Workplace Class Action Blog

U.S. Supreme Court Issues Ruling Favorable To Employers Involved In Disparate-Impact Litigation

Posted in Class Action Litigation

imagesBy Christopher M. Cascino and Gerald L. Maatman, Jr.

On June 25, 2015, the U.S. Supreme Court issued a 5 to 4 ruling in Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc., No. 13-1371 (2015).  Now that the dust has settled from the Supreme Court’s recent term, what does this decision mean for employers?

In Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc., the Supreme Court held that companies and government agencies can be liable for discrimination under a disparate impact theory for violations of the Fair Housing Act (“FHA”).  In coming to this conclusion, the Supreme Court emphasized the importance of placing limitations on the ability of potential plaintiffs to bring and successfully prosecute disparate impact lawsuits.

As is well known by employers, a disparate impact claim is based on what is sometimes called unintentional or adverse impact discrimination. The fundamental allegation is that a policy or practice, which is non-discriminatory on its face, is unlawful if it has a disparate impact on a legally protected group and does not serve a substantial legitimate non-discriminatory interest, or that interest is otherwise attainable with lesser adverse impact. Claims based on disparate impact are typically grounded in statistics. The far more common discrimination theory is disparate treatment, which requires proof of intentional discrimination.

The Supreme Court first approved the disparate impact theory in 1971, in employment discrimination cases under Title VII of the 1964 Civil Rights Act. Every federal appellate court that has decided the issue since then has held that disparate impact claims also are permitted in housing discrimination cases under the FHA, a part of the 1968 Civil Rights Act.

While it is not a workplace class action decision, the Supreme Court’s cautionary language in Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc. – especially about the limitations needed to prevent abusive disparate impact lawsuits – will no doubt assist employers in their defense of disparate impact class actions, and may create new, more employer-friendly burdens in such litigation. For this reason alone, Texas Dep’t of Housing & Community Affairs is a must read on the beach this summer for corporate counsel and HR professionals.

Case Background

The plaintiffs brought suit against the Texas Department of Housing and Community Affairs (the “Department”), claiming that the way the Department allocated tax credits to develop low-income housing violated the FHA.  Specifically, the plaintiffs claimed that the Department’s policies caused it to issue credits for developments in areas with significant minority populations while rarely issuing such credits for developments in areas with significant Caucasian majorities.  The plaintiffs claimed that this created segregated housing and claimed the Department thus violated the FHA under a disparate impact theory.

The District Court determined that the plaintiffs could bring FHA suits on a disparate impact theory, and found that the plaintiffs had succeeded in proving violations of the FHA under a disparate impact theory.  The U.S. Court of Appeals for the Fifth Circuit agreed that FHA suits could be brought under a disparate impact theory, but reversed the District Court’s finding that the Department had violated the FHA because it concluded the District Court applied the wrong legal standard.  The Department subsequently appealed the Fifth Circuit’s finding that an FHA action could be brought under a disparate impact theory.

The Supreme Court’s Decision

The Supreme Court began its analysis by considering why it construed Title VII to allow for a disparate impact cause of action in Griggs v. Duke Power Co., 401 U. S. 424 (1971).  Specifically, it observed that Griggs found that Title VII prohibited not just practices that are discriminatory in intent, but also practices that are discriminatory in operation.  Texas Dep’t of Housing & Community Affairs, No. 13-1371, at 8.  The Supreme Court observed that even in creating the disparate impact cause of action, however, Griggs put “important limits” on disparate impact liability, by way of the “business necessity” defense and finding that Title VII did not prohibit hiring criteria that had a disparate impact on protected minorities if those criteria had “a ‘manifest relationship’ to job performance.”  Id. at 8-9 (quoting Griggs, 401 U.S. at 432).

After then considering the fact that in Smith v. City of Jackson, 544 U.S. 228 (2005), the Supreme Court allowed disparate impact claims to proceed under the Age Discrimination In Employment Act for similar reasons, the Supreme Court reasoned – particularly in language favorable to employers – that Griggs and Smith “teach that disparate impact liability must be limited so employers and other regulated entities are able to make the practical business choices and profit-related decisions that sustain a vibrant and dynamic free enterprise system.  And before rejecting a business justification . . . . a court must determine that a plaintiff has shown that there is an available alternative employment practice that has less disparate impact and serves the entity’s legitimate needs.”  Texas Dep’t of Housing & Community Affairs, No. 13-1371, at 9-10 (citations omitted).

As a result, the Supreme Court concluded that disparate impact claims are permitted under the FHA, finding that the FHA was “results-oriented” and thus that allowing disparate impact liability would best meet the objectives of the FHA.  Id. at 11, 17.  It then went on to place important limitations on the ability of future plaintiffs to bring and succeed in such cases.

The first such limitation the Supreme Court discussed was that developers needed to be given “leeway to state and explain the valid interest served by their policies.”  Id. at 18.  Stating that this was “analogous” to the business necessity defense in Title VII litigation, the Supreme Court pointed out that, in the Title VII context, “an entity could be liable for disparate impact discrimination only if the challenged practices were not job-related and consistent with business necessity,” and that “an employer may maintain a workplace requirement that causes a disparate impact if that requirement is a reasonable measurement of job performance.”  Id. at 19 (citations omitted).

