restrictions in order to return to work. . . I expect that you will return to work no later than March 12, 2012.” Id.

On March 9, 2012, MRMC terminated Withers for no call/no show on March 6, 7, and 8, 2012. Id.

MRMC moved for summary judgment on the EEOC’s discrimination claim, and the EEOC moved for partial summary judgment on four issues: (1) whether Withers is a person with a disability under the ADA; (2) whether MRMC terminated Withers because of her disability; (3) whether Withers reasonably mitigated her damages; and (4) whether the EEOC fulfilled its conciliation obligation. Id. at 3.

The Court’s Opinion

The Court entered summary judgment in favor of the EEOC as to whether Withers was a person with a disability within the meaning of the ADA. It held that, although there was a dispute as to whether Withers was actually disabled following the conclusion of her radiation treatments, Withers had a record of having skin cancer and, thus, a “record of disability” under prong two of disability as defined by the ADA. Id. at 5-8. The Court also found a genuine issue of material fact as to whether MRMC terminated Withers because of her disability and as to whether MRMC’s proffered reason for Withers’ discharge – excessive absenteeism – was worthy of belief. It held that the “temporal proximity” between when Withers was placed on a leave of absence (March 5, 2012) and when she was discharged (March 9, 2012) “could lead to an inference of discriminatory intent.” Id. at 9-10. Further, the company failed to identify who actually made the decision to put Withers on a leave of absence, and it ostensibly required Withers to call in every day after it put her on a leave of absence, a requirement that is inconsistent with MRMC’s leave policy. Id. at 11-12.

The EEOC also moved for summary judgment on MRMC’s affirmative defenses of failure to conciliate and failure to mitigate.  MRMC withdrew its failure to conciliate defense. Id. at 3 n.2. The Court found a genuine issue of material fact as to MRMC’s failure to mitigate defense because Withers worked only part time following her termination from MRMC. Id. at 13.

Implications For Employers

Although the EEOC was successful in EEOC v. Midwest Regional Medical Center in obtaining partial summary judgment only as to whether its claimant was “disabled” within the meaning of the ADA, its attempt to win its claims and knock out MRMC’s affirmative defenses on summary judgment may foreshadow more widespread use of this litigation tactic by the EEOC. Employers litigating against the EEOC should plan their litigation strategy with this in mind and take care to position themselves to anticipate and defeat such motions.

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

Court Finds EEOC Satisfied “Low Hurdle” Of Pre-Suit Conciliation As Employers Anxiously Await Supreme Court’s Future Mach Mining Decision

Posted in EEOC Litigation

By Gerald L. Maatman Jr. and Howard M. Wexler

As we previously blogged about, most recently here, the U.S. Supreme Court’s decision to grant certiorari in Mach Mining, LLC v. EEOC (No. 13-1019) could be a game changer in EEOC-related litigation. In Mach Mining, the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit and that it will not scrutinize the EEOC’s pre-suit obligations, so long as the EEOC’s complaint pleads it has complied with all procedures required under Title VII, and the relevant documents are facially sufficient. By granting certiorari, the Supreme Court is set to weigh in during its next term relative to conflicting rulings amongst the circuit courts about judicial authority and standards for reviewing the EEOC’s pre-suit conduct.

In the meantime, however, the show must go on! To that end, a recent decision out of the U.S. District Court for the Western District of Missouri highlights why the Supreme Court’s eventual ruling in Mach Mining is important. In EEOC v. New Prime, Inc., Case No. 11-CV-3367 (W.D. Mo. Aug. 14, 2014), Judge Douglas Harpool granted, in part, the EEOC’s motion for summary judgment, finding that it satisfied its pre-suit investigation and conciliation obligation despite noting that the Court was “underwhelmed by the EEOC’s attempt at conciliation.” Id. at 13.

Background

In EEOC v. New Prime, a trucking company maintained a company-wide “same-sex training policy” which required all applicants who did not meet Prime’s experience requirements to receive over-the-road training by an instructor and/or trainer who is the same gender as the applicant unless there is some pre-existing relationship between the female applicant and male instructor/trainer. Id. at 3. The effect of this policy was that when a female applicant was ready to be assigned to a trainer or instructor in order to receive the necessary “over the road” training, a female driver had to be available. Id. However, based on the number of female drivers available to train, Prime would place female applicants on a “female waiting list” when drivers were not available. Id. at 3-4. Prime implemented this policy after it was involved in a sexual harassment case brought by three female truck driver trainees. Id.

