Workplace Class Action Blog

Groundhog Day In September – Another Repeat Of The EEOC Fiscal Year-End Lawsuit Filing Frenzy

Posted in EEOC Litigation

calendar-660670_640By Matthew J. Gagnon, Christopher DeGroff, and Gerald L. Maatman, Jr.

As the clock ticked down on the EEOC’s fiscal year (which ended on September 30), we are struck once again by the eerily consistent trend in the agency’s federal court filing trends. Employers around the country are seemingly trapped in the “Groundhog’s-day-like” loop that occurs each September. FY2015 was a blockbuster year in major EEOC-litigation decisions from the U.S. Supreme Court on down, leaving many areas of the law in flux. But one thing has remained constant: as we have reported for several years (see here, here, and here), the EEOC has once again rushed to file a blitz of federal court complaints just under the fiscal year wire.

Although we expect some additional filings will continue to filter in overnight, as the courts on the West Coast closed for the day, the raw numbers show that the EEOC filed 157 lawsuits in FY2015 (up from the 145 filed in FY2014). But most significantly, in the last 48 hours of its fiscal year alone, the EEOC launched 27 cases from coast to coast. Indeed, as the following graph depicts, the EEOC filed more complaints in the last quarter of FY2015 than the entire rest of the year put together.

Cases By Month

Where Was The EEOC’s Subject Matter Focus In FY2015?

We have once again crunched the numbers underlying the EEOC’s FY2015 filings to tease out where the EEOC is focusing its substantive enforcement efforts. We have analyzed the EEOC’s FY2015 filings according to the statutes pursued and the theories of discrimination that it has alleged. The following two charts show our breakdown of the EEOC’s filings in FY2015 by statute, and then a further breakdown of Title VII cases by discrimination theory.

Cases By Statute

Cases By Discrimination Type

We continue to see the same focus on sex/pregnancy discrimination and disability discrimination that we have seen in prior years. This year sex/pregnancy discrimination cases made up 54% of all Title VII filings, roughly on par with the 55% in FY2014. ADA cases made up 36% of all EEOC filings, which is also fairly consistent with previous years. (Disability cases made up 32% of all EEOC filings in FY2014, and 36% in FY2013.)

Suits alleging discrimination on the basis of race, however, are back on the upswing. Race discrimination cases were somewhat underrepresented last year as compared to earlier years. There were 15 race discrimination cases launched in FY2014, as compared with 17 in FY2013. This year, there were 24 lawsuits filed alleging race discrimination, which amounts to 26% of all Title VII filings.

Our analysis of the filings also confirms yet again that the likelihood of being tagged by the EEOC is not unlike the real estate market — it is all about location, location, location. Certain district offices emerge from the pack both in terms of the sheer number of case filings and the aggressiveness with which they pursue those cases. Here is this year’s breakdown by district office.

EEOC Map 2015

As with prior years, the Chicago office, led by regional attorney John Hendrickson, is on top with 26 filings in FY2015, the same number that it filed in FY2014. The Philadelphia and Phoenix offices also continued their historical trend of filing a large number of cases. Those offices racked up 18 and 16 filings in FY 2015, respectively, as compared to the 17 and 14 from FY2014. The Indianapolis and Charlotte offices rounded out the top five with 13 filings each. Last year, we noted that the New York office had a new regional attorney appointed in May 2014, and we wondered whether he would continue that office’s tradition of aggressive enforcement. If FY2015 is any indication, we now know the answer: the New York office was quite active in FY2015, filing 10 cases – two more than it filed in FY2014. The office earning the “biggest mover” honors is Los Angeles, jumping over 400% from only two cases in FY2014 to nine in FY2015 – still modest in comparison to some of the perennially active offices, but a trend to watch for our West Coast readers.

Old Questions Answered; New Questions Raised

We are now entering the final years of the EEOC’s 2012 Strategic Enforcement Plan (“SEP”) The SEP was issued by the EEOC in 2012 as the blueprint to guide its enforcement initiatives from 2012 through 2016. We closely followed the SEP through its stages of development, and, to a large extent, have relied on it as the lens through which we view trends and developments in the EEOC’s litigation activity. (See, e.g., here, herehere, and here.)

Over the past few years, we have seen how the EEOC’s enforcement activity has progressed and taken shape under the influence of the SEP. From the beginning, it was clear that the EEOC was making the prosecution of systemic cases a key priority. We have watched as the EEOC has continued to expend considerable resources litigating high-level, pattern or practice, policy, and class cases. And we have seen that with that increased focus on systemic cases has come an increased focus on the procedural mechanisms that the EEOC relies on to prosecute those cases – and that employers use to defend against them. In our view, FY2015 was a watershed year for determining the future direction of EEOC systemic cases. The Supreme Court has decided some key procedural and substantive issues underpinning the EEOC’s strategic initiatives of the past few years. And the EEOC has weighed in with its own guidance and interpretations concerning its own powers and the scope of Title VII and other anti-discrimination statutes.

To be sure, those developments have answered many of the open questions of the past few years. But even as those questions were answered, more questions arose to take their place. Here are just a few:

  • On April 29, 2015, the Supreme Court issued its long-awaited decision in Mach Mining, LLC v. EEOC, in which it considered whether the EEOC gets to operate beyond judicial review during its pre-suit conciliation phase. (In a word: “No!”) But that has only opened the door to many new questions about how the lower federal courts will apply that decision to decide employers’ challenges to the EEOC’s conciliation process. FY2016 will be a defining year in that respect.
  • Similarly, the Supreme Court unanimously rejected the EEOC’s pregnancy discrimination guidance in Young v. United Parcel Service, leaving employers to wonder how that guidance applies to their workplace and their employees.
  • The EEOC’s boundary-pushing theory of transgender discrimination – which we saw the first glimmers of at the very end of FY2014 – has become a full-blown trend. This rapidly solidifying theory of discrimination was aggressively pursued in FY2015, and we have every reason to expect that it will continue to develop in FY2016 and beyond.
  • The EEOC has repeatedly stated its intention to continue to litigate background check cases despite its initial string of embarrassing losses on this issue. FY2015 saw the EEOC gain ground in this area. Employers will need to wait to see whether those wins embolden the agency to pursue more of those types of cases in FY2016.
  • In a widely reported decision last year, the EEOC unsuccessfully tried to stop a company’s health and wellness plan in its tracks. That litigation position resulted in torrents of withering criticism from Congress and others. On April 16, 2015, the EEOC published a Notice of Proposed Rulemaking to clarify its position. But employers are still left scratching their heads because those proposed regulations appear to conflict with the implementing regulations of the Affordable Care Act.

