Workplace Class Action Blog

Don’t Mess With Texas: EEOC’s Criminal Background Check Guidance Subject To Challenge

Posted in EEOC Litigation

texasBy Gerald L. Maatman, Jr., Pamela Q. Devata, Robert T. Szyba, and Ephraim J. Pierre

On June 27, 2016, the U.S. Court of Appeals for the Fifth Circuit handed a victory to the State of Texas in Texas v. EEOC , No. 14-10949 (5th Cir. June 27, 2016), by remanding back to the district court the case it dismissed in 2014.  Notably, Fifth Circuit held that the State of Texas has standing to challenge the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII” (“Guidance”), and that the Guidance was a final agency rule subject to court challenge.

As a quick recap, the EEOC issued the Guidance in April 2012, urging businesses to avoid blanket rules against hiring individuals with criminal convictions, reasoning that such a hiring check could violate Title VII if they create a disparate impact on particular races or national origins, and calling for a multi-factor individualized assessment of an applicant’s criminal history.

In an unprecedented and novel action, the State of Texas filed suit against the Commission in November, 2013 seeking to enjoin the enforcement of the Guidance (which Texas nicknamed the “Felon Hiring Rule”) because it conflicted with Texas law that prohibited hiring felons for certain jobs.  On August 20, 2014, Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas dismissed the case under Federal Rule 12(b)(1) (which we reported here), finding that Texas lacked standing to maintain its suit because no enforcement action had been taken against it pursuant to the Guidance.  Texas, however, was not about to be messed with, and promptly appealed to the Fifth Circuit in November, 2014 (reported here).

Fifth Circuit Reverses And Remands

The Fifth Circuit’s decision is a stunner.

It found that Texas, in fact, has standing to challenge the Guidance because it presented “(1) an actual or imminent injury that is concrete and particularized, (2) fairly traceable to the defendant’s conduct, and redressable by a judgment in [Texas’s] favor.”  Id. at 5.  The Fifth Circuit pointed out that Texas, in its capacity as an employer, was an “object” of the Guidance because the Guidance was directed at all employers, including state agencies.  As an object of the Guidance, Texas did not need an enforcement action to establish a concrete injury.  Instead, it could establish two concrete injuries for purposes of Article III.  First, Texas pointed to the increased regulatory burden on it as an employer because of the hiring policies that the Guidance required.  Id. at 7-8.  Thus, the increased regulatory burden itself constituted a concrete injury.  Second, the Guidance forced Texas to “undergo an analysis, agency by agency, regarding whether the certainty of EEOC investigations stemming from the [] Guidance’s standards overrides the State’s interest in not hiring felons for certain jobs.”  Thus, “being pressured to change state law” constituted a concrete injury.  Id. at 8-9.  Therefore, regardless that there was no enforcement action, the Fifth Circuit concluded that Texas was deemed to have standing to challenge the Guidance.

The Fifth Circuit next determined that the Guidance was “final agency action” that is subject to challenge, finding that the Guidance was the “consummation of the agency’s decision-making process” “from which legal consequences would flow.”  Id.The challenge before the Fifth Circuit focused on whether the Guidance had any “legal consequences.”  The Fifth Circuit pointed out an important distinction for its analysis: Texas challenged the Guidance itself, not the prospect of investigation.  Rejecting the EEOC’s argument that it has no ability to enforce the Guidance and instead can only do so by referring a case to the U.S. Attorney General for prosecution (as it would have to with respect to a public entity), the Fifth Circuit found that the “legal consequence” of the Guidance is that the EEOC has committed itself to applying the Guidance to “virtually all public and private employers.”  Id. The EEOC’s staff is therefore bound by it to follow a certain course of action, and the only way to avoid a potential prosecution is by abiding by one of the two “safe harbor” provisions contained in the Guidance.  If Texas (or any other employer) does not fall into one of these safe harbor provisions — that is, it does not do what the EEOC says — it risks an enforcement action and potential liability, and thus the Guidance has a “legal consequence,” making it an final agency action that can be challenged in court.  Id.

