Workplace Class Action Blog

The EEOC’s Most Important Brief Of The Year Filed With The U.S. Supreme Court – The Lines Are Drawn In The Mach Mining Appeal

Posted in Class Action Litigation

By Gerald L. Maatman, Jr. and Rebecca Bjork

Yesterday evening the U.S. Equal Employment Opportunity Commission filed its Reply Brief with the U.S. Supreme Court in Mach Mining v. EEOC, Case No. 13-1019. It draws the battle lines for the upcoming oral argument before the SCOTUS in January of 2015. Given the importance of this case and the issue presented, the Commission’s pleading is well worth a read.

The Context

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for 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 EEOC. That decision had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes – “pay millions or we will sue and announce it in a media release – prior to suing employers.

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 Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). Readers can find the previous posts here and here.  In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed.

Grant Of Certiorari

Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations.

Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Amicus Briefs For The Defense

Employer groups have lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For our loyal blog readers interested in our amicus brief, a copy is here.

The EEOC’s Brief

The Commission’s submission to the Supreme Court last night asserts that federal judges cannot adjudicate any issue relative to the EEOC’s conciliation efforts. It relies heavily on the statutory language of Title VII, and argues that Congress left it to the Commission “to decide which informal methods of conference, conciliation, and persuasion would be appropriate.” EEOC Reply Brief at 8. Given that that Congress entrusted the Commission exclusive authority of whether to enter into pre-lawsuit settlements, this demonstrates that the process “is committed to the agency’s discretion” and further any such settlements – by way of a conciliation agreement – are confidential and cannot be made public. Id. at 9. Hence, the EEOC contends, this process is fundamentally “incompatible with judicial review of the conciliation process.” Id.

Not surprisingly, the EEOC also argues that judicial review of the adequacy of the Commission’s conciliation efforts “undermines the effective enforcement of Title VII.” Id. at 11. It asserts that employers have used the defense as a potent weapon to fight EEOC litigation through discovery and delay. Id. The EEOC contends that allowing for judicial review of its conciliation efforts would mean that employers would exploit it for litigation advantage, “stockpiling exhibits for the coming court battle.”  Id. at 40.

Next, in reciting legislative history for Title VII to support its view that the adequacy of its conciliation should not be reviewed, the EEOC relies on “basic principles of administrative law” to conclude that because conciliation failure is not final agency action, it is committed to the agency’s discretion.  Id. at 32-33.

Finally, and not unexpectedly, the EEOC contends that judicial review is unnecessary, as it has “powerful incentives” to conciliate in good faith and “has a long history of doing so.” Id.

Next Steps

We anticipate that worker advocacy groups will file their own amicus briefs with the SCOTUS supporting the EEOC in the next 10 days. Thereafter, Mach Mining will file its final brief before oral argument is set. So stay tuned for more developments…

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

Court Rejects Limits To Defense Counsel’s Communications With Putative Class Members

Posted in Class Action Litigation

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

On October 17, 2014, in Burrow v. Sybaris Clubs International, Case No. 13 C 2342 (N.D. Ill. 2014), Judge Harry Leinenweber of the U.S. District Court for the Northern District of Illinois denied Plaintiff’s Motion for Interim Class Certification, or alternatively, for a Protective Order on the basis that Defendants had improperly communicated with putative class members in association with a declarations campaign. The Court held that Defendant’s communications were not improper and therefore did not merit the entry of a protective order or interim class certification.

The case is a good guidepost for corporate counsel on the limits and opportunities to engage in class communications in the early, pre-certification stage of workplace class action litigation.

Case Background

Plaintiff sued Sybaris Clubs International (“Sybaris”) for allegedly recording and electronically archiving every phone call made to or from the reservations desks, at all locations, over a two-year period. Plaintiff claimed that some of his calls were recorded without his consent.  He filed a putative class action complaint on behalf of himself and other Sybaris employees and customers whose calls were allegedly recorded without consent.

During discovery, Sybaris’ attorneys contacted and interviewed several Sybaris employees. Before initiating any conversations, the Sybaris attorneys gave the Sybaris employees a “Consent to Interview” letter, which the employees signed if they decided to speak with the attorneys. Plaintiff’s motion was based on the letter’s contents. Amongst other things, the letter summarized the Plaintiff’s claims, stated the rationale behind the Sybaris attorneys reaching out to employees (“Attorney for Sybaris would like to interview you to obtain information relevant to Sybaris’ defense…Sybaris attorneys expect to use this information to show that Sybaris employees knew that the reservation lines were being recorded for quality assurance…”). Additionally, the letter stated that the employees were not required to speak with the Sybaris attorneys.

Based on this letter, Plaintiff filed a motion requesting that the Court either grant “interim class certification” or issue a protective order because, according to Plaintiff, the letter was misleading and coercive.

The Court’s Decision

In reaching its decision, the Court noted that there is no “statutory rule or case law that requires defense counsel to give specific information and instructions to putative class members.” Id. at 8 (internal quotations and citations omitted). Further, the Court determined that the communications at issue were proper and consistent with case law authority that had addressed similar types of communications with putative class members. Defendant’s counsel informed Sybaris employees that the attorneys represented Sybaris and not the employee. They also told each employee that he or she could decline the interview without any possibility of retaliation. Further, the Court found that it was of no concern that the letter did not provide a perfectly neutral explanation of the case, Plaintiff’s counsel’s contact information, or the case-identifying information, because this type of information is not legally required.