Insight & Implications For Employers

The fact that we are asking these questions – and not others – is a direct result of how the EEOC has interpreted and pursued the enforcement objectives that it identified for itself in the 2012 Strategic Enforcement Plan. We have seen how the SEP has guided and shaped the EEOC’s enforcement initiatives, from an increased focus on systemic litigation, to the pursuit of boundary-pushing theories of discrimination. FY2016 is the last year covered by the 2012 SEP. Now that we are entering the final year, we are starting to see clearly how those enforcement priorities have materialized into actual litigation, and what they have meant in terms of the types of case that are filed and the industries affected. Those choices, in turn, have established new precedent, both in terms of the procedural aspects of EEOC-initiated litigation, and the substance, that will have a lasting effect for years to come.

This fiscal year has just ended. As we do every year, we will continue to analyze the data and filings from FY2015 to see what else we can learn about the EEOC’s priorities, and what employers should watch out for in FY2016 and beyond. Seyfarth Shaw LLP will publish that detailed analysis in a book at the end of the calendar year. We hope that you are looking forward to that publication as much as we are, and that you continue to find it a useful reference and guide to developments in EEOC litigation. Please stay tuned, loyal blog readers!

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

Employers Beware: Possible Changes May Be Coming To Class Action Rules

Posted in Class Action Litigation

blog post picutreBy Gerald L. Maatman, Jr.

Rule 23 governs class action procedure in federal courts, and interpretation of that rule by the U.S. Supreme Court and lower federal courts drives risks and liabilities that employers face in high-stakes litigation. Being on the receiving end of a workplace class action can have dire consequences for a business. Careers of key company officials as well as market share and stock valuation are often on the line.

Rule 23 case law also evolves in another, yet often overlooked manner – through changes to the rule via amendments effectuated by the Federal Advisory Committee on Civil Rules, the committee that evaluates and proposes changes to the Federal Rules of Civil Procedure for consideration by the U.S. Supreme Court. The Rule 23 Subcommittee to the Advisory Committee on Civil Rules is composed of federal judges who suggest possible amendments to the rule every few years. Though the work of the Rule 23 Subcommittee to the Advisory Committee on Civil Rules does not take place in the sunshine of open courtroom proceedings and judicial rulings, its recommendations manifest key litigation issues ruminating through the lower federal courts, and any ultimate changes to Rule 23 adopted by the U.S. Supreme Court can impact class certification dynamics as surely as new judicial decisions.

Recent Rule 23 Subcommittee Meeting

For the past year, the Rule 23 Subcommittee has analyzed possible amendments to the rule and class action procedures. On September 11, 2015, it convened a Conference in Dallas and brought together a small group of federal judges, 4 law professors, and 15 lawyers with very diverse perspectives on class actions. The lawyers came from a wide range of substantive practice areas and included some who act primarily as objectors to class settlements and advocates for consumers and civil rights groups.

I was privileged to be invited to participate in the Conference by the Rule 23 Subcommittee. I was the sole defense lawyer at the conference that represents employers in workplace class action litigation.

During the conference, the attendees were encouraged to provide feedback and analysis on a variety of proposals being considered by the Subcommittee.  All in all, it made for a lively day of discussion, as well as a window into key class action practice issues.

Rule 23 Issues And Possible Changes

To facilitate the conference, the Subcommittee prepared a series of “sketches” in the form of preliminary rule language that served as guideposts for discussion and analysis at the conference. The topics included settlement approval procedures and criteria; use of cy pres to dispose of residual class settlement funds; a possible new rule codifying the evolving law on the ascertainability of class members; standards for issue certification; the impact of Rule 68 offers on class litigation; and a potential new Rule 23(b) sub-section for settlement-only certification. Advocacy groups representing workers and consumers – The Impact Fund and Public Justice – have previously weighed in with the Committee on a number of these subjects (their comments can be found here and here and here.

Potential changes to Rule 23 relative to class definitions, standards for ascertainability, issue certification, and trial plans/manageability issues received significant attention during the Conference. The “debate” among invitees was lively, robust, and somewhat ideological depending on “which side of the v.” the invitee practices on in terms of the plaintiffs’ class action bar and consumer advocacy groups and the defense lawyers invited to the Conference.

Most participants acknowledged that not every perceived class certification problem can or should be addressed with a rule change. The federal appellate courts are continuing to sort out some questions (like the impact of Rule 68 offers in class actions – our latest post on that development is here)  and a consensus may emerge without the necessity of a rule change.

Next Steps

The Advisory Committee on Civil Rules is scheduled to meet again on November 5-6, 2015, in Salt Lake City, and the Subcommittee’s Rule 23 recommendations will be discussed then before ultimate submission of final recommendations to the U.S. Supreme Court. Any changes proposed by the Subcommittee also have to be published for public comment before going to the U.S. Supreme Court for approval.

This all comes against the backdrop of significant class action cases that the U.S. Supreme Court is facing in its upcoming term, and in particular Tyson Foods, Inc. v. Bouaphakeo.  The Tyson case presents high-stakes issues for workplace class actions. Tyson seeks reversal of a $5.8 million judgment in favor of meat processing employees who claimed to have worked off-the-clock. It could result in the Supreme Court’s first discussion of how the standards for certifying a Rule 23(b) class action apply to wage & hour (and other types of workplace) class actions.

Implications For Employers

Changes to Rule 23 carry the potential for far-reaching consequences for employers.

We will monitor those developments and report on issues of concern and significance for employers. Stay tuned!