The Supreme Court also determined that “a disparate impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.”  Id. at 19-20.  It described this causality requirement as “robust” and stated that it needed to be robust to “protect[] defendants from being held liable for racial disparities they did not create.”  Id. at 20.

The Supreme Court observed that these limitations were important because, without such limitations, companies might adopt racial quotas, which would raise another set of “serious constitutional questions” and “serious constitutional concerns.”  Id.  Echoing its earlier comments about the free enterprise system, the Supreme Court further held that limitations preventing “abusive disparate impact claims” were needed because such claims would “undermine[]” the purpose of the FHA “as well as the free-market system.”  Id. at 21.  Finally, it  emphasized that “[w]ere standards for proceeding with disparate impact suits not to incorporate at least the safeguards discussed here, then disparate impact liability might displace valid governmental and private priorities, rather than solely removing artificial, arbitrary, and unnecessary barriers.”  Id. at 21 (citation omitted).

Implications For Employers

While not a workplace class action, Texas Dep’t of Housing & Community Affairs will be of significant use to employers defending against disparate impact class actions.  The Supreme Court’s employer-friendly language and warnings about the consequences of allowing abusive disparate impact class actions to proceed will help employers defeat such claims.

Moreover, the Supreme Court’s holding that “before rejecting a business justification . . . . a court must determine that a plaintiff has shown that there is an available alternative employment practice that has less disparate impact and serves the entity’s legitimate needs” arguably places a new burden on disparate impact plaintiffs to prove three things – (1) an available alternative practice; (2) with less of a disparate impact; (3) that serves the employer’s legitimate needs – to defeat a business necessity defense.  Further, this language and the Supreme Court’s several references to the need to protect the free-enterprise system may suggest that courts should apply a low standard, such as something akin to the business judgment rule, when evaluating an employer’s claim that a requirement was related to job performance and/or that certain factors are in fact an aspect of job performance.

 

Fourth Circuit Affirms EEOC’s Resounding Summary Judgment Defeat in ADA Case

Posted in EEOC Litigation

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

In a case we have previously blogged about several times due to spoliation sanctions imposed on the EEOC – most recently here - the U.S. Court of Appeals for the Fourth Circuit affirmed a ruling out of the Middle District of North Carolina and upheld the summary judgment dismissal of an ADA lawsuit brought by the EEOC.  In EEOC v. Womble Carlyle Sandridge & Rice, LLP, No. 14-1958 (4th Cir. June 26, 2015), the district court held that the individual the EEOC brought suit on behalf of,  Charlesetta Jennings, was not a “qualified individual” under the Americans With Disabilities Act (“ADA”). Accordingly, it granted summary judgment to the employer. The EEOC appealed the decision to the Fourth Circuit and it affirmed.

The ruling is instructive for any employer facing ADA litigation brought by the Commission.

Background Of The Case

Jennings, a Support Services Assistant (“SSA”) for Womble Carlyle, a law firm, was diagnosed with breast cancer in 2008. Id.  at 3. Following her treatment, Jennings developed a cancer-related condition that impairs an individual’s circulatory and immune systems. Id. As a result of this condition, Jennings was unable to lift more than 10 pounds at first, then 20 pounds after a second consultation with her doctor. Id. at 4. This was despite working in a position that not only requires, as a condition of employment, that employees lift at least 75 pounds, but also regularly requires the lifting of 20 pounds. Id.

For a time, Jennings was able to perform some of her duties while avoiding heavy lifting by modifying her lifting methods. Id. at 6. Nonetheless, she could not perform many of her SSA job duties as she was still unable to work alone and many SSA tasks required the lifting items that weighed in excess of 20 pounds. Id. at 7.

In February 2011, Womble Carlyle placed Jennings on medical leave “because she could not lift seventy-five pounds.” Id. at 8. After 6 months, with no improvement in her condition, Jennings was terminated by Womble Carlyle. Id. The EEOC brought a lawsuit on behalf of Jennings, against the law firm, alleging that it failed to accommodate her disability and subsequently terminated her employment because of the disability in violation of the ADA. Id.

The District Court’s Decision

Even though the District Court held that Jennings could not comply with an essential function of the SSA position, it noted that she could still be a “qualified individual” under the ADA if Womble Carlyle could “reasonably accommodate” her. Id. at 9. The EEOC proposed several solutions, but the District Court found them to clash with the well-established principles that the ADA does not require an employer to either create a “modified light-duty position” or “relocate essential functions” to another employee. Id. As such, the District Court granted summary judgment in favor of Womble Carlyle.

The Fourth Circuit’s Opinion

On appeal, the EEOC argued that: (1) Jennings could perform the essential functions of her job, even without a reasonable accommodation; and (2) alternatively, requiring other SSAs to help Jennings with certain job tasks is a reasonable accommodation that would have enabled her to perform the essential functions of her job. Id. at 11.

With respect to Jennings’ inability to perform the essential functions of her position, the Fourth Circuit held that the ability to lift up to 20 pounds – which Jennings could not do – was in fact an essential function of the SSA position. Id.  at 13. Notably, the EEOC noted “that an employee may typically be assigned to only certain tasks of a multifaceted job does not necessarily mean that those tasks to which she was not assigned are not essential.” Id. at 14. Although Jennings was able to perform small subset of her assignments through certain “work around methods” she devised, the Fourth Circuit reasoned that the ability to lift over 20 pounds was “inextricably tied to the vast majority of them” which rendered her unable to perform an essential function of her job, and thus she was not a qualified individual with a disability. Id. at 16.