Plaintiff attempted to argue that the portion of the letter which stated that Sybaris’ attorneys “expect to use this information to show that Sybaris’ employees knew that the reservation lines were being recorded,” constituted coercion because the phrase essentially told employees what they were expected to say. Id. at 9. The Court rejected this argument, reasoning that although it could be viewed in that light, the phrase could also be construed as the  Sybaris’ attorneys fully disclosing the purpose of their interview – they “expect” to use the information to defend the case. Id.

Finally, unlike prior cases where court intervention was appropriate, the Court concluded that defense counsel had not communicated with the putative class members in a coercive, misleading, or abusive manner. For example, defendant had not threatened the employees’ pay or fabricated information. Ultimately, the Court reasoned that the communications between the putative class members and Defendant’s attorneys were not abusive, coercive, or misleading and did not threaten the proper functioning of the putative class action litigation.

Implications For Employers

Burrows is one of the rare cases that addresses communications with an uncertified class action. The case is beneficial to employers facing putative class actions, as it confirms that there is no stringent standard in terms of what defense counsel must include in the Notice of Rights to employees. There is no bright-line rule and there are no “buzz words” in terms of what must be included. Based on Burrows, as long as the notice contains general information as to case background, purpose, makes clear that participation is voluntary, and refrains from including coercive, misleading, or fraudulent statements, that notice – and subsequent communications with putative class members – will likely be in-line with the body of law on this issue.

We Did It Again! Seyfarth Was Honored At The National Law Journal Chicago Litigation Department Of The Year Awards Ceremony

Posted in Class Action Litigation

For the second year in a row, we are honored to have received the “Chicago Litigation Department of Year: Labor & Employment” award from The National Law Journal. In The National Law Journal’s annual report on the Chicago Litigation Departments of the Year, Seyfarth was recognized for our litigation prowess in a series of high-profile and precedent-setting victories in pattern or practice cases that the U.S. Equal Employment Opportunity Commission brought against our clients. Seyfarth Shaw is grateful for the The National Law Journal‘s recognition and honor for our firm.

Not Impressed By The Chutzpah: Court Refuses To Bless The EEOC’s Attempt To Create A New Form Of Pattern Or Practice Litigation

Posted in EEOC Litigation

By Christopher DeGroff, Matthew Gagnon, and Gerald L. Maatman, Jr.

Judge John Darrah of the U.S. District Court for the Northern District of Illinois issued a decision this week in the EEOC’s landmark case against CVS Pharmacy. As we have previously blogged about here, in EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863 (N.D. Ill.), the EEOC staked out new ground in Title VII litigation by taking aim at certain provisions of CVS’s standard severance agreement. As we reported here, the Court decided to dismiss the case a few weeks ago but had not yet issued a decision. That decision came out on October 7, 2014. While we expected an important decision about the substance of Title VII’s protections, what we got instead was a landmark ruling on the scope of the EEOC’s enforcement authority. It is a stunner of a defeat for the Commission.

Case Background

In February of this year the EEOC brought suit against CVS, alleging that certain provisions of CVS’s standard severance agreement violate Title VII because they interfere with an employee’s right to file charges, communicate voluntarily with the EEOC and other state agencies, and participate in agency investigations. The case arose out of a former CVS pharmacy manager who was discharged in July 2011. She filed a charge with the EEOC, alleging that CVS terminated her due to her sex and race. On June 13, 2013, the EEOC dismissed the charge, but it then sent CVS a letter saying that it had reasonable cause to believe that CVS was engaged in a pattern or practice of resistance to the full employment of rights secured by Title VII by virtue of the severance agreements that the charging party and others signed at termination. Id. at 2-3. Specifically, the EEOC claimed that the agreement deters the filing of charges and interferes with the employee’s ability to communicate voluntarily with the EEOC and other federal and state agencies.

The Court’s Decision

Judge Darrah decided the case on purely procedural grounds. It was undisputed that the EEOC did not engage in any effort to conciliate prior to bringing suit. Id. at 3. The EEOC argued that it was not required to engage in conciliation procedures because it was not bringing a garden-variety pattern or practice claim under section 707(e), but rather was alleging a pattern or practice of resistance to the full enjoyment of rights created by Title VII. That “resistance” claim was brought under section 707(a), which does not mandate the same pre-suit procedures as are required under section 707(e).

Judge Darrah dove into the history of Title VII  to dismantle the EEOC’s argument. When Title VII was originally enacted, the Attorney General was given the power to bring civil complaints under section 707(a) when there was a reasonable cause to believe that an employer engaged in “a pattern or practice of resistance” to the full enjoyment of any of the rights secured by Title VII.  That power was transferred to the EEOC in March 1974. Under section 707(e), the Commission was given the authority to investigate and bring pattern or practice claims either on behalf of a person aggrieved, or on behalf the Commission itself. However, section 707(e) expressly mandates that all such actions must be conducted in accordance with the procedures set forth in section 706, which, among other things, requires the EEOC to engage in conciliation procedures before filing suit.

The EEOC’s argument was that the Attorney General was not required to adhere to section 706 pre-suit obligations when it exercised authority under section 707(a). Since the Attorney General’s authority was transferred to the EEOC, the EEOC was similarly not required to follow the pre-suit procedures of section 706.