Court Rejects The EEOC’s Request For A Free Pass From Discovery In Pattern Or Practice Lawsuit

Posted in EEOC Litigation

Magnifying_Glass_PhotoBy Gerald L. Maatman Jr. and Christina M. Janice

In an order recently issued in EEOC v J.R. Baker Farms, LLC, et al., Case No. 7:14-CV-136 (M.D. Ga. Sept. 9, 2015), Senior Judge Hugh Lawson  of the U.S. District Court for the Middle District of Georgia compelled the EEOC to produce in discovery anecdotal claims information for each known “class member” in a pattern or practice lawsuit (while not a class action governed by Rule 23, allegedly injured parties for whom the EEOC sues in a pattern or practice case are often referred to as “class members,” as in this order by Judge Lawson). The Court also denied the EEOC’s motions to quash or grant protective relief regarding the depositions of its lead investigator and a Rule 30(b)(6) witness.

The order is a case study for defense initiatives to take the fight to the EEOC in high-stakes workplace litigation.

Case Background

In August 2014 the EEOC brought a pattern or practice lawsuit under Title VII of the Civil Rights Act of 1964 against a Georgia-based farm J & R Baker Farms LLC and J & R Farms Partnership. The suit alleged that Defendants engaged in systemic race and national origin discrimination by providing greater opportunities for training and work hours to foreign-born workers, while involuntarily terminating or causing the constructive discharge of a disproportionate number of American and, specifically, African-American workers.

In discovery, Defendants sought to compel the EEOC to provide comprehensive responses to interrogatories requesting that the EEOC specify – for each class member – certain claim information, including whether each class member was a victim of an involuntary termination or constructive discharge. Id. The EEOC objected to the discovery requests as both exceeding the scope of discovery in a pattern or practice litigation largely to be proved through statistical data, and seeking privileged information. Id.

Defendants also issued a notice of deposition to the EEOC’s investigator, Jennifer Vanairsdale, who led the interviews of complaining and intervening parties and also participated in a prior conciliation. The EEOC filed a motion to quash or alternatively a motion for protective order to block the deposition, arguing the deliberative process privilege. Id. Relying on the recent decision of the Supreme Court in Mach Mining LLC v. EEOC, 135 S. Ct. 1645, 1655 (2015), the EEOC also objected to the deposition to the extent the examination would include an impermissible inquiry into the conciliation process. Id. The EEOC further argued that the deposition was superfluous because the EEOC already had produced its complete investigatory file. Id.

The EEOC filed an additional motion to quash or alternatively motion for protective order seeking to bar Defendants’ notice of the Rule 30(b)(6) deposition, objecting on the basis that EEOC personnel did not have knowledge of the claims underlying the lawsuit and the notice arguably called for the deposition of its attorneys. Id.

The Court’s Decision

In granting Defendants’ motion to compel, the Court observed that it was “clear” that the EEOC had collected pertinent information from only a “very small percentage of the alleged class,” including 60 potential “class members” out of a class approximated at 2,000 workers. Id. The Court also observed that the EEOC’s lawsuit presented a “hybrid scenario” in which some the Commission asserted that some class members suffered  involuntary discharges while others were victims of a constructive discharge, and that the EEOC had developed and mailed to each potential class member a “detailed questionnaire” in order to develop its case. Id. Finding that Defendants sought only information contained in the completed questionnaires, and not the documents themselves, the Court determined that Defendants’ interrogatories were within the scope of permissible discovery and were not unduly burdensome. Id.

The Court also ordered the EEOC to provide lists of all known class members, whether their claim constituted a constructive discharge or an involuntary termination, and the date of discharge or termination. Id. The Court then went further by ordering the EEOC to provide “detailed anecdotal information for a representative portion of the class members,” which the Court found to be “at least 250 individuals.” Id.

The Court also denied the EEOC’s motion to quash or grant protective relief regarding the deposition of EEOC lead investigator Vanairsdale, cautioning Defendants “…not to venture into the territory of the adequacy of the conciliation process.” Id. The Court went on to deny the EEOC’s motion to quash or grant protective relief regarding Defendants’ notice for the Rule 30(b)(6) deposition, suggesting that the EEOC should notify Defendants if it has no witness meeting the criteria of the notice. Id.

Implications for Employers   

As the EEOC continues to assert deliberative privilege and Mach Mining as shields protecting it from discovery and judicial scrutiny, the order of the Court in EEOC v J.R. Baker Farms, LLC. demonstrates the importance of diligently pursuing discovery of claims underlying EEOC pattern or practice lawsuits. The Court not only ordered discovery to proceed, albeit with limitations, but also ordered the EEOC to provide detailed anecdotal information for a “representative portion” of the alleged class, quantified as 250 out of 2,000. Employers can use this order to support seeking both meaningful discovery and judicial intervention to obtain information critical to the defense of these costly and time consuming lawsuits.

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

Too Little, Too Late: Eleventh Circuit Rejects Multiple Bites At The Apple For Class Claims

Posted in Class Action Litigation

clockBy Pamela Q. Devata and Courtney S. Stieber

Defendants can add a new decision to their arsenal for defending against multiple proposed class actions on the same claims. The Eleventh Circuit recently issued a decision in Ewing Industries Corporation v. Bob Wines Nursery, Inc., et al., No. 14-13842 (11th Cir. Aug. 3, 2015), holding that a proposed class action does not toll the statute of limitations for future proposed class actions, even where the class claims fail for reasons which have nothing to do with the proposed class.

Though not a workplace class action, the teaching of the cases are important for all employers.

Background Of The Case

On January 12, 2010, Aero Financial, Inc. (“Aero”) filed a proposed class action in Florida state court against a Florida nursery for sending unsolicited facsimile advertisements to a putative class in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)(C), which carries a four year statute of limitations. The complained of conduct allegedly occurred in December 2006, about three and a half years before the commencement of the action.

On June 25, 2013, the Florida state court granted summary judgment for Defendants, finding Aero lacked standing to bring the claim because the faxes were not sent directly to Aero.  Because Aero lacked standing, the claims were rejected solely due to inadequate class representation, and not any defect in the proposed class itself.