With respect to the EEOC’s second argument – having other SSAs perform those tasks Jennings could not perform was a reasonable accommodation – the Fourth Circuit disagreed, holding that excusing Jennings from all heavy lifting “would not have been a reasonable accommodation” and “requiring assistance for all tasks that involve lifting more than 20 pounds would reallocate essential functions, which the ADA does not require.” Id. at 17. As such, the Fourth Circuit held that “the unfortunate truth is that, because of Jennings disability, she is unable to perform an essential function of the SSA job without a serious risk of further injury” and therefore summary judgment for Womble Carlyle was appropriate. Id. at 17-18.

Implications For Employers

This decision serves as a good example of how courts determine whether a job duty is in fact an “essential function”, and an even better example of a court demonstrating judicial restraint to not unduly burden an employer to “reasonably accommodate” the affected employee by removing essential functions of the job. Nevertheless, employers must treat lightly and be sure that they are mindful of their obligations to engage in the “interactive process” with disabled employees in order to determine what reasonable accommodations, if any, are available without posing an undue burden.

What Employers Can Expect From The SCOTUS Decision On Same-Sex Marriage

Posted in Class Action Litigation

same_sex_marriage_fast_factsBy Gerald L. Maatman, Jr.

On June 26, 2015, the U.S. Supreme Court issued its long-awaited decision in Obergefell, et al. v. Hodges, Director, Ohio Department Of Health; Tanco, et al. v. Haslam, Governor Of Tennesee, et al.; DeBoer, et al. v. Snyder, Governor of Michigan, et al.; and Bourke, et al. v. Bershear, Governor of Kentucky, and ruled 5 to 4 that the equal protection guarantee provided by the 14th Amendment to opposite-sex marriages extends to same-sex marriages.  The SCOTUS opinion, authored by Justice Kennedy, holds that “same-sex couples may exercise the fundamental right to marry in all States [and] that there is no lawful basis for a State to refuse to recognize a lawful same-sex marriage performed in another State on the ground of its same-sex character.”

With same-sex couples now having the same rights as opposite-sex couples, how will the decision affect employers and what can employers expect as an outcome?

More Lawsuits?

With the new decision, much of what employers provide and are mandated to provide to employees, such as those rights granted by the Family and Medical Leave Act (“FMLA”) and other employee benefits, may change to include same-sex couples.  Although the U.S. Department of Labor modified its definition of “spouse” in the FMLA back in March 2015, employers must verify that it is granting all eligible employees in same-sex marriages their FMLA rights.  Speaking of the U.S. Department of Labor, we expect that there will be guidance from it soon.

Employers can also expect more lawsuits under Title VII of the Civil Rights Act of 1964.  Although Obergefell, Tanco, DeBoer, and Bourke are not employment cases, the Supreme Court’s decision implicates employment laws.  Claims of transgender, sexual orientation, and/or gender discrimination may increase as gender identity and expression continue to be a topic of discussion.  Likewise, discrimination based on marital status may give rise to lawsuits in certain states under state anti-discrimination laws.

Health And Welfare Plans Update

One of the biggest impacts the U.S. Supreme Court decision will have on employment is on employee benefits.  Medical insurance coverage and taxes will change, so employers should be prepared to accommodate such changes in its policies and contracts.  We expect the Internal Revenue Service will provide guidance soon.

Employee Handbook And Company Policies Update

Employers are also well-served to update their employee handbooks to reflect and extend the rights given to the opposite-sex spouses to same-sex spouses to minimize litigation risks.  Employers must also revised its enrollment processes, such as updating its consent and eligibility forms, to ensure that they comply with the new rule.

We will continue to update you on the impact of the decision on employee benefits in greater detail soon.

One To Watch: The House Judiciary Committee Signs Off On Fairness In Class Action Litigation Act

Posted in Class Action Litigation

Capitol%20BuildingCroppedBy Matthew J. Gagnon and Gerald L. Maatman, Jr.

We have something a bit different for our loyal blog readers today: a preview of an important bill that could have a significant impact on class action litigation.

On June 24, 2015, the House Judiciary Committee voted to send H.R. 1927, the Fairness in Class Action Litigation Act, to the full House. H.R. 1927 is a short statute, but one that could have a major impact on class action litigation. The substance of the Act prohibits any federal court from certifying a class action unless the party seeking certification “affirmatively demonstrates through admissible evidentiary proof that each proposed class member suffered an injury of the same type and extent as the injury of the named class representative or representatives.”

According to House Judiciary Committee Chairman, Bob Goodlatte, the bill is intended to counteract the “proliferation of class actions filed by lawyers on behalf of classes including members who have not suffered any actual injury.” He went on to explain that, “[w]hen classes are certified that include members who do not have the same type and scope of injury as the class representatives, those members siphon off limited compensatory resources from those who are injured, or who have suffered injuries of much greater extent. That leads to substantial under-compensation for consumers who have suffered actual or significantly greater harm.” His comments are here.