The Court disagreed, holding that the transfer of authority may have granted the EEOC the power to bring charges of a pattern or practice of discrimination, but it did not create a separate cause of action. Judge Darrah reasoned that: “[I]t is clear that the transfer of prosecutorial authority in 707(a) from the Attorney General was not intended to create a cause of action for the EEOC other than those specifically conferred on the commission pursuant to 707(e) and subject to the procedures provided in 706, including the obligation of conciliation.” Id. at 7. In other words, there is no separate cause of action for “resisting” employment laws under section 707(a). The EEOC is stuck with the pattern or practice claims under section 707(e) and the procedural requirements of section 706.  Because the EEOC did not adhere to those procedures when it failed to conciliate, it was not authorized to file suit against CVS, and CVS was entitled to judgment as a matter of law.

Implications For Employers

One has to admire the EEOC’s creativity as it seeks to boost its power. In the same case it sought to open up whole new territory for itself through a novel interpretation of the substantive protections of Title VII, while at the same time advancing a theory that would further dismantle the procedures that protect employers from the EEOC’s trigger finger. As we blogged about here, the EEOC is spending a considerable amount of time and resources easing its path to bringing systemic pattern or practice cases. This case touches on one of the most visible of those efforts: its attempt to immunize itself from any judicial scrutiny of how it conducts its pre-suit obligations, especially its conciliation obligations. If the EEOC had its way against CVS, then it would be able to dispense with that obligation altogether for some pattern or practice cases. Thanks to Judge Darrah’s ruling, that protection remains, at least for now.

While this turned out to be quite an interesting ruling on the procedural aspects of defending against EEOC litigation, it leaves the EEOC’s substantive challenges to CVS’s severance agreements unresolved. The EEOC is pursuing a similar theory against a different employer in the U.S. District Court for the District of Colorado. See EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-01232-LTB-MJW (D. Colo.). That may provide another opportunity to see if the EEOC’s substantive theory holds water. Stay tuned.

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

Court Bucks Notion That There Is Nationwide Jurisdiction If The EEOC Sues Under Title VII

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

On September 22, 2014, in EEOC v. Vicksburg Healthcare LLC, et al., Case No. 3:13-CV-895 (S.D. Miss. Sept. 22, 2014), Judge Keith Starrett the U.S. District Court for the Southern District of Mississippi granted defendant’s motion to dismiss an EEOC lawsuit for lack of personal jurisdiction and insufficient service of process. The EEOC had filed a disability discrimination claim on behalf of a nurse who worked at hospital owned by a subsidiary of defendant. The Court held that the EEOC, which sued a subsidiary hospital in Mississippi and its Tennessee-based parent corporation, did not put forth prima facie evidence of the necessary factors to satisfy personal jurisdiction requirements for the parent corporation in Mississippi. While this ruling is favorable for non-Mississippi parent corporations who operate subsidiaries in Mississippi, it has larger significance for employers. It shows that nationwide jurisdiction is not a given when the EEOC sues. Additionally, the ruling provides the framework for how to prevent liability by avoiding personal jurisdiction.

Case Background

The EEOC filed an action on behalf of Beatrice Chambers alleging disability discrimination under Title I of the Americans With Disabilities Act of 1990. Id. at 1. The complaint named Community Health Systems, Inc. (“CHSI”) and Vicksburg Healthcare, LLC (“VHL”) as Defendants, alleging that both CHSI and VHL have been continuously doing business as River Region Medical Center (“River Region”) in Vicksburg, Mississippi. Id. The EEOC alleged that the Defendants terminated Chambers, who worked as a nurse at River Region for approximately 36 years, because of her unspecified disability, and additionally failed to provide her with reasonable accommodations in violation of the ADA. Id. at 1-2. VHL was a subsidiary of CHSI, which was incorporated in Delaware and had its principal place of business in Tennessee. Id. at 2. While VHL admitted doing business as River Region and admitted employing Chambers, CHSI denied doing business as River Region and denied employing Chambers. Id. Further, in its motion to dismiss, CHSI asserted the affirmative defenses of lack of personal jurisdiction, insufficient process, and insufficient service of process. Id           

The Court’s Decision

In granting CHSI’s motion to dismiss, the Court held that the issue of personal jurisdiction was controlling. Id. The EEOC has the burden of establishing a prima facie case for personal jurisdiction. Id. at 5. The Court noted that a non-resident defendant is amenable to being sued in Mississippi if: (1) Mississippi’s long-arm statute confers jurisdiction over the defendant; and (2) the exercise of personal jurisdiction comports with the requirements of federal due process. Id. at 3. The Mississippi long arm statute consists of three prongs, including: (i) the contract prong; (ii) the tort prong; and (iii) the doing-business prong. It was undisputed that the “doing-business” prong was case dispositive. Id.

CHSI submitted an affidavit from its Senior Vice President and Chief Litigation Counsel to the effect that it did not conduct business in Mississippi and that it lacked sufficient minimum contacts to be hauled into court in Mississippi. Id. at 6. The affidavit confirmed that CHSI is a holding company with no employees; CHSI indirectly owned subsidiaries including VHL; CHSI neither operated nor controlled the day-to-day operations of River Region; CHSI and River Region maintained separate banking records and did not co-mingle funds; CHSI did not employ nor have control over any River Region staff; CHSI never made any employment decisions regarding Chambers; CHSI and River Region observed corporate formalities (including no overlap between the Board of Trustees of River Region and the Board of Directors of CHSI; the respective Boards of River Region and CHSI each convened separate meetings; and the Boards maintained separate minutes and records); and CHSI is not qualified to do business in Mississippi, owns no property there, has no offices there, does not market there, and does not pay taxes there. Id. at 6-7. Following well-established precedent, the Court found this aggregation of factors to be dispositive. It held that the EEOC lacked personal jurisdiction to sue CHSI in Mississippi. Id. at 7.