On August 2, 2013, Ewing Industries Corporation (“Ewing”) filed a similar class complaint against the same defendants in federal court for the same alleged violations. While the complaint acknowledged that the statute of limitations had passed, Ewing  argued that the claims were tolled during the pendency of Aero’s proposed class action. On June 26, 2014, the District Court granted defendants’ motion to strike the class allegations on the grounds that the claims were time-barred and denied Ewing’s motion for class certification. Ewing appealed to the Eleventh Circuit.

The Eleventh Circuit’s Opinion

The Eleventh Circuit affirmed the District Court’s ruling. It relied heavily on a twenty-year old ruling in Griffin v. Singletary, 17 F.3d 356 (11th Cir. 1994) (“Griffin II”), which established a no “piggy backing” rule to avoid class actions piggy backing “one after another in an attempt to find an adequate class representative.” Ewing, at 4. In Griffin II — an action consolidating appeals by the original proposed class representatives and other class members who subsequently filed and whose claims were denied as untimely — the Eleventh Circuit held that the statute of limitations was not tolled during the initial proposed class action, noting “the pendency of a previously filed class action does not toll the limitations period for additional class actions by putative members of the original asserted class.” Id. at 359.

The plaintiffs in Ewing attempted to distinguish Griffin II, arguing that the class in Griffin II had failed due to defects in the proposed class, while the proposed class in Ewing failed only as a result of an inadequate class representative. The Eleventh Circuit rejected this distinction, noting instead that Griffin II was likewise concerned with “the potential for multiple rounds of litigation as the class seeks an adequate class representative.” Ewing, at 8. Consequently, the Eleventh Circuit held that even where “the original purported class action was dismissed due to the inadequacy of the class representative rather than a defect in the class itself,” the statute of limitations is not tolled for the later class action.

The Eleventh Circuit’s decision provides new ammunition to defendants faced with multiple proposed class actions for the same alleged misconduct. Breaking from prior interpretations of Griffin II by other circuit courts — including the Seventh, Sixth and Ninth Circuits, which have each previously distinguished Griffin II, finding the precedent did not apply to circumstances where the class failed due to inadequate representation — the Eleventh Circuit has added an additional defense against plaintiffs attempting multiple bites at the apple.

Implications For Employers

The Ewing decision encourages defendants to thoroughly vet the adequacy of named plaintiffs, particularly for causes of action with short statutes of limitation that may expire before a class certification determination is issued on the merits. Meanwhile the ruling certainly bolsters defendants’ abilities to defend proposed class claims on statute of limitations grounds.  However, the decision may also make it more difficult for the parties to reach agreement on bifurcated discovery, absent a willingness to enter a broad tolling agreement.

Doing the “Two Step”: Court Grants Stage One Conditional Certification Of EPA Collective Action

Posted in Class Certification

200px-Ballroom_svgBy Gerald L. Maatman Jr. and Howard M. Wexler

In a case we previously blogged about here where the Court refused to grant Plaintiffs’ request for equitable tolling on their claims under the Equal Pay Act (“EPA”), Magistrate Judge Michael Dolinger recently issued a decision granting Plaintiffs’ motion for conditional certification of a collective action under the EPA to cover past/current female Sales Representatives who were employed between 2009 and 2014. The decision serves a primer as to the standard that courts in the Second Circuit utilize in deciding conditional certification motions brought under the Fair Labor Standards Act (and the EPA, which was enacted as an amendment to the FLSA).

Background To The Case

Eleven current/former female employees brought individual and class claims under the EPA and Title VII alleging disparate pay based on their gender in July of 2012. Id. at 1.  Ten of the Plaintiffs’ subsequently filed a motion for conditional certification of their EPA claims, as well as a proposed form of notice to be sent to potential opt-in plaintiffs. Id. 2

The Court’s Decision

The Court began by explaining the “two step method” adopted by the Second Circuit in deciding conditional certification motions under the FLSA (and EPA).  Id.  First, per that standard, Plaintiffs must make a “modest factual showing” that they and the potential opt-in plaintiffs, “together were victims of a common policy or plan that violated the law.”  Id. at 3.  If conditional certification is granted at the “first step,” then, following discovery, the Court – at the second step – will make a decision based “on a fuller record” as to whether the collective action may go forward by determining whether the plaintiffs who have opted-in are in fact “similarly situated” to the named plaintiffs.  Id.  The action may be decertified if the record reveals that the opt-in plaintiffs are not similarly situated to the named plaintiffs. Id.

In discussing the quantum of proof that must be established at “first step,” the Court noted that while the standard is a modest one, “unsupported assertions” of similarly situated employees are not enough. Id. at 4.

With respect to the pending motion, the Court reviewed certain pre-motion document production as well as an expert report offered by Plaintiffs, which allegedly demonstrated “a statistically significant difference between the pay of male and female Sales Representatives.” Id. at 4.  Plaintiffs also presented a list of comparators for each named Plaintiff, which they argues as proof of the pay disparity between male/female Sales Representatives.  Id.

Based on this evidence, the Court held that Plaintiffs met their modest burden.  The Court, however, was sure to note that it was neither resolving any factual disputes nor deciding any substantive issues.  To this end, the Court noted that “Plaintiffs’ own assertions of discrimination are conclusory…” Id. at 11.  However, the Court held that what Plaintiffs presented to the Court was enough to satisfy their stage one burden, even though Defendant came forward with evidence rebuking many of Plaintiffs’ assertions as such merit-based determinations are not appropriate at this juncture of the case.  Id. at 14-15.

Implication For Employers

Although the Court granted Plaintiffs’ motion for conditional certification, it is clear that even at this early juncture of the case, the record was developed through some limited discovery concerning the basis of Plaintiffs’ claims, as well as expert reports from both sides.  Given the increasing number of EPA lawsuits, Plaintiffs are increasingly “jumping the gun” and trying to obtain conditional certification before any discovery has even taken place.  This decision should be used as employers facing such “shot gun” motions to demonstrate why it is appropriate for courts to allow discovery, even limited discovery, to take place prior to an employer having to fend off a conditional certification motion as it will help crystalize the issues for the Court given that the requisite showing, while “modest” cannot be met by mere unsupported assertions.