Critics of the bill argued that it could effectively eliminate class actions in certain types of cases, including employment discrimination lawsuits, by imposing a standard that would be impossible to meet. In comments prepared for an April 29, 2015 hearing before the Judiciary Committee, Professor Alexandra Lahav of the University Of Connecticut School Of Law argued that existing screening mechanisms embedded in Rule 23 were sufficient to police class actions and prevent baseless claims. She argued that imposing an additional requirement that each class member suffered an injury of the same type and extent would “effectively eliminate the kinds of class actions that are widely agreed to be beneficial.” As Professor Lahav explained:

For example, suppose a bank charges an illegal fee of $2 to every customer when he or she withdraws funds with a debit card. During the class period, James engaged in 15 transactions and Sarah engaged in 20. Accordingly, James’s loss is $30 and Sarah’s is $40. Assuming that the court would interpret the loss of funds as an “impact” on their “property,” under this bill the court would still not be permitted to certify this case as a class action because the extent of their losses is different: Sarah has lost $10 more than James and H.R. 1927 requires that the extent of their injury be the same.

According to Professor Lahav, courts could interpret the new language more broadly such that plaintiffs must only demonstrate that class members’ alleged injuries can be determined on a class-wide basis. But that interpretation is consistent with Rule 23’s requirements as they already exist, so the change in language would do nothing to change the law. In other words, according to Professor Lahav, the new law would be either catastrophic for class plaintiffs or wholly irrelevant, depending on how the language is interpreted by the courts.

Proponents of the bill, including the U.S. Chamber of Commerce, have asserted that the bill is necessary to put an end to overbroad, “no-injury” class actions – those that are brought by a named plaintiff who allegedly experienced a problem with a product or service and then seeks to represent a class of every other individual who purchased the product or paid for the service regardless of whether they experienced any problem with it. The Chamber argued that those types of cases are becoming increasingly prevalent and are a departure from the traditional view that such classes are not viable.

At the heart of this criticism lies the disquieting reality familiar to any employer who has faced class action litigation. For companies that cannot bear the risk and cost of defending against a large class action, certification is effectively a defeat on the merits because it forces companies to settle regardless of the merits of the claims. This is the entirely predictable outcome when companies are forced to choose between risking a devastating loss, or settling for a fixed amount, however unpalatable. Overbroad classes that include members who were never injured only ratchets up the pressure on defendants, while at the same time providing compensation to individual class members who would never be able to recover on an individual suit.

The bill was amended at the last minute to address concerns that it would unduly burden civil rights plaintiffs. Language was added to clarify that the new requirement applies only to classes “seeking monetary relief for personal injury or economic loss,” thereby exempting classes that seek only declaratory or injunctive relief. This amendment will be small comfort to plaintiff-side class action lawyers.

Implications For Employers

Making it out of committee is just the first step for this bill. While the Chamber lauded the House action, there is still a long road ahead. If it indeed becomes law, there is little doubt that it will have a substantial impact on class action litigation. Just how much impact will depend on how the new language is interpreted by the federal judiciary. But it will be hard for courts to ignore the fact that this bill is intended to make certification more difficult for certain types of class actions. This one is worth keeping an eye on.

Kudos For Seyfarth’s Annual Workplace Class Action Report

Posted in Class Action Litigation

trophy2By Gerald L. Maatman, Jr.

We are humbled and honored by the recent review of our Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. Here is what EPLiC said:

“The Report is the singular, definitive source of information, research, and in-depth analysis on employment-related class action litigation. Anyone who practices in this area, whether as an attorney, risk manager, underwriter, or broker, should not be without it. This is because the Report is the only publication of its kind in the United States.”

We are often asked – “How does it happen – how do you produce your Annual Workplace Class Action Litigation Report”?

The answer is pretty simple – we live, eat, and breathe workplace class action law 24/7.

Each and every morning we check the previous day’s filings of EEOC lawsuits and workplace class actions relative to employment discrimination, ERISA, and wage & hour claims. We do so on a national basis – both in federal courts and all 50 states. Then we check every ruling on Rule 23 certification and subsidiary issues throughout federal and state trial and appellate courts. This is also done on a national basis. We put this information in our customized database; we analyze and compare the rulings on class action issues and Rule 23 topics; and then we prepare an analysis of each decision.

Our class action practitioners – a group of over 170 Seyfarth lawyers – contribute to the process of building the database and analyzing decisional law on a daily basis.

We have being doing this on a 24/7 basis for 11 years, and publishing the Annual Workplace Class Action Litigation Report in the first week of January of each calendar year.

The result is a compendium of workplace class action law that is unique in its analysis, scope, and comprehensiveness.

We were particularly proud when EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation. I

Thanks EPLiC. We sincerely appreciate the kudos.

By way of a progress report, we are now 6 months into the year, and we have tracked and analyzed more class action decisions to this point in 2015 than in past years. On this pace, our 2016 Report will cover more decisions than ever before.

Illinois Appellate Court Finds Non-Injured Plaintiffs Lack Standing To Pursue Claims For Technical Violations Of State Consumer Protection Statutes

Posted in Class Action Litigation

laptopBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In Maglio v. Advocate Health and Hosps. Corp., 2015 IL App (2d) 140782-U (Ill. App. Ct. June 2, 2015), the Illinois Appellate Court was asked to decide whether individuals have standing to bring suit for violations of consumer data protection laws where their personal data, while compromised, has not been used to harm the individuals. The Illinois Appellate Court, in holding that such individuals do not have standing, established that, at least in Illinois, plaintiffs who suffer no concrete harm, but instead allege only technical statutory violations, cannot sue for violations of consumer and, presumably, workplace-related laws.