The Court rejected the EEOC’s three arguments in opposition of dismissal.  Id. at 7-8. First, the EEOC argued that the 10-K form submitted by CHSI to the SEC demonstrated CHSI’s intent to do business in Mississippi as it often used language such as “we” when referring to the hospital. Id. at 8. The Court rejected this argument, noting that the 10-K form also contained a provision saying the hospitals are expressly owned and operated by the subsidiaries. Id. Next, the EEOC mistakenly speculated that the River Region employee handbook contained references to CHSI. Id. at 9-10. The Court cited an affidavit from CHSI’s litigation counsel clarifying that the entity referred to in the handbook was a different indirect subsidiary, and not the parent corporation. Id. at 10. Finally, the EEOC erroneously relied on another case involving CHSI - Bass v. Community Health Systems, Inc., Case No. 2:00cv193 (N.D. Miss.). Id. at 12. The Court noted that no facts from that case illustrated that CHSI should be amenable to personal jurisdiction. Id.

Implications For Employers

 When out-of-state parent corporations conduct business in Mississippi through subsidiaries, it is imperative that they observe corporate formalities to clearly maintain the parent-subsidiary relationship. Further, in documents such as 10-K forms and employee handbooks, employers must explicitly indicate that subsidiaries, and not the parent, own and operate local entities. If parent corporations follow the teachings of EEOC v. Vicksburg Healthcare, LLC, et al., they can avoid unwittingly submitting to personal jurisdiction in Mississippi courts while their subsidiaries do business there.

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

The EEOC’s Litigation Scorecard For FY2014 – What Does It Mean For Employers

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

The EEOC’s fiscal year ended on September 30, 2014.

So what did the EEOC’s litigation record look like for the past year?

Our analysis is here, along with a video presentation on the highlights of what this all means for employers.

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

Court Denies Class Certification In Race Discrimination Case Against The Fed

Posted in Class Certification

By Rebecca S. Bjork and Gerald L. Maatman, Jr.

After Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), class action litigants are re-booting their theories in employment discrimination class actions. The stakes are high and the legal theories are novel in these workplace class actions, especially when an employer’s decision-making processes – either objective, subjective, or both – are challenged.

Most recently, Judge Emmet Sullivan of the U.S. District Court for the District of Columbia denied class certification in a long-running employment discrimination case involving discretionary decision making and, in the process, expressed cogently what it now takes to satisfy the commonality requirement of Rule 23(a). The order in Artis v. Yellen, No. 01-CV-400, 2014 U.S. Dist. LEXIS 136753 (D.D.C. Sept. 29, 2014), is helpful for its clarity on that subject, even if the specific record before the Court is (hopefully) not likely to arise in many future cases.

The History Of The Litigation

Why, you may ask? Well, if you read the decision, involving allegations of race discrimination against African-American and Native American secretaries and clerical staff working for the Federal Reserve Board, you’ll quickly see why. The Court was clearly not impressed with the litigation tactics of the plaintiffs’ attorneys. For starters, the named plaintiffs refused to participate in class discovery, including depositions, until ordered to do so. Id. at 9. Worse, they failed to notice any depositions of the defendant until after the close of class discovery (id. at 10-11); their statistics “expert” with a B.A. degree had, by his own admission, never before run statistical analyses of employment data in a discrimination case, and did not use any differential statistics to attempt to measure statistical significance (id. at 29-30); they attempted to file multiple corrected and supplemental briefs and expert reports after deadlines had passed (id. at 15-19); and more.

The Court’s Commonality Analysis

His patience apparently having been worn thin, Judge Sullivan struck the untimely filings and denied class certification. The commonality clarification he provided, beginning on page 25 of his ruling, is helpful and worth reading, despite the background noise created during the discovery phase of the litigation. First, consider his cogent discussion of the post-Wal-Mart v. Dukes legal landscape. Commonality can be shown in cases alleging subjective discretion in employment decisions, the Court writes, if (1) a common mode of exercising that discretion has been proven; (2) the exercise of discretion is tied to a specific employment practice and that subjective practice affected the class in a uniform manner; or (3) there is evidence uniting acts of discretion under a single policy or practice. Id. at 26 (citing Tabor v. Hilti, Inc., 703 F.3d 1206, 1229 (10th Cir. 2013), Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 113 (4th Cir. 2013), and In Re Countrywide Fin. Corp. Mortg. Lending Practices Litig., 708 F.3d 704, 708 (6th Cir. 2013)).

The Court then worked through each of these three ways to show commonality, and found no record support for them presented by the plaintiffs. As for “common mode,” the depositions that were compelled elicited testimony that some supervisors made discriminatory decisions, but many others did not. Artis, at 27. (Nor did the plaintiffs have any evidence that “a single high-level manager was involved” in the challenged decisions. Id. at 28.) As for “affecting the class in a uniform manner,” the Court held the plaintiffs’ statistical evidence was unimpressive in multiple ways, failing to demonstrate any uniform effect. Id. at 28-31. And the only “uniting policy” in the record was the Fed’s anti-discrimination and affirmative action policy, which applies agency-wide and certainly does not provide glue tying the allegations of discrimination together. For these reasons, the Court reasoned that “the discrimination [the plaintiffs] allege stems from an array of individualized decisions of low-level supervisors who operate with significant discretion to design subjective criteria for making personnel decisions.” Id. at 25.