The Dissent

Circuit Judge Patrick E. Higginbotham disagreed with the majority of the Fifth Circuit panel.  First, he opined that the Guidance was a mere expression of the EEOC’s view of what the law requires, which the EEOC has no authority to enforce without the Attorney General taking the case.  Judge Higginbotham also opined that the issue identified by Texas was not ripe for adjudication.  Because Texas presented no factual dispute, in the judge’s view the dispute was theoretical since any potential adverse effect identified by Texas was too remote and abstract.  In additional to disagreeing with the majority’s constitutional analysis, Judge Higginbotham opined that the Guidance also lacked a legal consequence because, again, it was an expression of the EEOC’s view of the law, and thus had no specific consequence for any specific party.

Implications For Employers

This case continues to be flagged as “one to watch,” especially now that the case is remanded to the district court, where the State of Texas is anticipated to challenge the “Felon Hiring Rule” created by the EEOC’s Guidance.  Likewise, the EEOC is anticipated to continue its staunch defense, positioning the parties for future clashes.  The EEOC’s positions, which thus far have included admissions that the Guidance is not “legally binding” and does not carry any “legal consequences,” stand to provide employers with additional defenses when faced with the EEOC’s own investigations or prosecutions relating to criminal background checks.  As this case continues in the district court, we will be continue our coverage of this important case.  Stay tuned!

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

 

A Call For Harmony Between The EEOC And NLRB’s Rules Concerning Prevention And Investigation Of Workplace Harassment

Posted in EEOC Litigation

th7Y6M6GN7By Christopher J. DeGroff, Matthew Gagnon, Andrew R. Cockroft, and Gerald L. Maatman, Jr.,

Seyfarth Synopsis: The EEOC’s Select Task Force on the Study of Harassment in the Workplace offers insight into how employers’ harassment prevention policies can change for the better and, in furtherance of this desire for change, calls for interagency clarification between the EEOC and the NLRB on how employers may investigate harassment while requesting confidentiality, how they may promote general civility through workplace harassment policies, and how employers may prevent and respond to harassment through social media. 

On June 20, 2016, the Equal Employment Opportunity Commission’s Select Task Force on the Study of Harassment in the Workplace released its final report. The report can be found here.  The report found that workplace harassment remains a persistent problem and that harassment often goes unreported. The Task Force urged that harassment prevention training must change as much of the training done over the last 30 years, which focused simply on legal compliance, has not been effective as a prevention tool. It should be noted that in reaching this finding, the Task Force admits that there are deficiencies in almost all of the empirical studies done on the effectiveness of training standing alone. However, the Task Force concluded that the existing reliable studies, along with the practical and anecdotal evidence provided by employers and trainers agree that training cannot stand alone, but must be a part of a holistic effort to prevent harassment.

The Task Force recommended that new and different training approaches should be explored to empower “bystanders” to intervene when they witness harassing behavior and training ought to be geared towards promoting respect and civility in the workplace generally, without necessarily focusing on protected characteristics. Additionally, the report suggests that employers may need to reassess their harassment reporting systems and find ways to ensure that employees believe there will be a genuine effort to resolve harassment when it is reported. The report offers recommendations and helpful tools to aid in designing anti-harassment policies, training curricula, implementing complaint, reporting and investigation procedures, and assessing and responding to workplace “risk factors” for harassment.

Additionally, employers will be happy to know that the report emphasized that the EEOC and the National Labor Relations Board should work together to harmonize the relationship between federal EEO laws and the NLRA. Employers have often struggled to comply with both federal EEO laws and the NLRA in preventing and investigating workplace harassment. This is especially true when employers craft their harassment prevention policies with a focus on workplace civility. See Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012) (finding that “Courtesy” rules in the employee handbook violated the NLRA because an employee may reasonably believe that such rules prohibited statements of protest or criticism of the employer); First Transit, Inc., 360 NLRB No. 72 (2014) (same).

The same is true when employers ask for confidentiality in the course of investigating harassment, something promoted in the report but in conflict with several rulings of the NLRB finding that requests for confidentiality may burden protected concerted activity under the NLRA. Likewise, because of the ever increasing use of social media and its effect on the workplace, employers are often in the difficult position of trying to stop online harassment while simultaneously complying with decisions of the Board finding that employers’ social media policies restrict Section 7 rights if they sweep too broadly.

The report recognizes the tension such rulings may create and their potential to undermine genuine harassment prevention. As such, the report issues the following recommendations in the hopes of getting employers out of this difficult bind.