The decision of the Illinois Appellate Court could have implications beyond Illinois. As we previously reported here, the U.S. Supreme Court recently granted certiorari in Spokeo, Inc. v. Robins, No. 13-1339 (U.S. Apr. 27, 2015).  In the Spokeo matter, the U.S. Supreme Court will confront a nearly identical issue: Do individuals have standing to sue for violations of the Fair Credit Reporting Act (“FCRA”) even when they have not suffered any harm or injury? If the U.S. Supreme Court reasons in the same way that the Illinois Appellate Court did and answers this question “no,” the decision would likely discourage the current wave of consumer, workplace, and other class actions seeking millions in statutory damages.

Case Background

Advocate is a network of hospitals and doctors. Maglio, 2015 IL App (2d) 140782-U at 3.  On July 15, 2013, burglars stole four computers from Advocate’s administrative building that contained the personal information of about four million of Advocate’s patients. Id. Advocate notified these patients of the theft on August 23, 2013. Id.

Two sets of plaintiffs filed class actions against Advocate, claiming that Advocate violated two state consumer data protection laws by failing to maintain adequate procedures to protect the personal information of plaintiffs and putative class members and by failing to notify the plaintiffs and putative class about the breach in a timely matter. Id. at 4-5. The plaintiffs also sued Advocate on theories of negligence and invasion of privacy. Id.

Advocate moved to dismiss both class actions, arguing that the plaintiffs lacked standing because they had not suffered any injury as a result of their data being stolen. Id. at 5. Both trial courts dismissed the class actions. Id. at 5, 7. The trial courts found that “[t]he increased risk that plaintiffs will be identity theft victims at some indeterminate point in the future . . . . did not constitute an injury sufficient to confer standing,” and that the plaintiffs’ “allegations concerning anxiety and emotional distress . . . . were insufficient to establish standing, where they were not based on an imminent threat.” Id. at 6. The plaintiffs appealed.

The Appellate Court’s Decision

The Appellate Court pointed out that, under Illinois law, a plaintiff only has standing if he or she has suffered “some injury in fact to a legally cognizable interest.” Id. at 9. “[T]he claimed injury may be actual or threatened and it must be: (1) distinct and palpable; (2) fairly traceable to the defendant’s actions; and (3) substantially likely to be prevented or redressed by the grant of the requested relief.” Id. at 10 (emphasis in original).

The Appellate Court then considered whether the plaintiffs had suffered a “distinct and palpable” injury under Illinois law. It found, in light of Chicago Teachers Union, Local 1 v. Bd. of Educ., 189 Ill. 2d 200 (2000) – a case in which the Illinois Supreme Court held that physical education teachers did not have standing to challenge a statute allowing school districts to waive mandatory physical education requirements because the teachers were not “in immediate danger of sustaining a direct injury as a result of enforcement of the challenged statute that is distinct and palpable” – that the plaintiffs allegations of injury were speculative and that the plaintiffs thus did not have standing to bring suit. Id. at 10.

The Appellate Court reasoned that this result was supported by federal case law on standing. It observed that, “[i]n federal courts, to show standing under Article III of the Constitution, a plaintiff must establish the existence of an injury that is: (1) concrete, particularized, and actual or imminent; (2) fairly traceable to the challenged action; and (3) redressable by a favorable ruling.”  Id. at 11 (citing Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013)) (emphasis in original). To meet the first requirement, “an ‘allegation of future injury may suffice if the threatened injury is ‘certainly impending,’ or there is a ‘substantial risk’ that the harm will occur.” Id. (quoting Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014)) (emphasis in original). “Allegations of possible future injury are not sufficient,” nor is an “objectively-reasonable-likelihood” that the future injury will occur. Id. (quoting Clapper, 113 S. Ct. at 1147) (emphasis in original).

The Appellate Court went on to find that an increased risk of harm is not sufficient to confer standing. While agreeing that the Seventh Circuit appears to have held that an increased risk of harm can confer standing in Posciotta v. Old Nat’l Bank Corp., 499 F.3d 629 (7th Cir. 2007), it found that the later-decided Clapper case compelled rejection of this position. Id. at 11-12 (citing Strautins v. Trustwave Holdings, Inc., 27 F. Supp. 3d 871, 876 (N.D. Ill. 2014)) (additional citations omitted).

Finally, the Appellate Court found that alleged “appreciable emotional injury” did not confer standing on the plaintiffs. Id. at 14. Specifically, the Appellate Court found that, because the purported emotional injury did not flow from an “imminent, certainly impending, or substantial risk of harm,” it could not, on its own, confer standing. Id.

Implications For Employers

This case is welcome news for Illinois employers, who can use this case to defeat consumer and workplace class actions based on technical violations of state laws without any resulting harm to consumers or employees. Outside of Illinois, if the U.S. Supreme Court interprets federal standing requirements as the Illinois Appellate Court did, employers could be handed a significant win in the Spokeo matter. If Spokeo is decided as Maglio, employers nationally should have a powerful tool to achieve dismissal of class action lawsuits based on technical violations of both federal and state consumer and worker protection laws. Stay tuned.