Implications Of The Decision

Corporate counsel who follow class action law should refer to this decision as a roadmap for how to engineer an effective class certification defense. Always remember that is it the plaintiffs’ burden to build an evidentiary record to support class certification, which was lacking here in several ways. And drilling down into the commonality test as explained in case law — in granular detail — will allow the defense to analyze the evidence pro or con as to the Rule 23 elements, and build the best arguments in the circumstances.

Second Circuit Rejects EEOC Claim That “A Lawyer Is A Lawyer Is A Lawyer”

Posted in EEOC Litigation

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

On September 29, 2014, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a high-profile lawsuit brought by the EEOC – entitled EEOC v. Port Auth. of N.Y. & N.J., No. 13-2705 (2d Cir. Sept. 29, 2014) – alleging that female attorneys were underpaid as compared to their male counterparts at the Port Authority of New York and New Jersey (“Port Authority”). In dismissing the case, the Second Circuit affirmed the District Court’s determination that the EEOC had failed to adequately plead its Equal Pay Act claims against the Port Authority because it had failed to plead any specific facts regarding what the job duties of the employees were.

The Second Circuit’s ruling is a distinct defeat for the Commission, as equal pay issues are a key agenda item on the EEOC’s enforcement program.

Background

In 2007, the EEOC initiated a three-year investigation into pay practices at the Port Authority which led to the filing of EEOC v. Port Auth. of N.Y. & N.J., No. 10 Civ. 7462 (S.D.N.Y.) in the U.S. District Court for the Southern District of New York; the case was assigned to Judge Buchwald. The crux of the suit was that female attorneys in non-supervisory positions were paid less than similarly situated male attorneys performing the same work in violation of the Equal Pay Act (“EPA”). In support of the EPA claim, the EEOC broadly pled that female attorneys were paid less than male attorneys with the same “job code” and that the disparity could not be explained by factors other than sex. (The suit also initially included an age discrimination claim which was later abandoned.)

The complaint was devoid of substantive allegations regarding the actual job duties of the attorneys, and at an initial conference Judge Buchwald expressed skepticism that the EEOC had sufficiently stated a claim. The EEOC then responded to interrogatories and provided information for 14 claimants and numerous comparators. The EEOC responses stated in conclusory terms that all of the attorney positions required the same skill, effort, and responsibility, but it still failed to provide any information about the specific content of the jobs. When the District Court asked during a pre-motion conference whether the EEOC was proceeding on the theory that “an attorney is an attorney is an attorney,” the EEOC agreed that this was true at the Port Authority. The District Court later granted the Port Authority’s Rule 12(c) motion for judgment on the pleadings, and the EEOC appealed.

The Second Circuit’s Decision

In EEOC v. Port Auth. of N.Y. & N.J., the Second Circuit held that the EEOC had utterly failed to meet the demanding EPA standard that the jobs compared be “substantially equal.” Id. at 18. The Second Circuit explained that the case law requires a plaintiff to establish “that the jobs compared entail common duties or content, and do not simply overlap in titles or classifications,” and it further noted that the EEOC’s own regulations and compliance manual emphasize that the content of the jobs determines whether they are substantially equal for purposes of the Equal Pay Act. Id. at 18-20. The Second Circuit found that the EEOC complaint and interrogatory responses, which were treated as a “functional amendment” to the complaint (id. at 10), failed to plead that the content of the jobs was similar. The Second Circuit commented that the EEOC set forth only “bland abstractions [which were] untethered from allegations regarding Port Authority attorneys’ actual job duties.” Id. at 23 (emphasis in original). The Second Circuit further characterized the EEOC’s contention that “an attorney is an attorney is an attorney” as a “broad generalization” that is not recognized by the EPA. Id.

Implications For Employers

The Second Circuit ruling is powerful precedent for employers defending EPA suits that a generalized comparison of jobs will not carry the day. Plaintiffs – and the EEOC – must plead and prove that the specific content of the jobs is substantially equal through discussion and analysis of particular job duties. The decision should also embolden employers to carefully review complaints, including those filed by the EEOC, and scrutinize whether they meet the Rule 8 pleading standard mandated by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).

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

Déjà Vu All Over Again: EEOC’s Fiscal Year-End Lawsuit Blitz Once Again Catches Dozens Of Employers In Litigation Net

Posted in EEOC Litigation

By Gerald L. Maatman, Jr., Christopher DeGroff, and Matthew Gagnon

In the words of the immortal bard Yogi Berra, “it’s like déjà vu all over again.”

As we have reported in years past (see here and here), the EEOC has a predictable trend of filing a flurry of lawsuits in the last days of its fiscal year, which ends on September 30. Fiscal year 2013-14 was no different. Like clockwork, the EEOC filed a spate of lawsuits as time ran out, yet again enmeshing dozens of employers across the country in government initiated litigation. Indeed, the EEOC filed an astonishing 58 lawsuits in September 2014 alone, up 10 lawsuits over September 2013. But does this year-end-rush accomplish the EEOC’s goals and square with its statutory mandate? The following post explores this annual governmental filing phenomenon and what it means to employers in its aftermath.