A female job applicant brought a charge with the Missouri Commission on Human Rights (“MCHR”) and alleged that Prime told her that her application had been accepted, but she could not be hired because she was female and there were no female trainers were available then or in the near future. Id. at 4. After the MCHR issued a Probable Cause finding, it transferred the case to the EEOC for further investigation. Id. at 5. On April 1, 2010, the EEOC sent Prime a letter stating “the EEOC’s investigation of this charge is nation-wide in scope.” Id. One year later the EEOC issued its Letter of Determination, which stated “[b]ased on the foregoing, there is reasonable cause to believe that Respondent has subjected Charging Party and a class of female trainees to unlawful discrimination by adopting a policy that denies female trainees training and employment opportunities that are not denied to similarly-situated male trainees.” Id. at 5. On this same date, the EEOC sent its letter regarding conciliation that focused on relief not only for the charging party who brought the charge, but also “all identified and still-to-be identified victims.” Id.

On June 7, 2011, Prime submitted its response to the conciliation proposal, which indicated that it was “not interested” in engaging in class-wide conciliation and would only negotiate concerning the individual who filed the EEOC charge. Id. at 6. One week later the EEOC informed Prime that conciliation failed and subsequently brought suit in federal court. Id.

The Decision

Both the EEOC and Prime argued that they were entitled to summary judgment on the merits as well as on several evidentiary (e.g. spoliation) and damage (punitive damages) issues. However, especially relevant with Mach Mining on the horizon is the fact that the EEOC decided to move for summary judgment on whether all conditions precedent to the filing of the lawsuit were met. Prime filed its own motion on this point, arguing that the EEOC failed to adequately investigate and conciliation the matter before filing suit.

The Court acknowledged that the EEOC is obligated to conciliate in good faith, and that in order satisfy the statutory requirement of good faith conciliation, the EEOC must “(1) outline to the employer the reasonable cause for its belief that the law has been violated; (2) offer an opportunity for voluntary compliance; and (3) respond in a reasonable and flexible manner to the reasonable attitudes of the employer.” Id. at 8. Furthermore, the Court held that whether the EEOC adequately fulfilled its obligation to conciliate is dependent upon the “reasonableness and responsiveness of the [EEOC’s] conduct under all the circumstances.” Id.

With respect to its investigatory function, the Court held that the EEOC’s initial letters put Prime on notice that it was investigating on behalf of “similarly situated individuals with regard to the same-sex training policy.” Id. at 10. Furthermore, Prime was put on notice through the initial charge and the subsequent investigation that any females that were subject to the policy, or more specifically put on the waiting list, were part of the EEOC’s investigation. Id. Since it held that “the EEOC’s scope of the investigation in this matter was clear – it pertained to the same-sex training policy implemented by Prime, including the female waiting list for potential applicants, trainees and potential employees,” the Court held that the EEOC adequately investigated the matter with respect to its class-wide claims prior to filing suit. Id. at 11.

With respect to conciliation, the Court found that the EEOC met the “low hurdle of attempting a reasonable and responsive conciliation process” despite shutting down conciliation one week after Prime submitted its initial response to the EEOC. Id. at 13. The Court was “not persuaded that this is enough to prevent the case from meeting the requirements for the filing of the instant lawsuit” given that Prime expressed no interest in considering compensation for any women affected by the policy – which is something the EEOC informed Prime it sought as a result of the company-wide alleged discriminatory policy. Id. at 14. Accordingly, the Court granted the EEOC’s motion for summary judgment, finding that it satisfied all conditions precedent to filing this lawsuit. Id.

Implication For Employers

As this case demonstrates, the eventual ruling by the Supreme Court in Mach Mining has the potential to be a game changer for any employer dealing with the EEOC. If federal courts cannot review its pre-lawsuit conciliation efforts, the EEOC, in effect, will have free reign to pay mere lip service to its conciliation obligations and approach any negotiations in a “take-it-or-leave-it” manner. We will continue to follow developments as the parties and amicus groups file their briefs, and keep our readers informed.