 

Stock-Not So-Well: Officers Denied Class Certification Of Age Discrimination Claims (Again)

Posted in Class Certification

gavel on white backgroundBy William David and Laura J. Maechtlen

As we reported here to our loyal blog readers, in April 2014, the Ninth Circuit overturned an order denying class certification of age discrimination claims filed by a group of police officers in Stockwell v. City & Cnty. of San Francisco , 749 F.3d 1107 (9th Cir. 2014). On remand, the officers filed a third motion for class certification, and Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California recently issued an order, denying (again) the officers bid for certification.

Background

To recap, traditionally, the City filled its investigative positions by promoting police officers over the age of 40 who took and passed a “Q-35” exam. In 2005, the SFPD abandoned use of the Q-35 exam in favor of a new “Q-50” Sergeant’s exam. Following the change, the City began assigning investigative duties to newly promoted Sergeants who had taken the Q-50 exam, rather than to Assistant Inspectors promoted from the Q-35 list. Plaintiffs alleged that the practice of filling investigative positions from the Q-50 list had a substantial adverse impact on officers over the age of 40.

Throughout this case, plaintiffs asserted two causes of action for age discrimination — one under California’s Fair Employment and Housing Act (FEHA), the other under the federal Age Discrimination in Employment Act (ADEA). The FEHA claim was asserted by five named representative plaintiffs on behalf of a putative class, and the ADEA claim was asserted by the same five plaintiffs in their individual capacities, as well as by 25 additional individual plaintiffs. Plaintiffs sought class certification under Rule 23(b)(3) on their FEHA claim only.

On two occasions, the Court denied the plaintiffs’ bid for class certification. On the second occasion, the Court denied certification because it found that the plaintiffs did not satisfy the commonality requirement under Rule 23(a). As mentioned earlier, the Ninth Circuit overturned this decision, suggesting that the district court judge overreached by going too far in its analysis of the merits. Instead, the Ninth Circuit found that the commonality prong was met simply because “the officers are challenging a single policy they contend has adversely affected them”, and remanded the case to consider whether the putative class satisfied the requirements of Rule 23(b)(3) for class certification.

The Recent District Court Decision

On remand, the Court evaluated whether plaintiffs met the requirements under Rule 23(b)(3).  The Court also reviewed plaintiffs’ claim for class certification under Rule 23(a) with the Ninth’s Circuit’s guidance in mind. Plaintiffs also presented the Court with additional points for consideration.  In their third motion seeking class certification, the plaintiffs acknowledged that even if the City had never undertaken the allegedly discriminatory hiring practice (i.e., making promotions to investigative positions from the Q-50 list), only 55 individuals from the Q-35 list could have been promoted. In light of this information, plaintiffs made two alternative arguments.  First, they argued that the damages from the 55 “but-for” promotions should be aggregated and divided pro rata among the 133 putative members.  Second, plaintiffs argued that the Court could certify a class of only 55 individuals by using the 55 highest-ranked officers on the Q-35 list. The Court then reviewed plaintiffs’ third motion for class certification for the two proposed classes of 133 and 55 under Rules 23(a) and 23(b)(3).

The Court found that plaintiffs satisfied all certification requirements under Rule 23(a). However, plaintiffs also needed to satisfy the Rule 23(b)(3) requirements for class certification. Rule 23(b)(3) requires plaintiffs to establish that questions of law or fact common to the class predominate, and that a class action is superior to other methods available for adjudicating the controversy at issue. Upon review, the Court denied plaintiffs’ third motion for class certification because it found that the plaintiffs did not satisfy either the “predominance” or “superiority” requirements under Rule 23(b)(3) for either of the proposed classes.

            Predominance

To support their argument for certification of a liability-only class of 133, plaintiffs primarily relied on Houser v. Pritzker, 28 F.Supp. 3d 222 (S.D.N.Y. 2014), which certified a class for liability purposes, but not for damages purposes. Houser expressly found that a damages class cannot be certified under Rule 23(b)(3) and certified a liability-only class only because the plaintiffs moved for such a class under Rule 23(b)(2). In denying certification in Stockwell, the Court differentiated Houser by indicating that the plaintiffs sought certification under Rule 23(b)(3) and did not invoke Rule 23(b)(2) as a basis for their motion. Further, the Court reasoned that because plaintiffs admitted that only 55 of the 133 proposed class members would have been promoted in the “but-for” scenario, the majority of the class would be made up of individuals with no claim for relief.

Next, the Court analyzed the class of 55 under the predominance test which requires that plaintiffs show that the proposed class of 55 actually suffered a common injury and that damages from the injury are measurable on a class-wide basis through the use of a common methodology. Under the first prong of the test, the Court inquired whether the proposed class of 55 actually suffered a common injury– that is, whether each of them would have been promoted but-for the City’s allegedly discriminatory policy. The Court found that the entire proposed class of 55 did not suffer a common injury for two reasons. First, based on plaintiffs’ admission, not every one of the 55 highest-ranked Q-35 officers would have been promoted to the 55 investigative positions that were filled during the last class period. Instead, at best, the Q-35 evidence suggested only that most of the 55 highest-ranked individuals would have eventually received a promotion. Second, the Court held that plaintiffs provided no basis for determining the size of the “band” from which the 55 promotions would have been made.

Under the second prong of the test, the Court expressed concern that plaintiffs’ claims would require individualized proof at trial rather than proof common to the class because the class members may have differing amounts of damages. As the defendant pointed out, some class members have taken the Q-50 exam and some even received Q-50 promotions, which would limit their recovery in this case.