  • The EEOC and the Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the National Labor Relations Act and federal EEO statutes with regard to the permissible confidentiality of the workplace investigations, and the permissible scope of policies regulating workplace social media usage.
  • EEOC and the National Labor Relations Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the NLRA and federal EEO statutes with regard to permissible content of workplace “civility codes.”

We believe that this is a positive development from the EEOC, and we know that loyal blog readers will appreciate any efforts at interagency cooperation. We hope that these steps will bring clarity to how employers may effectively address workplace harassment while complying with all aspects of federal labor and employment law.

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

Taking The EEOC At Its Word: Court Relies On Agency’s Own Declaration In Granting Summary Judgment

Posted in EEOC Litigation

maryland state flagBy Gerald L. Maatman Jr. and Alex W. Karasik

Seyfarth Synopsis: Court granted EEOC’s partial motion for summary judgment on issue of pre-suit conciliation, finding that a declaration submitted by an EEOC official was sufficient evidence to show that the EEOC satisfied this obligation under Title VII.

In EEOC v. Dimensions Healthcare System, No. 15-2342 (D. Md. May 27, 2016), the Commission alleged that the defendant employer, Dimensions Healthcare System (“Dimensions”), unlawfully discriminated against one of its former employees on the basis of sex after it allegedly passed her over for a promotion due to her maternity leave. The EEOC filed two motions relative to the employer’s affirmative defense based on the Commission’s alleged failure to conciliate, including: (1) for partial summary judgment on the issue of pre-suit conciliation and (2) a motion to strike portions of Dimensions’ response in opposition to the EEOC’s summary judgment motion. On May 27, 2016, Judge Hazel of the U.S. District Court for the District of Maryland granted both of the EEOC’s motions.

The ruling, which heavily relied on the U.S. Supreme Court’s Mach Mining v. EEOC decision from 2015, held that a declaration submitted by an EEOC official was sufficient evidence that the government satisfied its Title VII pre-suit conciliation obligations. For employers seeking to challenge whether the EEOC met its Title VII pre-suit obligations, this ruling is instructive regarding the very low burden of proof the government needs to block the defense.

Case Background

The complainant was employed as a “Team Lead” by Dimensions, where she oversaw and managed several team members and performed various human resources tasks. Id. at 2. The complainant took maternity leave between January and April of 2014. On or around October 2014, she learned that Dimensions had promoted a less-experienced male employee, who was her subordinate, to a manager position. After learning of the promotion, the complainant met with a Dimensions executive. The executive told the complainant that while she was considered for the position, the male employee was selected instead because the complainant had been “on maternity leave for a while.” Id. Shortly thereafter, the complainant resigned and filed a charge of discrimination with the EEOC.

On May 11, the EEOC issued a reasonable cause determination to Dimensions. Id. at 2-3. According to the EEOC, the parties “engaged in communications” between May 11, 2015 and July 7, 2015 to provide Dimensions an opportunity to “remedy the discrimination practices described.” Id. at 3. Thereafter declaring the “communications” unsuccessful, the EEOC filed a lawsuit against Dimensions on August 10, 2015. In its answer to the complaint, Dimensions asserted the affirmative defense that the EEOC’s claims were barred to the extent it failed to properly conciliate, but later withdrew this defense.

While discovery was ongoing, the EEOC moved for partial summary judgement, arguing that Dimensions refused to stipulate that the EEOC fulfilled its pre-suit obligations. Id. at 4. Dimensions argued that there was a genuine dispute of material fact as to whether the EEOC failed to conciliate prior to filing its lawsuit. The EEOC moved to strike the specific allegations contained within Dimensions’ argument regarding the conciliation process. The Court granted the EEOC’s motion for partial summary judgment and its motion to strike.

The Decision

The Court began its analysis by discussing the U.S. Supreme Court’s decision in Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015), which examined whether and to what extent a federal district court can review the EEOC’s conciliation efforts. Id. at 5. Quoting Mach Mining, the Court noted that “[a] sworn affidavit from the EEOC stating that it has performed the [pre-suit] obligations . . . but that its efforts have failed will usually suffice.” Id. at 7. Further, the Court noted that “this ‘relatively barebones’ review is all that a court is permitted to inquire into when considering a failure-to-conciliate defense.” Id. Finally, discussing Mach Mining’s holding that the district court in that case erred by not striking from the record descriptions of the conciliation process, the Court opined that “[c]onfidentiality in the conciliation process is necessary.” Id.