Different Year, Same Spike: FY 2014 Cases Filed By Month

As this graph shows, the year-end-rush is still a very real phenomenon for employers, with a gradual increase in filings throughout the year, punctuated by a final blast in September. Readers may note the uptick in December 2013. This was most likely due to clearing a backlog caused by the October 2013 government shut-down; we expect that, like most other government agencies, the EEOC needed a few weeks to get its legs back beneath it before it got back to business as usual.

The end-of-year rush pushed the total number of suits filed up a bit from last year, increasing to 142 from last year’s 134. But this is still a dramatic drop from the high point of 261 filings in 2011. This drop, however, is consistent with the EEOC’s 2012 strategic enforcement plan, which directed the regional offices to pursue more systemic, class-wide employment discrimination cases. In short, the EEOC continues to strive for getting the most bang for the taxpayer buck.

But with fewer total filings, what has consumed the EEOC’s resources this year? Where does the money go? We have developed some ideas based on our study of EEOC activity:

The EEOC Is Still Fighting The Giants From Previous Years

The EEOC has finite resources. Predictably, one problem the EEOC faces with an increased focus on systemic cases is that these whopper cases take up more resources and last longer than garden-variety matters. The EEOC is still fighting some of the same major cases that it filed during the high-water mark for filings. For example, the EEOC recently convinced U.S. District Judge Keith Ellison to reverse, at least in part, his earlier employer-friendly decision in EEOC v. Bass Pro Outdoor World, LLC, et al., Case No. 11-CV-3425 (S.D. Tex. July 30, 2014). That large-scale case still remains in its relative infancy, even though it was filed in 2011.

The EEOC has also continued its battle against employers – and at least one state – over the legality of using credit and criminal background checks to make hiring and employment decisions. We have blogged often about this beleaguered EEOC initiative over the past few years. At least one of those cases came to a spectacular end this year in a stunning defeat for the EEOC, while other battles continue to rage on. As we previously blogged about here, the EEOC recently lost a landmark case against Kaplan Higher Education Corp. where the Sixth Circuit upbraided the EEOC for the “homemade” methodology that the agency used to determine race in that case – namely, by asking “race raters” to assign race based on drivers’ license photographs – concluding that it was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.”

But this EEOC theory lives on in the EEOC v. Freeman case, which is up for appellate review before the Fourth Circuit, and in the November 2013 case that Texas brought to enjoin the enforcement of the EEOC’s criminal history guidance.  As we discussed here, that suit was dismissed on August 20, 2014 in State of Texas v. EEOC, Case No.5:13-CV-255 (N.D. Tex. Aug. 20, 2014). The Court held that Texas lacked standing to maintain its suit because Texas did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance. While an important victory for the EEOC, this decision left untouched the important substantive issues regarding the EEOC’s guidance, which will have to be fought another day.

The key to this retrospective is that when analyzing EEOC activity, it is often necessary to look back at filings from previous years, as that activity impacts the EEOC’s resources and strategies today.

Clearing The Underbrush For An Enhanced Systemic Program

The EEOC also appears to be taking another strategic direction in FY2014: deploying considerable resources to litigate high-level, defining issues that will have a major impact on its ability to carry out its systemic initiative. As we previously blogged about here, in 2012 the EEOC issued its strategic enforcement plan that outlined the priorities for the Commission’s enforcement activity through 2016.  We have dissected the potential ways that the SEP would guide enforcement priorities as it was implemented (see, e.g., here, here, and here). But by FY2014, we start to see the EEOC’s agenda snap into clearer focus, and note how the government has adjusted its activities to pursue the SEP objectives. Of course, one of the EEOC’s most important strategic objectives is an increased focus on pattern or practice, policy, or class cases where the alleged discrimination has a broad impact on an industry, profession, company or geographic area. These so-called “systemic” cases are developing into its single most important litigation driver.

But this year, the agency has focused substantial resources to tackle the legal issues that could, if the EEOC is successful, sweep away certain procedural prerequisites to filing suit that the EEOC believes just get in the way of its enforcement efforts, especially concerning systemic cases.

Perhaps chief among those procedural brake-pumps is the EEOC’s statutorily mandated obligation to conciliate in good faith before bringing suit against an employer.  On June 30, 2014, the Supreme Court granted certiorari in Mach Mining, LLC v. EEOC (No. 13-1019). As we have discussed a length here, the outcome of that case could be a game-changer in EEOC litigation because the EEOC seeks to effectively immunize itself from any attack on its failure to meaningfully conciliate with an employer before bringing a lawsuit. The Seventh Circuit ruled in December 2013 that the EEOC’s failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit.  The Court held that such pre-suit obligations were beyond judicial scrutiny as long as the EEOC’s complaint pleads it has complied with all procedures required under Title VII, and the relevant documents are facially sufficient. This decision is now up for review by the Supreme Court because of the conflict among the circuits created by the Seventh Circuit’s decision. As we previously blogged about here, Seyfarth Shaw submitted an amicus brief to the Supreme Court on behalf of the American Insurance Association, questioning the underpinning of the Seventh Circuit’s decision.