            Superiority

The Court held that plaintiffs did not satisfy the superiority analysis, either. Unlike the predominance prong, the Court did not separate its analysis of both proposed classes here because it found no material difference in the outcome of its analyses of the two classes. In making its ruling, the Court noted that the current complaint includes 5 representative plaintiffs and 25 additional individual named plaintiffs, all of whom assert an ADEA claim. It further noted that plaintiffs sought certification of a FEHA-only class, which even if granted, would leave 30 ADEA claims to be individually litigated, all based on the same facts that underlie the FEHA claim. The Court also found that the plaintiffs failed to provide any explanation as to how the individual claims would be litigated alongside the class claim.  Id. at 38.

Implications for Employers

Though the Court denied class certification on remand, the Ninth Circuit’s decision still stands. Employers can expect plaintiffs to continue to challenge the Wal-Mart decision by arguing that courts have abused their discretion by delving too far into the merits of Rule 23 requirements. The extent to which courts can consider the merits is likely to continue to take shape as district courts evaluate more cases involving Rule 23 class certifications following the Ninth Circuit’s ruling in Stockwell.

Chambers Selects Seyfarth As The Employment Law Practice Group Of The Year In 2015

Posted in Uncategorized

gold standardBy Gerald L. Maatman, Jr. and Lorie Almon

We wanted to share a new, significant development with our loyal blog readers — Seyfarth’s Labor & Employment Practice Group has just been recognized for excellence by one of the most prestigious awards in the legal profession.

The Seyfarth L&E practice group was named Labor & Employment Team of the Year at the 10th Annual Chambers USA Awards for Excellence ceremony in New York City on Tuesday evening. Our practice group was selected as the top-ranked firm in the United States in labor & employment law from a Winners Logo 2shortlist of highly respected firms that also included Jones Day, Littler, Morgan Lewis, and Proskauer.

The Chambers Awards honor the achievements of leading law firms and lawyers across the country for pre-eminence in key practice areas and notable achievements during the past 12 months, including outstanding work, impressive strategic growth, and excellence in client service. Chambers described Seyfarth as “the market-leading labor & employment practice in the country with an expertise and track-record of successful, cutting-edge defenses to employment discrimination class actions, bet-the-company EEOC lawsuits, and complex, high-stakes  wage & hour litigation.”

The Chambers report included client quotes about Seyfarth’s work that included: “Aside from being legal experts in their fields, the firm’s attorneys are incredibly responsive and provide pragmatic, value-add legal advice,” and “I’ve had several occasions when they’ve given advice contrary to that of other firms – in every instance the lawyers at Seyfarth have been correct.”

Chambers’ 150-member research team conducted and analyzed hundreds of interviews with corporate general counsel of companies, court rulings in cases defended, and submissions provided by the firms. The Chambers selection is a gold standard award for the firm, one that holds great credibility with client companies.

To all of our clients, loyal blog readers, and colleagues, thank you so much for your support and the honor bestowed on Seyfarth’s labor & employment practice group by Chambers.

chambers picture

The EEOC Secures Favorable Ruling Over Discovery Of The Government’s Employment Practices

Posted in EEOC Litigation

gavel on white backgroundBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. DolGenCorp, LLC d/b/a Dollar General, No. 13-CV-4307 (N.D. Ill. May 5, 2015), Judge Andrea R. Wood of the U.S. District Court for the Northern District of Illinois decided several discovery issues that have become increasingly common in EEOC-initiated disparate impact litigation.  In contrast with other recent decisions by other district courts, Judge Wood decided most of these issues in the EEOC’s favor.

That the EEOC’s internal personnel procedures can be discoverable and relevant in disparate impact cases was first established in 2011 in EEOC v. Kaplan Higher Educ. Corp., No. 10-CV-2882, 2011 WL 2115878, at *4 (N.D. Ohio May 27, 2011), in a ruling we discussed here. This was the first time a federal court had ever so held, and as a result, many employers have tried a similar tactic in EEOC lawsuits over the past few years.

However, in EEOC v. DolGenCorp., the Court ordered Dollar General to turn over the contact information of Dollar General’s job applicants, even though that information did not contain any information about the race or criminal background of the job applicants.  Also in contrast with a recent decision out of the U.S. District Court for the District of South Carolina we discussed here, the Court refused to compel the EEOC to turn over its internal background check policies, despite the fact that the EEOC is alleging that Dollar General’s background check policy creates disparate impact discrimination against African-Americans.  In a better ruling for employers, the Court agreed to examine the EEOC’s internal statistical analyses of Dollar General’s hiring decisions in camera to determine whether the analyses are protected by the deliberative process privilege or work product doctrine.

This case is important for employers because the EEOC will likely use this discovery ruling against employers when similar discovery disputes arise in the future.

Case Background

The EEOC filed suit against Dollar General, alleging that Dollar General’s use of criminal background checks for applicants is discriminatory because it has a disparate impact on African-American job applicants.  EEOC v. DolGenCorp, 13-CV-4307, at 1.  During the course of discovery, the EEOC asked Dollar General to turn over the “names, complete social security numbers, addresses, phone numbers, and complete dates of birth” of job applicants, arguing that such information would allow the EEOC to “link separate databases maintained by Dollar General and two of its vendors.”  Id. at 2.  Dollar General refused, arguing that the requested information was not relevant and was not needed for the EEOC to link the databases.  Id.

