Workplace Class Action Blog

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

Posted in Class Action Litigation

By Courtney K. Bohl and Laura J. Maechtlen

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

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

Background Of The Case

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

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

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

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

The Court’s Ruling

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

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

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

Implications For Employers

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

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

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

Posted in Class Certification

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

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

Case Background

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

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

The Decision Of The Court Of Appeals

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

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

Implications For Employers

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

 

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

Posted in EEOC Litigation

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

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

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

Case Background

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

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

The Court’s Decision

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

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

Implications For Employers

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

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

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

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

Posted in EEOC Litigation

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

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

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

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

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

Factual Background

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

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

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

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

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

The Court’s Opinion

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

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

Implications For Employers

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

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

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

Posted in EEOC Litigation

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

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

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

Background

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

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

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

The Decision

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

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

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

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

Implication For Employers

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

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

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

Posted in Settlement Issues

By Timothy F. Haley

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

The Decision

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

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

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

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

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

Implications For Employers

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

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

Posted in Class Certification

By Rebecca Bjork and Gerald L. Maatman, Jr.

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

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

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

Implications For Employers

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

Vote For Seyfarth’s Workplace Class Action Blog As ABA’s Top 100 Legal Blog – One Week Left To Vote!

Posted in Class Action Litigation

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

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

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

Click the link here to vote by August 8, 2014. Simply provide a short explanation of why you like this blog.

Hurry over to the polls, and cast your vote!

An About-Face By The Court Could Put Bass Pro Back On The Hook

Posted in EEOC Litigation

By Christopher J. DeGroff, Gerald L. Maatman, Jr., and Julie G. Yap

In the spirit of “it ain’t over ‘till it’s over,” this week’s decision in EEOC v. Bass Pro Outdoor World, LLC, et al., Case No. 11-CV-3425 (S.D. Tex. July 30, 2014), by Judge Keith Ellison of the U.S. District Court for Southern District of Texas is a stark about-face from the Court’s own ruling from earlier this year (which we blogged about previously here.) In the process, the Court makes several sweeping rulings concerning EEOC-initiated litigation procedure and addresses the very fabric of Title VII itself.  The sheer scope of the Court’s ruling makes it an important read for employers and practitioners alike. Of course, the case is not without controversy, especially given the Court’s tacit invitation to Bass Pro to appeal its ruling.

Background

Historically, the EEOC has used two avenues for suing employers for alleged discrimination under Title VII — Section 706 and Section 707 actions. Section 706 cases have traditionally been viewed as a “representative” actions, where the EEOC steps into the shoes of individual claimants and sues on their behalf (some of these actions are one-off, single-claimant actions, while others involve a group of similar claimants). Section 706 claimants can be awarded typical economic damages, as well as compensatory and punitive damages. Section 707, on the other hand, authorizes the EEOC to bring a systemic case alleging a universally applied “pattern or practice” of discrimination. Because a § 707 case is brought directly by the EEOC on its own behalf, it may only obtain equitable relief and damages, such as back pay. Pattern or practice cases follow a burden-shifting framework first articulated in Franks v. Bowman Transportation Company, Inc., 424 U.S. 747 (1976), and later refined in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). The Teamsters framework typically requires a showing by the EEOC that discrimination is the employer’s “standard operating procedure.” If the government meets that difficult burden of proof, it arguably creates a presumption that all individuals in the EEOC’s “class” were victims of discrimination, leaving it to the employer to rebut individual claims, often years after employment decisions were made. Obviously, a class-wide presumption of discrimination is deeply troubling for employers.

This all sets the stage for the case against Bass Pro. There, the EEOC has attempted to bring a  “hybrid” claim, where it seeks to use the Teamsters pattern or practice framework typically used under § 707, in a § 706 action (with the full boat of damages allowable under that section). Bass Pro, of course, vigorously opposed the EEOC’s play, insisting that to cut-and-paste the Teamsters model into § 706 would essentially make a § 707 case redundant and obsolete.