But conciliation is not the only procedural hurdle that the EEOC seeks to dismantle. It is also challenging the court’s ability to inquire into the scope of the EEOC’s pre-suit investigation as well. On March 10, 2014, in EEOC v. Sterling Jewelers Inc., Case No. 08-CV-706 (W.D.N.Y. Mar. 10, 2014), Judge Richard J. Arcara of the U.S. District Court for the Western District of New York dismissed the EEOCs’ entire case against Sterling Jewelers with prejudice. In so doing, the Court rejected the EEOC’s contention that a court may not inquire as to the scope of the EEOC’s pre-lawsuit investigation, and found no evidence that the EEOC had actually investigated the nationwide claims that it had brought against Sterling prior to bringing suit. The EEOC promptly appealed that decision, which is now being litigated at the Second Circuit.

Pushing The Envelope On Non-Substantive Legal Theories

Not content to continue to pursue the novel issues raised in prior years, the EEOC is also attempting to add new weapons to its enforcement arsenal. In EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863 (N.D. Ill. Feb. 7, 2014), the EEOC challenged various provisions of CVS’s standard severance agreement, arguing that it violates Title VII because it interferes with an employee’s right to file charges, communicate voluntarily, and participate in investigations with the EEOC and other state agencies. In addition to the general release and the covenant not to sue – which were already areas of concern for the EEOC – the EEOC also challenged the agreement’s requirements that employees notify the company of any legal proceedings or administrative investigations, the non-disparagement provision, and the agreement’s prohibition on the disclosure of confidential information without the company’s consent. Although preliminary comments from the judge strongly suggest that this case will be dismissed, the EEOC is already pursuing a different employer under a similar theory in the District of Colorado. See EEOC v. CollegeAmerica Denver, Inc., Case No. 14-cv-01232-LTB-MJW (D. Colo.).

And in EEOC v. Supervalu, Inc. and Jewel-Osco, Case No. 1:09-CV-05637 (N.D. Ill.), the EEOC attacked an employer for supposedly failing to comply with the injunctive mandates that the employer had agreed to as part of a consent decree entered into with the EEOC.  The EEOC had sued Supervalu, Inc. and Jewel-Osco (“Jewel”) in 2009, alleging that it engaged in a pattern or practice of violating the Americans with Disabilities Act. On January 14, 2011, the EEOC and Jewel entered into a three-year consent decree to resolve the case. Jewel agreed, among other things, to engage an “accommodations consultant” to assist in identifying possible accommodations for disabled employees.

But just a year later, on March 26, 2012, the EEOC sought civil contempt sanctions against Jewel for failing to follow the requirements of the consent decree. Magistrate Judge Mason of the Northern District of Illinois filed his Report and Recommendation on July 15, 2014, ruling that Jewel violated the terms of the consent decree by allegedly failing to follow its own procedures, including the use of an accommodations consultant, and failing to accommodate and ultimately terminating three disabled employees. The EEOC almost always insists on some form of injunctive relief when it settles a case through a consent decree. If enforcement of the terms of those decrees is the new cause of action de jour, then this poses an entirely new threat to employers, who could face substantial exposure even after a case is settled and “over.”

Finally, the EEOC has been steadily increasing its use of its subpoena power to gather as much information as possible from employers prior to filing suit. Fiscal year 2014 saw 24 subpoena actions versus the 17 that were filed last year. As we have discussed here, although some employers have been successful in reigning in the EEOC’s subpoena power, many courts continue to give the agency considerable leeway to conduct searching pre-suit investigations, even where those investigations have little or no connection to the underlying charge.

What Types Of Cases Did The EEOC Focus On In FY2014?

Of course, the legal shifts discussed above are not the only story coming out of the EEOC’s FY2014 filings. We can also discern significant trends in the types of cases that the EEOC is choosing to pursue.  The following chart offers a breakdown of the EEOC’s filings by statute:

We continue to see a strong focus on disability issues: disability cases make up 34% of all EEOC filings this year, fairly close to the number of cases we saw filed last year (36% in 2013). Race cases were somewhat underrepresented this year when compared with past years (14 in 2014, as compared with 17 in 2013), but there has been a fairly sizable uptick in age discrimination filings (nine this year, compared with only five in 2013).

By far, sex and pregnancy issues are the dominant discrimination theories alleged in Title VII cases in FY2014. The Commission filed 6 pregnancy discrimination cases in September alone, and has repeatedly emphasized that this is a priority for the agency. In a recent case filing announcement, for example, the EEOC’s press release stressed that “[t]he law is clear – employers cannot refuse to hire or discharge women because of their pregnancy,” and that “[c]ombating pregnancy discrimination remains a priority.” Indeed, sex/pregnancy discrimination cases make up 61% of all Title VII cases filed in 2014:

Aggressive Regional Offices

Finally, as with prior years, FY2014 saw significant disparities in the number and types of filings coming out of the EEOC’s 15 districts. Five districts in particular are unusually aggressive in the number of cases they file, the types of cases they bring, and how aggressive they pursue those cases. Here is a breakdown of how many cases were filed where:

The EEOC’s Chicago district office, led by regional attorney John Hendrickson, remains one of the most aggressive in the country, pursuing not only a large number of cases (26 in FY2014), but also cases that are themselves large and important in terms of their impact on U.S. employers. CVS, Jewel, and Mach Mining, discussed above, all started in Chicago.