Court Finds Against EEOC And Holds Charging Party Who Represented Herself As Being “Totally Disabled” Was Not Qualified To Perform Her Job

Posted in EEOC Litigation

thCAV77FL1By Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Vicksburg Healthcare LLC, et al., Case No. 13-CV-895 (S.D. Miss. Aug. 27, 2015), a case we have blogged about previously here and here, Judge Keith Starrett of the U.S. District Court for the Southern District of Mississippi recently rejected the EEOC’s lawsuit. He entered summary judgment in favor of the defendant and against the EEOC on its disability discrimination claims, finding that the charging party was not able to perform her job duties in light of the fact she described herself as “totally disabled” in making a disability insurance claim.

This case should be of interest to employers engaged in EEOC disability discrimination litigation because it provides a potential route to summary judgment when plaintiffs claim outside of litigation that they were not able to perform their job duties because of their disabilities.

Case Background

Beatrice Chambers (“Chambers”) was a nurse for Vicksburg Healthcare, LLC d/b/a River Region Medical Center (“River Region”). After taking medical leave for shoulder surgery, Chambers’ physician sent a note to River Region stating that she could return to duty as long as she was limited to “light work.” Because River Region concluded that Chambers could not perform the essential functions of her job when limited to “light work,” River Region terminated Chambers.

The day after Chambers was terminated, Chambers’ physician filled out a disability insurance claim form that stated that Chambers had a “temporary total disability.” Chambers reviewed this form and sent it to her insurer.

The EEOC filed suit on Chambers’ behalf, claiming she could perform the essential functions of her job while being limited to light duty and that her termination thus violated the ADA.

The Court’s Decision

The Court began by noting that “[t]o establish a prima facie discrimination claim under the ADA, a plaintiff must prove: (1) that he has a disability; (2) that he was qualified for the job; and (3) that he was subject to an adverse employment decision on account of his disability.” Vicksburg Healthcare, at 5. It then moved on to consider whether Chambers could prove that she was qualified to perform the essential functions of her job in light of the statement in her insurance claim that she was totally disabled. Id. at 6-7.

Judge Starrett noted that, in Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806 (1999), the U.S. Supreme Court held that “‘when faced with a plaintiff’s previous sworn statement asserting ‘total disability’ or the like, the court should require an explanation of any apparent inconsistency with the necessary elements of an ADA claim.’” Id. (quoting Cleveland, 526 U.S. at 806). The Court concluded that the EEOC would, in light of Cleveland, have to present an explanation that would allow the Court to conclude that Chambers could perform the essential functions of her job despite her insurance claim. Vicksburg Healthcare, at 7.

The Court then considered the EEOC’s explanation. According to the EEOC, the fact that Chambers applied for disability benefits after her termination explained the discrepancy between her insurance claim and her litigation position. Id. at 8. The Court disagreed, finding the explanation insufficient to explain the discrepancy. Id. at 8-9. The Court thus granted summary judgment to River Region, finding that the EEOC had not met its burden of producing sufficient evidence that Chambers was qualified to perform the essential functions of her job. Id.

Implications For Employers

Individuals who are terminated because they are unable to perform their jobs due to disability often seek disability benefits through private insurers or the Social Security Administration. In the course of seeking those benefits, these individuals frequently represent that they are totally disabled or are wholly unable to do their job due to their disability. Employers involved in ADA discrimination litigation should be on the lookout for such representations and, relying on Vicksburg Healthcare and the language of Cleveland, employers can use such representations to seek summary judgment.

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

Show Me the Money: The EEOC Secures Post-Trial Damages Victory In Religious Discrimination Case

Posted in EEOC Litigation

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

In EEOC v. Consol Energy, Inc. et. al., Case No. 1:13-CV-215 (S.D. W. Va. Aug. 21, 2015), a jury found in favor of the EEOC in its claim brought under Title VII that the employer denied an employee a religious accommodation involving an exemption from using a biometric hand scanner. Prior to trial the parties filed motions in limine concerning certain issues relating to damages, which was held in abeyance pending trial. Id. at 1. Given the EEOC’s trial verdict, the Court then decided the motions and what damages (other than compensatory which was awarded by the jury) should be awarded. Id. at 2. For good measure, the Court also entered a significant injunctive relief award.

The ruling ought to be required reading for any corporate counsel and human resources professional dealing with EEOC litigation issues.

The Court’s Decision On Damages

With respect to monetary damages, the parties disagreed concerning the level of back and front pay the Charging Party should receive. Namely, the EEOC argued that the pension benefits the Charging Party received should not be used as an off-set to any back or front pay award as they are collateral (not paid directly from and entirely by the employer, rather, by a third source). Id. at 3. The collateral source rule provides that compensation from a collateral source should be disregarded in assessing damages.  The employer argued that as the pension plan was 100% employer funded, it is a non-collateral source, and as such, should off-set any economic damages the Charging Party receives. Id. at 4.

The Court agreed with the EEOC and held that the pension benefits are a collateral source as “there has been no evidence that the fund is meant to be used as an indemnifying fund for potential litigation that is not in an employer’s favor” and “there has been no evidence that the applicable collective bargaining agreement contains a provision contemplating a set-off of benefits received in a case such as the one at hand.” Id. at 7.

The employer also argued that the Charging Party’s back and front pay award should be limited as he failed to adequately mitigate his damages. Id. at 11. Namely, that he failed to seek similar employment in the coal mining industry (he only attended a single job fair and didn’t seek similar employment as he did not want to lose his pension payments) and that he failed to apply for available openings in the coal industry that he was “likely aware.” Id. at 12.

The Court found that the Charging Party reasonably mitigated his damages given the limited available positions in the coal mining industry, his personal economic circumstances (he had a wife and two grandchildren to support at the time) and although he was skilled in certain industries, he was limited by his education for higher-paying jobs in his area as well as by his age. Id. at 18-20.

Given the Court’s ruling on damages, it awarded the Charging Party (before interest) $586,860.74 in economic damages. Id. at 39.