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

Court Refused To Approve $324.5 Million Settlement In Workplace Antitrust Class Action

Posted in Settlement Issues

By Timothy F. Haley

That’s not a typo! In a decision issued on August 8, 2014, Judge Lucy Koh of the U.S. District Court for the Northern District of California rejected the parties’ $324.5 million proposed class action settlement as inadequate and denied the Plaintiffs’ motion for preliminary approval in In Re High-Tech Employee Antitrust Litigation, 11-CV-0250, 2014 U.S. Dist. LEXIS 110064 (N.D. Cal. Aug. 8, 2014). At first blush that appears like a lot of money to deny the Plaintiff class and force a trial (absent a renewed offer). But Judge Koh’s opinion makes significant arguments to support her conclusion that the offer is insufficient.

The Decision

Plaintiffs filed five class action lawsuits against their seven former high technology employers, including Apple and Google, alleging that they had engaged in a conspiracy not to solicit one another’s employees. Plaintiffs alleged that this conspiracy violated §1 of the Sherman Antitrust Act and had the effect of suppressing the wages of the companies’ employees. (We have previously blogged about this case here, here and here.) The cases were consolidated and Plaintiffs filed a motion for class certification on October 1, 2012. The Court denied that motion on April 5, 2013, but without prejudice to the Plaintiffs filing an amended motion addressing the Court’s concerns. Id. at *6-8.

On July 12 and 30, 2013, after class certification had initially been denied and while an amended motion for class certification was pending, Plaintiffs settled with three of the Defendants (“Settled Defendants”) for $20 million (“Initial Settlement”). Preliminary approval of the settlement agreement was granted on September 12, 2013, and final approval was entered on May 1, 2014. On October 25, 2013, the Court granted the Plaintiffs’ amended class certification motion.  Thereafter, the remaining Defendants (“Remaining Defendants”) filed five motions for summary judgment and a motion to exclude the testimony of Plaintiffs’ expert, who opined that the total damages in the case exceeded $3 billion, which comes to more than $9 billion after trebling as required by the Sherman Act. The Court denied each of these motions. Id. at *8-10.

On April 24, 2014, one month before trial was set to commence, counsel for Plaintiffs and the Remaining Defendants sent the Court a joint letter stating that they had reached a settlement. The Plaintiffs’ motion for preliminary approval of the settlement was filed on May 22, 2014. But one of the named Plaintiffs, Michael Devine, split ranks and filed an opposition to the proposed agreement. Id. at *10-11. The agreement provided that the Remaining Defendants would pay a total of $324.5 million of which Plaintiffs’ counsel would seek up to 25%  (approximately $81 million) in attorneys’ fees, $1.2 million in costs, and $80,000 per class representative as incentive payments. It was estimated that the class members each would receive an average of approximately $3,750 from the settlement if the Court were to grant all the requested deductions and there were no further opt-outs. But the Court concluded that the settlement was inadequate and denied the Plaintiffs’ motion for preliminary approval. Id. at *15-16.

The Court’s principal concern was that the class members would recover less, on a proportional basis, from the proposed settlement than they would from the $20 million paid in the Initial Settlement. And this would occur, despite the fact that the case had progressed consistently in the class’s favor since the time of the Initial Settlement. The Settled Defendants contributed only 5% of the total compensation paid to the class during the class period, while the Remaining Defendants paid out 95% of the class’s total compensation. Based upon these figures, if the Remaining Defendants were to settle at the same (or higher) rate as the Settled Defendants, the Remaining Defendants would have to pay at least $380 million, more than $50 million greater than their proposal. Id. at *17-20. The Court also noted that based upon the potential damages of over $3 billion calculated by Plaintiffs’ expert, the total amount for both settlements would be 11.29% of single damages, or merely 3.76% of treble damages under the Sherman Act. Id. at *21.