And the Court agreed with Bass Pro.  At least at first.

On May 31, 2012, the Court sided with Bass Pro, holding that “the EEOC cannot bring a hybrid pattern or practice claim that melds the respective frameworks of § 706 and § 707.” Id. at 29. The Court noted that § 707, unlike § 706, expressly authorized the use of a pattern-and-practice framework for determining claims and that the differences in remedies available under each section counseled in favor of applying two different frameworks. Id.

The Court’s About-Face

But the EEOC repeatedly asked the Court to revisit its decision, and eventually the Court relented and took another look.  Judge Ellison took his original ruling, and turned it on its head. Specifically, the Court held that the Teamsters analysis can apply to both § 706 and § 707 claims. Id. at 2. In doing so, the Court rejected the Defendants four primary arguments, though not without noting the strength of the Defendants’ positions:

  •  First, even though Section 707 expressly authorizes pattern-or-practice litigation (and Section 706 does not), the Court held that because Congress knew about the Teamsters framework, it must have implicitly included it in drafting Section 706, even though it expressly included it in Section 707.  Id. at 23-26.
  • Second, even though Congress authorized different damages under Sections 706 and 707, the Court concluded that this distinction did not limit the way in which the EEOC could prove facts to support any sort of relief, albeit equitable relief or monetary damages.  Id. at 26-28.
  • Third, the Court rejected Defendants’ position that applying a Teamsters framework in a jury trial on Section 706 claims — in contrast to § 707 proceedings where evidence is presented to a court — would create Seventh Amendment problems because a second jury may be required to re-examine facts already decided by a first jury.  The Court deferred the constitutional concerns for another day, noting that it “will carefully consider the Seventh Amendment implications . . . when the Court revisits a case management plan.”  Id. at 30.
  • Fourth, the Court declined to adopt the reasoning of analogous cases cited by Defendants, instead relying heavily on the Sixth Circuit’s decision in Serrano v. Cintas Corp.  The Court noted, however, that “lower courts have been riven by disagreement” and that “this is an area of law ripe for further illumination from the appellate courts.”  Id. at 2.

Finally, in the same order, the Court again addressed the EEOC’s conciliation obligations — an issue that has been a bone of contention in this case for years, as discussed here and here. Defendants moved for summary judgment, asserting that the EEOC had not sufficiently fulfilled its obligations to conciliate the Section 706 claim on behalf of individuals who had not been identified before filing suit. The Court rejected this argument, noting that the EEOC could conduct an adequate investigation, even where it does not know the specific identities of all those allegedly aggrieved. The decision appears to leave untouched the Court’s earlier ruling that the EEOC cannot sue on behalf of claimants that had not even applied at the time the parties conciliated the underlying claims.

Where does this leave Bass Pro? In a fairly stunning move, Judge Ellison acknowledged that he was “fully sensitive to the strength of the antithesis” of his decision. Id. at 2. Indeed, the Court went so far as to express that it “would look favorably upon a motion for certification” of an appeal of his decision.  Id. at 46. The Court has essentially invited Bass Pro to appeal his ruling to the U.S. Court of Appeals for the Fifth Circuit. Readers of this blog should stay tuned, as we suspect that is precisely what Bass Pro will do.

Implications For Employers

The Court’s decision in Bass Pro has sent reverberations throughout the employer community, and may further muddy the waters on some fundamental structural issues of EEOC-initiated litigation. Of course, this is just one court’s take on the Section 706/707 issue, and even the judge acknowledged that there was “ample support” for Bass Pro’s positions. Thus, this case has limited presidential value, but we expect the EEOC will attempt to expand the impact of the Bass Pro decision to other jurisdictions or even different legal theories. The EEOC v. Bass Pro decision essentially leaves employers with less clarity on the rules of the road in government-initiated litigation than ever before.

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

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

Posted in Uncategorized

By Gerald L. Maatman, Jr.

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

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

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

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

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

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

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