Also during discovery, Dollar General also sought discovery from the EEOC relative to its internal policies and procedures regarding its own use of criminal background checks in making employment decisions.  Id. at 8.  The EEOC refused to turn over the information, arguing that it was not relevant.  Id.  Dollar General also sought any statistical analyses the EEOC had regarding the purported disparate impact of Dollar General’s background check policy.  Id. at 6.  The EEOC refused to turn its analyses over, claiming that they were protected by the deliberative process privilege and work product doctrine.  Id.

Both parties moved to compel production of the requested documents.

The Court’s Decision

The Court first decided the EEOC’s motion to compel production of the personal information of Dollar General’s conditional hires.  The Court found that the requested information was discoverable because it was “calculated to lead to the discovery of admissible evidence” insofar as it would allow “the EEOC and its experts more effectively to analyze the statistical impact of Dollar General’s use of criminal background checks” by giving the EEOC the ability to link Dollar General’s databases.  Id. at 3.  While Dollar General argued that this linking could be done by other means, the Court found that the EEOC was not required to use those means when it could use the personal information to accomplish its goal.  Id. at 3 n.1.  The Court further found that Dollar General’s suggested linking method might not be “verifiably accurate,” further supporting the Court’s conclusion that the personal information requested by the EEOC was discoverable.  Id.

The Court next considered whether the EEOC’s policies and procedures on using background checks in its own hiring decisions were discoverable.  The Court pointed out that such information would only be discoverable if Dollar General could potentially use it to show that its use of criminal background checks was “job related for the position in question.”  Id. at 9 (emphasis in original).  While agreeing with Dollar General that a government agency’s employment policies can be discoverable in employment discrimination litigation, it found that such policies would not be relevant to Dollar General’s defenses in this case because Dollar General had not shown that “the functions performed by its employees are in any way comparable to those undertaken by the EEOC’s employees.”  Id.  The Court thus denied Dollar General’s motion to compel production of the EEOC’s background check policies and procedures.  Id.

The Court finally considered whether the EEOC’s statistical analyses of Dollar General’s background check policies were protected by either the deliberative process privilege or work product doctrine.  The Court pointed out that the EEOC argued that its statistical analyses were prepared “during the EEOC’s investigation to determine whether to issue a reasonable cause determination of discrimination,” and that they were thus protected by the deliberative process privilege.  Id. at 7.  The Court further pointed out that EEOC argued that its analyses were also protected by the work product doctrine because they were used by the EEOC’s attorneys in making the decision to sue Dollar General and because one of the analyses was provided to an EEOC investigator by an EEOC attorney.  Id. at 7-8.  The Court concluded that it could not determine whether the EEOC’s privilege and work product assertions were correct based on these arguments, and thus ordered the EEOC to produce the analyses to the Court for in camera review.  Id. at 8.

Implications For Employers

This case is significant for employers because it will undoubtedly be used by the EEOC when it seeks personal information that, while not relevant in itself, could arguably be used to find or create relevant evidence, and when the EEOC seeks to block production of its own hiring practices in disparate impact litigation.  Employers who are engaged in such litigation should anticipate this and try to preempt the EEOC’s use of this case by addressing the Court’s reasoning when responding to or bringing a similar motion to compel.  For example, employers seeking the EEOC’s background check policies should present arguments for why their employees perform similar functions as the EEOC’s employees.  In the meantime, we expect other courts to confront similar discovery disputes in EEOC-initiated disparate impact litigation and to provide further guidance to employers as they work through discovery in such cases.  Stay tuned.

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

SCOTUS Benchslaps The EEOC – An Analysis Of The Mach Mining v. EEOC Decision

Posted in EEOC Litigation

imagesThe U.S. Supreme Court recently ruled on Mach Mining v. EEOC, No. 13-1019. We have blogged extensively about this case previously –  here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here. To recap, this case was initially brought by the EEOC, in which it claimed that Mach Mining had a pattern or practice of not hiring women for mining-related positions, or, in the alternative, maintaining a neutral hiring policy that has a disparate impact on women. The company asserted a number of affirmative defenses, including that the EEOC failed to conciliate in good faith before initiating litigation. The EEOC argued that its conciliation activities not subject to judicial review.

The Supreme Court deliberated on whether the EEOC satisfied its statutory obligation to attempt conciliation before filing suit, and whether its conciliation efforts are judicially reviewable by courts. On April 29, 2015, the Supreme Court issued its long-awaited decision and concluded – in an unanimous opinion authored by Justice Kagan – that federal courts have the authority to review the EEOC’s conciliation efforts.

Our blog editor, Gerald L. Maatman, Jr. (tweet him @g_maatman) discusses the SCOTUS decision and his take on what to expect from the EEOC and implications for employers going forward with Colin O’Keefe from LXBN TV (@LXBN) and Rick Bell from Workforce (@Workforcenews) in the videos below.

5 Minutes of Management: Assessing Mach Mining v. EEOC With Rick Bell At Workforce

LXBN TV: Supreme Court Benchslaps EEOC with Mach Mining Decision With Colin O’Keefe At LXBN TV

For more information on Mach Mining v. EEOC, our readers should check out the following posts:

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Don’t forget to reserve your copy of the 2015 Annual Workplace Class Action Litigation Report and the EEOC-Initiated Litigation: Case Law Development In 2014 And Trends To Watch For In 2015 today!

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