Applied here, the Court noted that in support of its motion for partial summary judgment, the EEOC submitted the declaration of the Director of the Baltimore Field Office of the EEOC. Id. at 8. The declaration stated that after the EEOC determined there was reasonable cause to believe that Dimensions failed to promote the complainant because of her sex, it sent a letter of determination to Dimensions, and invited the employer to informally resolve the claim. Id. Further, the declaration explained that the EEOC “engaged in communications” with Dimensions and subsequently determined that further conciliation efforts would be unproductive. Id. at 8-9.

Granting the EEOC’s motion for partial summary judgment, the Court found that “[t]his evidence is sufficient for the EEOC to satisfy its burden to establish that it ‘endeavor[ed] to eliminate [the] alleged unlawful employment practice by informal methods’ prior to filing suit.” Id. at 9. Further, the “declaration establishes that the EEOC ‘tr[ied] to engage the employer in some form of discussion’ prior to filing suit.” Id. In opposition, Dimensions argued that the EEOC did not try in earnest to reach a resolution prior to litigating the case. Rejecting this argument, the Court held that “[t]hose details . . . are not only irrelevant to the scope of this Court’s review under Mach Mining, but also violate the confidentiality provision of Title VII.” Id. Accordingly, the Court granted the EEOC’s motion to strike the portions of Dimensions’ briefing regarding what was “said or done” during the conciliation process. Id.

Implications For Employers

This ruling is a very-pro Commission interpretation of the Mach Mining decision. It holds that merely mailing a demand letter and stating a settlement demand is enough. The practical realities of negotiation and give-and-take in the conciliation process are ignored. In this respect, it parts company with previous rulings on the Mach Mining issue that view the give-and-take of conciliation in a practical manner [see here].

As a result, this ruling gives employers an idea of how the EEOC will respond to challenges regarding whether it satisfied its Title VII pre-suit obligations: by submitting a declaration from one of its employees as to the mailing the determination, stating a settlement demand, and unilaterally deciding that further conciliation discussions are fruitless.

More importantly, this case illustrates how courts will likely find the EEOC’s declarations to be “sufficient evidence.” Id. Given that the EEOC only needs to submit a declaration to prove it satisfied its Title VII pre-suit obligations, employers can likely expect such conciliations to be far from fruitful if courts will now merely take the government at its word. Accordingly, employers engaged in future EEOC litigation likely have one less defense in their arsenal as a result of the Mach Mining decision.

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

U.S. Supreme Court Rejects The Government’s Position In The Largest EEOC Fee Sanction Case Ever

Posted in EEOC Litigation

supremecourtBy Gerald L. Maatman, Jr., Christina M. Janice, and Alex W. Karasik

Seyfarth Synopsis: In a landmark case for EEOC litigation involving fee sanctions, while employer CRST successfully argued that a ruling “on-the-merits” is not necessary to be a prevailing party, the SCOTUS remanded the case back down to the Eighth Circuit to determine whether a preclusive judgment existed and if the EEOC should be responsible to pay over $4.5 million in fees as a sanction.

Today, the U.S. Supreme Court issued its much anticipated ruling in EEOC v. CRST Van Expedited, Inc., unanimously ruling in favor of the employer. We have kept our blog readers up to date on this litigation as it wound through the lower courts and progressed at the Supreme Court.  Readers can find the previous posts here, here, here, here, here, here, here, here, here, here, here, and here.

At stake was the largest fee sanction award ever levied against the EEOC — nearly $4.7 million.  While the SCOTUS remanded the case back to the U.S. Court of Appeals for the Eighth Circuit for further proceedings, and therefore did not directly rule on the appropriateness of the record fee sanction, the Supreme Court nonetheless held that a favorable ruling on the merits is not a necessary predicate to find that a defendant is a “prevailing party” for purposes of recovering legal fees under Title VII.

Though a procedural ruling, EEOC v. CRST Van Expedited, Inc. is apt to have significant practical implications for the future of EEOC litigation.