The Court also opined that the evidence of an over-arching agreement not to solicit each other’s employees and the effect of the agreement in suppressing wages was compelling. Id. at *24-64. Given the fact that since the Initial Settlement the Plaintiffs had received orders certifying the class and denying the Defendants’ motions for summary judgment and to exclude Plaintiffs’ expert testimony, the Court saw no basis for discounting the settlement as compared to the Initial Settlement. Accordingly, the Court denied the Plaintiffs’ motion for preliminary approval. Id. at *64-67.

Implications For Employers

This is one of a number of recent wage suppression cases in which plaintiffs have been successful at obtaining class certification and recovering millions of dollars in settlements. Employers are sometimes unaware that application of the antitrust laws is not limited to the commercial marketplace. The Sherman Act also applies to agreements among employers that impact the employment market. Thus, employers should be cautious about exchanging information with competitors regarding wages or benefits or entering into agreements regarding the recruitment, solicitation or hiring of employees. As this case demonstrates, failure to do so could have very expensive consequences.

Fourth Circuit Denies As Untimely A Request To Review A Decision On A Motion To Decertify A Class In Light Of Comcast v. Behrend

Posted in Class Certification

By Rebecca Bjork and Gerald L. Maatman, Jr.

On July 25, 2014, a three-judge panel of the Fourth Circuit refused to accept a Rule 23(f) interlocutory appeal in a case where an employer had asked the district court to decertify a hostile work environment class in light of Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).  In Nucor v. Brown, No. 14-154, 2014 U.S. App. LEXIS 14182 (4th Cir. 2014), the panel decided the request was untimely because the order it sought to overturn was issued in 2011.  You can read the decision here.

The outcome says more about class action law and its current evolutions perhaps, than about the rules regarding timing of class action appeals.  This case has been before the Court of Appeals before (in 2009 and now), after the district court denied class certification in a case where African-American employees lodged “substantive allegations of racial discrimination.”  Id., slip op. at 2.  The first time, the Fourth Circuit vacated and remanded for the district court to grant class certification.  In early 2011, the district court certified two classes, one involving disparate treatment and disparate impact discrimination in promotions, and the second involving a hostile work environment.  But after the Supreme Court decided Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2001), in June 2011, the parties in this case continued to litigate the propriety of class certification in the district court, as motions for reconsideration and decertification were briefed and argued.  Id. at 3. In 2012, the district court decertified the promotions class in light of Wal-Mart, but left intact the hostile work environment class.  Both sides asked the Fourth Circuit to review that decision under Rule 23(f) in a timely manner — e.g., within the 14-day time period allowed for class certification interlocutory appeals under Rule 23(f). That time, the Fourth Circuit denied Nucor’s petition for interlocutory review, but granted the plaintiffs’ petition. While that appeal was pending, the Supreme Court decided Comcast. Nucor moved for decertification of the hostile work environment class again under the reasoning of that case (arguing that individual damages calculations preclude a finding of predominance of common issues under Rule 23(b)(3)). The district court declined to decertify the hostile work environment class, Nucor timely sought reconsideration (which was denied), and 14 days later per Rule 23(f), Nucor asked the Fourth Circuit to review the denial of decertification under Comcast.

The Fourth Circuit explained that it would not take up Nucor’s interlocutory appeal of the Comcast issue because “the time for appeal will not be reset when a court rules on certification motions filed subsequent to the original ruling so long as the later rulings do not alter the original ruling.” Id. at 4. Under this decision, subsequent motions aimed at trying to “amend the original certification order” are considered untimely when filed after the 14-day deadline in Rule 23(f).  What about Nucor’s point that the Supreme Court’s decision in Comcast changed the law in a way that should require appellate review? The Fourth Circuit explained “We are not persuaded that Comcast rises to this level of demanding exceptional treatment in this case.” Id. at 5, n.2.

Implications For Employers

The meandering way in which this decision came about is perhaps important to its outcome, though apparently not as important as the Fourth Circuit panel’s opinion about the significance — or lack thereof — of Comcast. As our blog postings have explained before, for example, in discussing recent case law out of the Seventh Circuit, the application of Comcast to class certification in a variety of contexts is still developing in the law. As a result, we will continue to bring our readers important new decisions in this area as they are decided.