The Court’s Decision On Injunctive Relief

The EEOC also sought a company-wide permanent injunction that would dissolve after three years and prohibit the following:  any requirement or rule for the use of a biometric hand scanner will be in conformity with Title VII as long as absent undue hardship on the defendants; provide a complete exemption as an alternative for persons who need such an exemption as a reasonable accommodation; and provide training to all management personnel regarding Title VII within 60 days of the injunction being entered. Id. at 25. In support of its request, the EEOC argued that once a plaintiff prevails in a Title VII case, “injunctions are presumptively appropriate.” Id.

The Court agreed with the EEOC and issued the permanent injunction it sought as “defendants have not met their heavy burden of proving that future discrimination will not occur.” Id. at 33. Although the Court noted that the employer had taken steps to eradicate any discrimination, that is not enough to warrant a denial of the injunction. Id. at 33. Furthermore, the Court found the scope of the injunction reasonable as it targets religious discrimination based on precedential case law and the biometric hand scanning device – which was at issue in the underlying lawsuit. Id. at 35.

Implications for Employers

This decision serves as a good primer on the factors that courts will rely upon in determining what damages are available (and, even if available, should be reduced). Although the Court ruled in favor of the EEOC in this case, employer access to specific types of claimant information can make a critical difference in mounting key defenses, testing claimant credibility, and limiting available damages.

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

Seventh Circuit Provides Guidance On Fairness Of Class Action Settlement Agreements And Fee Awards

Posted in Settlement Issues

00-money-bagBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In In Re Southwest Airlines Voucher Litigation, Case No. 13-3264 (7th Cir. Aug. 20, 2015), the U.S. Court of Appeals for the Seventh Circuit upheld a fee award to class counsel in a class action that resulted in a “coupon settlement” – a settlement in which the defendant agrees to issue coupons to the class members.  In upholding the fee award, the Seventh Circuit also discussed the propriety of a number of settlement provisions and practices that are frequently at issue in class action settlement negotiations.  While not a workplace class action, this decision should be of interest to any employers who are involved in class action litigation because it provides guidance about how courts in the Seventh Circuit and beyond will view certain class action settlement provisions and practices.

Case Background

Southwest Airlines issued vouchers to its “Business Select” passengers that could be redeemed for one free in-flight alcoholic beverage.  Some passengers saved their beverage vouchers so they could use them on later flights.  In August 2010, Southwest Airlines announced that these vouchers could only be used on the flight covered by the “Business Select” ticket.  The plaintiffs filed a class action against Southwest Airlines for breach of contract, unjust enrichment, and violations of state consumer fraud laws.

The district court dismissed the unjust enrichment and consumer fraud claims as being preempted by the Airline Deregulation Act.  The parties subsequently agreed to settle the remaining breach of contract claim on a class-wide basis.  Under the terms of the settlement, Southwest Airlines agreed to provide all class members with a  voucher that was good for one free in-flight alcoholic beverage and further agreed to pay class counsel $3 million in attorneys’ fees.  The parties also agreed on a “clear-sailing” clause that provided that Southwest Airlines would not object to the attorneys’ fee request up to the agreed-to amount, and further agreed to a “kicker” clause, which provided that, if the district court were to reduce the fee award, the reduction would benefit Southwest Airlines rather than the class.  The parties also agreed on limited injunctive relief that would constrain how Southwest could issue vouchers in the future.

Several class members objected to the class settlement, focusing primarily on the fee award.  They argued that the settlement was a “coupon settlement” within the meaning of the Class Action Fairness Act (“CAFA”), and that therefore the fee award needed to be a percentage of the value of the vouchers actually redeemed by class members.  As such, they contended that class counsel sought inflated fees to the detriment of the class. They further argued that the settlement agreement was unfair because it contained the “clear-sailing” and “kicker” clauses, which manifested the lack of a fair and adequate settlement.

The district court agreed that the CAFA applied, but held that attorneys’ fees nonetheless could be calculated using the lodestar method of determining attorneys’ fees.  Under this method, fees are calculated by multiplying the hours spent on litigation by a reasonable hourly rate and then adjusting the award based on various factors, such as whether the work was taken on a contingency basis and the quality of the result.  Using this method, the district court awarded $1,649,118 in attorneys’ fees.  The district court further held that the “clear-sailing” and “kicker” clauses did not render the settlement agreement unfair because the class was receiving what amounted to the full value of their claims.  Both class counsel and several class members appealed that decision.

The Seventh Circuit’s Decision

The Seventh Circuit agreed with the district court that the CAFA applied because, in the Seventh Circuit, a voucher is considered to be a coupon.  Southwest Airlines, at 7.  It then considered whether the district court correctly concluded that the lodestar method nonetheless could be applied to determine the fee award.  Disagreeing with the Ninth Circuit’s decision in In Re HP Inkjet Printer Litigation, 716 F.3d 1173 (9th Cir. 2013), the Seventh Circuit concluded that attorneys’ fees could be calculated using the lodestar method in coupon settlements, while simultaneously warning district courts to use the method only after “evaluat[ing] critically the claims of success of a class receiving coupons.”  Id. at 16-17.

The Seventh Circuit further considered whether the settlement agreement was fair and reasonable in light of Southwest Airlines’ agreement to pay $3 million in attorneys’ fees and in light of the “clear-sailing” and “kicker” clauses.  Addressing the objecting class members’ argument that the fact Southwest Airlines was willing to pay $3 million in attorneys’ fees showed that there was additional money class counsel could have recovered on behalf of the class, the Seventh Circuit held that this argument, while potentially powerful in other cases, was of “little force” here because “the class members [would] receive essentially everything they could have hoped for.  As the district court put it, ‘the class members are getting back exactly what they had before, an unexpired drink voucher.’”  Id. at 18-20.

The Seventh Circuit also addressed the “clear-sailing” and “kicker” clauses.  It pointed out that, while it had “deep skepticism about such clauses, which seem to benefit only class counsel and can be signs of a sell-out,” it would not adopt a rule finding that such clauses per se bar settlement approval.  Id. at 21.  On the record before it, the Seventh Circuit concluded that the settlement agreement was fair and reasonable despite these clauses because the class members got everything they could have hoped for in the settlement.  Id.