Case Background

Finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on the employer and the judicial process, the U.S. District Court for the Northern District of Iowa granted CRST’s motion for an award of attorneys’ fees and costs, directing the EEOC to pay CRST a record fee sanction of nearly $4.7 million.  On the EEOC’s appeal, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that the District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations “[did] not constitute a ruling on the merits,” and that “[t]herefore, CRST is not a prevailing party as to these claims.”  Accordingly, the Eighth Circuit’s holding provided the EEOC some breathing room in terms of complying with its Title VII pre-suit obligations.

In its Supreme Court brief, CRST asserted two arguments as to why the Eighth Circuit’s decision was improper.  First, CRST argued that the Eighth Circuit’s rule that a prevailing defendant may recover fees only when a case is decided “on the merits” has no basis in the statute, conflicts with Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978), and severely undermines the policy of Section 706(k) of Title VII.  Second, CRST posited that even if the “on the merits” standard applied, CRST was successful on the merits when it defeated certain claims by demonstrating that the EEOC did not investigate, find reasonable cause for, or attempt to conciliate any of these claims as required by the statute.  In essence, CRST asserted that the EEOC never identified the allegedly injured workers prior to filing its lawsuit; instead, it filed suit and then fished for the identities of the claimants by using discovery.

In its response, having abandoned its original contention that only a dismissal “on the merits” may be the subject of an attorneys’ fee award, the EEOC argued that the District Court’s finding that the EEOC failed to satisfy Title VII’s administrative preconditions to filing a lawsuit did not authorize an award of attorneys’ fees under 42 U.S.C. 2000e-5(k), because such a dismissal does not make the defendant a “prevailing party.”  The EEOC further noted the District Court’s original dismissal was not “with prejudice,” and that the later agreed-upon “with prejudice” dismissal did not and could not modify the District Court’s earlier dismissal of the claims at issue here, which had already been affirmed by the Eighth Circuit.  Finally, citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1656 (2015), the EEOC also contended that the award of attorneys’ fees and costs in this litigation was improper because the Commission’s suit was not “frivolous, unreasonable, or groundless.”

During the oral arguments on March 29, 2016, the Supreme Court asked nearly twice as many questions to the EEOC’s counsel than the Justices did to CRST’s counsel.  The grilling of the government is best summarized with a notable quote from Chief Justice Roberts, who opined that conciliation without the threat of fees would not necessarily incentivize the EEOC to abide by Title VII obligations, “But if they were subject to fees because they ignored their duty to conciliate, it seems to me that might give them some incentive to get it right the first time.”  Our blog post on that argument is here.

The Supreme Court’s Ruling

In vacating the judgment of the Eighth Circuit, the Supreme Court ­unanimously held that a favorable ruling on the merits is not a necessary predicate to find that a defendant is a “prevailing party” in order to recover attorneys’ fees under Title VII.

After thoroughly detailing the intricate procedural history of this ten-year litigation, the Supreme Court initially noted the question of whether the petitioner was a prevailing party was the central issue presented by the decision of the Eighth Circuit.  Id. at 3.  The Supreme Court opined that “[c]ommon sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits . . . The defendant may prevail even if the court’s final judgment rejects the plaintiff ’s claim for a non-merits reason.”  Id. at 12.  The Supreme Court reasoned that this is so because while a plaintiff seeks a “material alteration in the legal relationship between the parties that is in its favor, a defendant seeks to prevent that material alteration.  Where the defendant succeeds and the plaintiff’s challenge is “rebuffed,” the defendant prevails.  Id.

Looking beyond the letter of Title VII to Congressional intent in enacting a fee shifting statutory scheme, the Supreme Court noted that “Congress must have intended that a defendant could recover fees expended in frivolous, unreasonable, or groundless litigation when the case is resolved in the defendant’s favor, whether on the merits or not. Imposing an on-the-merits requirement for a defendant to obtain prevailing party status would undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available.”  Id. at 13.  Accordingly, the Supreme Court held that neither the text of the fee-shifting statute nor the policy which underpins it counsels in favor of adopting the Eighth Circuit’s on-the-merits requirement.  Id. at 14.

Turning to the EEOC’s specific arguments, the Supreme Court observed that the EEOC had abandoned its defense of the Eighth Circuit’s requirement that a party prevail on the merits, and instead urged the Supreme Court to hold that a defendant must obtain a “preclusive” judgment in order to prevail.  Id.  The Supreme Court declined to decide this issue, and noted in an implied bench-slap how the EEOC “changed its argument between the certiorari and merits stages… [and] [a]s a result, the Commission may have forfeited the preclusion argument by not raising it earlier.”  Thus, the Supreme Court took issue with the EEOC’s strategy of advancing new arguments at the “11th hour,” and further noted that this tactic resulted in inadequate briefing on the issue.  Id. at 15.