The Philadelphia office is also consistently active and aggressive. That office took the lead in a handful of cases alleging that employers’ use of criminal and credit history background checks had an adverse impact on minority applicants.  Although one of those cases, EEOC v. Kaplan, Inc., resulted in a stinging defeat for the agency at the district court and the Sixth Circuit, another case, EEOC v. Freeman, lives on at the appellate level. The Fourth Circuit is set to decide that case after a Maryland federal judge granted summary judgment to the company.

The New York office has also been quite active, and is pursuing a handful of high profile pregnancy and sex discrimination cases that are still winding their way through the Courts. Chief among those are the Sterling case discussed above, which is now before the Second Circuit, and a pregnancy discrimination suit against Bloomberg LP, which was gutted by the district court in September 2013, and which the EEOC was forced to walk away from in August of this year.

Rounding out the list of hard-hitting regional offices are the Houston office and the Phoenix office, which are both known to file high-profile cases and aggressively pursue them. Those offices filed 9 cases and 14 cases respectively in 2014.

Insight For Employers

Fiscal Year 2014 was curious in many ways. We can see the unquestionable fingerprints of the 2012 SEP in the EEOC’s filings, and we can expect to see those trends continue. But we also see the agency making more nuanced, strategic decisions with how it uses its finite resources – choosing to fight a number of procedural issues that may pave the way (at least if the EEOC has its way) to an open door to the federal courthouse in years to come, unfettered by procedural prerequisites. The 2014 fiscal year has just ended, and we continue to process this data. The EEOC’s official published statistics are typically released in November, which will give us additional insight into this often confounding agency. Stay tuned, loyal blog readers.

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

EEOC Pushes Its Strategic Enforcement Plan And Advocates For Transgender Workplace Protections Under Title VII

Posted in EEOC Litigation

By Laura J. Maechtlen

No federal statute explicitly prohibits employment discrimination based on gender identity or expression. Nevertheless, in recent years, the EEOC has advocated — including as part of its strategic plan — that it would pursue protections for transgender workers under Title VII’s prohibition against “sex” discrimination and harassment. Indeed, on April 20, 2012, the agency issued a landmark administrative ruling titled Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (April 23, 2012) in which it held that transgender individuals may state a claim for sex discrimination under Title VII. Read our prior analysis of the Macy decision here.

Following Macy, on September 25, 2014, the EEOC filed two separate lawsuits—EEOC v. Lakeland Eye Clinic, P.A. (Middle District of Florida, Tampa Division) and EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (Eastern District of Michigan, Southern Division) — on behalf of transgender workers. The crux of the EEOC’s theory is that Title VII protects transgender workers based on “sex.”

Facts And Claims Alleged

In EEOC v. Lakeland Eye Clinic P.A., the EEOC asserts that the employer fired its director of hearing services, Brandi M. Branson, after she began wearing feminine clothing to work and informed the clinic she was transitioning from male to female. Managers and employees allegedly made derogatory comments about Branson’s appearance, and Branson was thereafter deprived of her client base by the employer. Branson was terminated, and the EEOC alleges that, two months after Branson was terminated, the clinic hired a male worker in the same position who conformed to traditional gender norms.

In R.G. & G.R. Harris Funeral Homes, the EEOC alleges that a Detroit-based funeral home illegally fired a funeral director and embalmer named Aimee Stephens, weeks after Stephens gave the funeral home a letter saying she was undergoing a gender transition from male to female. She was allegedly terminated, and told by the owner of the employer that what she was “proposing to do” was “unacceptable.”

In both cases, the EEOC alleges various theories of “sex” discrimination on behalf of the claimants. The EEOC alleges that the decision to terminate each of these employees was motivated by “sex-based” considerations because the employee is transgender, because of the employee’s transition from male to female, and/or because the employees did not confirm to the employers sex- or gender-based preferences, expectations or stereotypes.

Implications For Employers

The theories of liability articulated in these lawsuits clearly follow the EEOC’s prior ruling in Macy, in which the EEOC found that discrimination against a transgender worker was — per se — sex discrimination. See Macy at *6. The EEOC also uses as a basis for liability the decision in Price Waterhouse v. Hopkins, 490 U.S. 228, 239 (1989), in which the U.S. Supreme Court held that Title VII bars discrimination based on gender stereotypes, in other words, failing to act and appear according to expectations defined by gender — a form of sex discrimination that has since been described as “sex stereotyping,” and one alternative way of proving sex discrimination.  The EEOC has made clear that, while gender identity and/or expression are not independent classifications for protection under federal law, the agency will attempt to establish a case of sex discrimination through a variety of different formulations.

In order to avoid potential pitfalls in this emerging area of law, employers must be mindful of issues related to gender identity and/or expression that might arise during interviewing, hiring, discipline, promotion and termination decisions.  Employers should be particularly vigilant when an employee identifies as transgender, or announces a plan to undergo a gender transition. Moreover, the theories articulated in these cases are not just limited to transgender employees—many forms of “sex stereotyping” may give rise to actionable claims, not just discrimination or harassment against individuals who identify as transgender. Employers must also be aware that transgender individuals may be affirmatively protected under state or local laws (see our analysis of a recent California case here), and that any allegations concerning transgender discrimination, gender stereotyping or gender identity, require the same analysis, investigation and response as a traditional sex discrimination complaint. Finally, employers should consider whether to implement gender transition guidelines for human resources and/or management that define a process through which employees and management approach an employee gender transition in the workplace.

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