Finally, the Seventh Circuit addressed class counsel’s argument that he should receive $3 million in fees because Southwest Airlines agreed to provide that amount.  It held that judicial deference to the provisions of class action settlements is not appropriate, and that the district court did not abuse its discretion in awarding class counsel $1.6 million in fees.  Id. at 22.

Implications For Employers

Employers who are involved in class action litigation should use this case for guidance on how courts in the Seventh Circuit and beyond will react to proposed class action settlement agreements.  Employers should be aware that including “clear-sailing” or “kicker” clauses in such agreements will cause district courts – and any appellate court on appeal if objectors attack the settlement – to more closely examine the fairness of the proposed settlement because such clauses may only benefit class counsel.  In the right circumstances, employers may also be able to use this case to argue that they are providing full relief to a class even when they are not providing monetary relief if they can plausibly argue that they are providing something else that remedies a past wrong.  Finally, employers who agree to provide nearly full relief to the class to settle a class action can use this case to overrule objections to the terms of a class action settlement.

Seventh Circuit Again Limits Application Of The Wal-Mart Ruling And Certifies Chicago Teachers’ Discrimination Claims

Posted in Class Certification

School desk with pencil and appleBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In Chicago Teachers Union, Local No. 1, American Federation of Teachers, AFL-CIO v. Bd. of Educ. of the City of Chicago, Case No. 14-2843 (7th Cir. Aug. 7, 2015), the U.S. Court of Appeals for the Seventh Circuit reversed a district court decision we discussed previously here and certified the discrimination claims of a class of African-American Chicago teachers. The case is significant for employers in that the Seventh Circuit, as it previously did in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012), a case we discussed here, again certified a class even though the final alleged discriminatory decisions were based on subjective decisions by multiple decision-makers. In addition, the Seventh Circuit further limited Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and held that, even where the legality of final employment decisions cannot be decided on a class-wide basis because of individualized exercise of discretion, there are circumstances where the legality of intermediate decisions preceding the final alleged unlawful employment decision can nonetheless be decided on a class-wide basis.

Background Of The Case

Under the Illinois School Code, schools may be subject to a “turnaround” if they have been on probation for at least one year and have failed to make adequate progress in correcting deficiencies. In a turnaround, the Board of Education takes control of the school and removes all staff. Affected teachers and para-professionals are either placed in a reassignment pool or a substitution pool with different rights to salary and other benefits depending on their tenure status and job position.

In 2011, the Board began considering which schools should be turned around in 2012. There were three steps in this process. The process started with an initial list of 226 schools eligible for turnaround because they had been on probation for one year and had failed to make adequate progress in correcting deficiencies. That list was reduced to 74 schools based on composite standardized test scores and graduation rates. Subsequently, in the third step, a qualitative “in-depth investigation process” began for the remaining 74 schools. This involved school visits, additional data collection, and meetings with a variety of school representatives and community members. No written policy applied to the final turnaround decision. Some of the factors considered were: the academic culture of the school, whether quality instruction was being provided, the quality of the leadership, and the academic trends of the school.

After reviewing the information, several Chicago Public Schools officials decided to recommend that 10 schools should be turned around. The Board subsequently agreed. The schools were located exclusively on the south and west sides of Chicago. The total percentage of African-American tenured teachers at the 10 schools selected for turnaround was approximately 51%, while the total percentage of African-American tenured teachers in the entire Chicago public school system was only 25%.

The Chicago Teachers Union and three African-American tenured teachers brought a class action lawsuit against the Chicago Board of Education alleging that the board’s decision to turn around the 10 Chicago public schools was racially discriminatory. Plaintiff sought to certify a class consisting of all African-American teachers or para-professionals in any school subjected to the 2012 turnarounds. The U.S. District Court for the Northern District of Illinois denied class certification, and the Plaintiffs appealed.

The Seventh Circuit’s Decision

The Seventh Circuit began its analysis by noting that one of the purposes of class action litigation is to avoid repeated litigation of the same issues. Chicago Teachers Union, at 8. Then pointing out that the question on appeal was whether there were common issues of law or fact common to the class, the Seventh Circuit addressed the Board’s argument that, given that the third step in the turnaround decision-making process was qualitative and subjective, there was a lack of commonality under Wal-Mart. Id. at 12.

The Seventh Circuit reasoned that the first flaw in this argument was that it skipped to the third step of the decision-making process. It pointed out that the first two steps of the process were “clearly-objective steps.” Id. at 13. The Seventh Circuit opined that these first two steps could have resulted in disparate impact discrimination against African-Americans regardless of what happened at the third step. Id. For example, it hypothesized that, after the first two steps, it could be the case that all schools remaining under consideration for turnaround had 100% African-American teaching staffs, and that the first two steps would thus have had a disparate impact on African-Americans regardless of the third step. Id. The Seventh Circuit therefore found that the question of whether the first two objective steps had a disparate impact could be decided on a class-wide basis. Id. at 14.

The Seventh Circuit concluded that this result followed from its prior decision in McReynolds.  In McReynolds, the Seventh Circuit certified the disparate impact claims of a class of African-Americans even though the employment decisions at issue were made at the discretion of 165 separate individuals because two company-wide policies allegedly caused the 165 individuals to exercise their discretion in a common way that caused discrimination. Id. at 15-16. In Chicago Teachers Union, the Seventh Circuit held that McReynolds demonstrated “that a company-wide practice is appropriate for class challenge even where some decisions in the chain of acts challenged as discriminatory can be exercised by local managers with discretion[,] at least where the class at issue is affected in a common manner[,]” and that under this principle certification of a class to determine the disparate impact of the first two steps of the turnaround decision-making process was appropriate. Id. at 17-18.

The Seventh Circuit went on to consider whether a class could be certified to determine whether the third step of the decision-making process was discriminatory. It found that, despite the fact the Board “describe[d] numerous factors considered in the various schools” during the third step, “they could be boiled down to” 10 factors, including factors like “school culture” and “parent and community input.” Id. at 19-20. It found the fact that there were 10 factors that made the “case worlds away from that in Wal-Mart where a court could have no way of knowing why each of the thousands of individual managers made distinct decisions.” Id. at 22. It did so even though there were cases where only one of the 10 factors was determinative in deciding to turnaround a school.  Id.