In addition, the Supreme Court avoided consideration of the EEOC’s argument that even if CRST was the prevailing party, the EEOC should prevail upon the fee request because its claim that it had satisfied its pre-suit obligations was not frivolous, unreasonable, or groundless.  Noting that the Court of Appeals had not decided this “fact sensitive issue,” the Supreme Court declined to address it.  Id.

By remanding the case for further proceedings consistent with its holding that a party need not prevail “on the merits” to be eligible to recover attorney fees under Title VII, the Supreme Court left the door open for the EEOC to continue to defend against CRST’s fee petition. That being said, the record and the circumstances in the case suggest rough sledding for the EEOC on remand and the likelihood of having to face a record-setting fee sanction for its litigation tactics.

Implications For Employers

In the context of potential fee sanction motions brought by employers mired in improper EEOC litigation, the Supreme Court’s holding that a favorable ruling “on the merits” is not a necessary for an employer to seek an award of legal fees in EEOC-initiated Title VII litigation can certainly be beneficial to employers.

In practice, the SCOTUS decision may well have the significant practical effect of forcing the EEOC to “come clean” during conciliation and to provide fulsome information about the identities, number, and alleged injuries of claimants rather than threatening employers with the costs and adverse publicity of a systemic lawsuit. Clearly, a litigation strategy based on “fishing for claimants” after filing a lawsuit is a process that is likely to be deemed inconsistent with the proper utilization of taxpayer dollars for enforcing Title VII.

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

Spokeo v. Robins: The U.S. Supreme Court Finds Concrete Injury Is Required Under Article III But Remands Back To The Ninth Circuit

Posted in Class Action Litigation

supremecourtBy Gerald L. Maatman, Jr., Pamela Q. Devata, Robert T. Szyba, and Ephraim J. Pierre

Seyfarth Synopsis: In deciding Spokeo v. Robins, the U.S. Supreme Court reaffirmed that plaintiffs seeking to establish that they have standing to sue must show “an invasion of a legally protected interest” that is particularized and concrete — that is, the injury “must actually exist.” Bare procedural violations are not enough.

Today, the U.S. Supreme Court issued its long awaited decision in Spokeo, Inc. v. Robins, No. 13-1339 (U.S. 2016), which we have been watching closely for its possible dramatic implications on the future of workplace class action litigation.

In a 6 to 2 opinion authored by Justice Samuel A. Alito, Jr., the Supreme Court held that the Ninth Circuit’s injury-in-fact analysis under Article III was incomplete. According to the Supreme Court, of the two required elements of injury in fact, the Ninth Circuit addressed only “particularization,” but not “concreteness,” which requires a plaintiff to allege a “real” and not “abstract” injury. Nevertheless, the Supreme Court took no position on the correctness of the Ninth Circuit’s ultimate conclusion: whether Robins adequately alleged an injury in fact.

Based on its conclusion, the Supreme Court vacated the Ninth Circuit’s ruling and remanded for further consideration consistent with the Opinion. Justice Thomas concurred, while Justice Ginsburg (joined by Justice Sotomayor) dissented.

Given the stakes and the subject matter, the ruling is a “must read” for corporate counsel and all employers.

The Case’s Background

This ruling is likely to have substantial impact on class action litigation overall, as we have discussed in our prior posts here, here, and here.

In Spokeo, the issues focused on the Fair Credit Reporting Act (“FCRA”), which requires that consumer reporting agencies (“CRAs”) follow reasonable procedures to assure maximum possible accuracy of its consumer reports (15 U.S.C. § 1681e(b)), issue specific notices to providers and users of information (1681e(d)), and post toll-free phone numbers to allow consumers to request their consumer reports (1681b(e)).

The purported CRA in this case was Spokeo, Inc. (“Spokeo”), which operates a “people search engine” — it aggregates publicly available information about individuals from phone books, social networks, marketing surveys, real estate listings, business websites, and other sources, which it organizes into comprehensive, easy-to-read profiles. Notably, Spokeo specifically states that it “does not verify or evaluate each piece of data, and makes no warranties or guarantees about any of the information offered . . .,” and warns that the information is not to be used for any purpose addressed by the FCRA, such as determining eligibility for credit, insurance, employment, etc.