The Seventh Circuit also emphasized the fact that there was one decision-making body that was “of one mind, using one process.” Id. at 23. It distinguished this situation from Wal-Mart, where there were “myriad actions of individual managers.” Id. It concluded that “[d]ecisions by myriad low-level managers are different than decisions made by . . . few concentrated top-level managers,” and thus that certification of claims based on the third stage of the decision-making process was appropriate. Id. at 23-24.

The Seventh Circuit also reaffirmed McReynolds’ holding that a class should be certified where liability can be determined on a class-wide basis even though individual trials as to damages would be needed. Id. at 32-33.

Implications For Employers

Plaintiffs’ class action lawyers will likely cite to this case as further support in their McReynolds-based arguments for class certification. Of particular concern to employers might be the fact that the Seventh Circuit found that decisions based on consideration of 10 non-enumerated factors – including factors like “school culture” that are far from objectively measurable – are the type of decisions that can support certification of a discrimination class action.  Moreover, this case provides an additional tool that plaintiffs’ lawyers are likely to use to try to certify classes where employment decisions are made in multiple stages. They will likely try to certify classes even where final decisions were highly individualized and discretionary by arguing that earlier steps leading to the final decision were uniformly applied and discriminatory. Employers should be on the lookout for how successful these attempts are in future litigation.

Court Rejects The EEOC’s Novel Attempt To Impose Disparate Treatment Liability Without Any Injury

Posted in EEOC Litigation

scales-of-justice-tippedBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Autozone, Inc., Case No. 14-CV-5579 (N.D. Ill. Aug. 4, 2015), Judge Amy St. Eve of the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of the defendant and against the EEOC in a case in which the EEOC brought a disparate treatment discrimination suit on behalf of an individual who did not suffer an adverse employment action as a result of alleged discrimination.

This decision is an important victory for employers, as it represents a rejection of the EEOC’s novel theory that an employer can be liable for limiting, segregating, or classifying employees in a purportedly discriminatory way even absent any adverse employment action. In addition, the Court rejected the EEOC’s theory that an alleged discriminatory transfer is per se an adverse employment action.

Case Background

Kevin Stuckey (“Stuckey”), an African-American, was employed by AutoZone from January 2008 to July 2012. Id. at 1-2. During this period, Stuckey was transferred four times to different AutoZone locations. Id. In each such transfer, Stuckey was placed in the same position and had the same job duties and rate of pay that he had at his prior location. Id.

After Stuckey was transferred for the fourth time, Stuckey refused to report to his new location, and instead filed an EEOC charge on August 13, 2012, claiming he was transferred to the new location due to his race. Id. at 2. According to Stuckey, he was transferred out of the third AutoZone location where he worked because AutoZone’s district manager wanted to make the third location “predominantly Hispanic.” Id. at 2-3. The EEOC thereafter filed a disparate treatment suit on Stuckey’s behalf. AutoZone moved for summary judgment, arguing that, because Stuckey did not suffer an adverse employment action as a result of his transfer, he did not have a claim for disparate treatment discrimination.

The Court’s Decision

The Court began by pointing out that Title VII makes two types of racial discrimination unlawful. Id. at 4. First, under 42 U.S.C. § 2000e-2(a)(1), it is unlawful to refuse to hire, to discharge, or to discriminate against individuals with respect to compensation or other terms of employment on the basis of race. Id. Second, under 42 U.S.C. § 2000e-2(a)(2), it is unlawful “‘to limit, segregate, or classify . . . employees . . . in any way which would deprive . . . any individual of employment opportunities or otherwise adversely affect his status as an employee’” on the basis of race. Id. (quoting 42 U.S.C. § 2000e-2(a)(2)).

After pointing out that disparate treatment claims brought under Title VII generally require a plaintiff to prove that he or she suffered an adverse employment action, the Court addressed the EEOC’s argument that there is no need for an adverse employment action to maintain a claim under 42 U.S.C. § 2000e-2(a)(2). Id. at 4-5.

The Court first indicated that the Seventh Circuit has consistently required an adverse employment action in § 2000e-2(a)(2) cases. Id. at 5-6. It then addressed the EEOC’s argument that, in Kyles v. J.K. Guardian Sec. Serv., Inc., 222 F.3d 289 (7th Cir. 2000), the Seventh Circuit held that a defendant could be liable under  § 2000e-2(a)(2) even in the absence of an adverse employment action. In Kyles, the Seventh Circuit held that employment discrimination “testers” – individuals who, without an intent to accept an offer of employment, pose as job applicants in order to gather evidence of discriminatory hiring practices – had standing to sue under Title VII, even though they were not genuinely interested in the employment they were denied.  Id. at 6-7. The Court reasoned that the holding of Kyles was that a plaintiff has standing to bring suit for a statutory violation if he or she suffers an injury contemplated by the statute even if a plaintiff was not harmed apart from the statutory violation. Id. at 7. It thus held that Kyles did not support the EEOC’s position. The Court thereby concluded that an adverse employment action is required in § 2000e-2(a)(2) cases.

The Court also considered the EEOC’s argument that Stuckey had suffered an adverse employment action in that he “suffered dignitary harm and humiliation because AutoZone maintained a racially segregated workplace.” Id. at 9. While agreeing that a materially adverse employment action could include an action that subjected an employee to “an objectively humiliating or degrading workplace,” the Court could not find any reason that transfer to another AutoZone location “resulted in an objectively humiliating or degrading change in work conditions.” Id. at 9-10. The Court thus granted summary judgment to Autozone.

Implications For Employers

This case represents a significant win for employers. The Court rejected the EEOC’s attempt to create liability for disparate treatment discrimination under § 2000e-2(a)(2) of Title VII without any proof of an adverse employment action.  Moreover, the Court found that an allegedly discriminatory transfer does not automatically create an objectively humiliating or degrading workplace and thus is not necessarily an adverse employment action.  Despite this setback, we expect the EEOC to continue its attempts to create new Title VII liability using novel and untested theories.  Stay tuned.

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