In July 2010, Plaintiff Thomas Robins filed a putative class action alleging that Spokeo violated the FCRA because it presented inaccurate information about him. He alleged that Spokeo reported that he had a greater level of education and more professional experience than he in fact had, that he was financially better off than he actually was, and that he was married (he was not) with children (he did not have any). But beyond identifying the inaccuracies, he did not allege any actual damages. Instead, he argued that Spokeo’s alleged FCRA violation was “willful” and therefore he sought statutory damages of between $100 and $1,000 for himself, as well as for each member of the purported nationwide class.

The district court dismissed the case, finding that “where no injury in fact is properly pled” a plaintiff does not have standing to sue. In February 2014, the U.S. Court of Appeals for the Ninth Circuit reversed, holding that the “violation of a statutory right is usually a sufficient injury in fact to confer standing” and that “a plaintiff can suffer a violation of the statutory right without suffering actual damages.”

In its petition for certiorari, Spokeo posed the following question to the Supreme Court: “Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.” Spokeo highlighted a circuit split, as the Fifth, Sixth, and Seventh Circuits previously lined up with the Ninth Circuit’s approach, while the Second, Third, and Fourth Circuits generally disagreed and required an actual, concrete injury.

After being granted certiorari, Spokeo argued that the Ninth Circuit’s holding was inconsistent with the Supreme Court’s precedents, the Constitution’s text and history, and principles of separation of powers. More specifically, Spokeo argued that Robin’s bare allegations of FCRA violations, without any accompanying concrete or particularized harm, were insufficient to establish an injury in fact, and thus failed to establish Article III standing.

Robins responded that the Supreme Court’s precedent established that Congress may create private rights of action to vindicate violations of statutory rights that are redressable through statutory damages.

The U.S. Solicitor General also weighed in, appearing as an amicus in support of Robins, and argued that the Supreme Court should focus on the specific alleged injury — the public dissemination of inaccurate personal information — and, specifically, the FCRA. The Government argued that the FCRA confers a legal right to avoid the dissemination of inaccurate personal information, which is sufficient to confer standing under Article III.

The Supreme Court’s Decision

Writing for the majority on the Supreme Court, Justice Alito held that Ninth Circuit failed to consider both aspects of the injury-in-fact requirement under Article III when analyzing Robin’s alleged injury, therefore its Article III standing analysis was incomplete. Slip. Op. at *8. The Supreme Court determined that to establish injury in fact under Article III, a plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is both “concrete and particularized.” Slip. Op. at *7. For an injury to be “particularized,” it “must affect the plaintiff in a personal and individual way.” Id. “Concreteness,” the Supreme Court found “is quite different from particularization.” Id. at *8. A concrete injury must “actually exist” and must be “real” and not “abstract.” Id.

The Supreme Court further stated that concreteness includes both easy to recognize tangible injuries as well as intangible injuries. Id. at 8-9. The Supreme Court instructed that when considering intangible injuries, “both history and the judgment of Congress play important roles.” Id. In particular, Congress may identify intangible harms which meet Article III’s minimum requirements. Id. Nevertheless, the Supreme Court cautioned that plaintiffs do not “automatically” meet the injury-in-fact requirement where the violation of a statutory right provides a private right of action. Id. Thus “Robins could not, for example, allege a bare procedural violation divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Id. The Supreme Court also added that the “risk of real harm” may also satisfy the concreteness requirement, where harms “may be difficult to prove or measure.” Id.

Viewing the FCRA in light of these principles, the Supreme Court recognized that while Congress “plainly sought to curb the dissemination of false information by adopting procedures designed to decrease that risk . . .[,] Robins cannot satisfy the demands of Article III by alleging a bare procedural violation.” For example, the Supreme Court noted it would be “difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.” Id. at * 11.

Justice Thomas concurred, reviewing the historical development of the law of standing and its application to public and private rights of action, finding the standing requirement a key component to separation of powers.

Justice Ginsburg, joined by Justice Sotomayor, largely agreed with the majority, but nevertheless dissented. She departed from the majority’s reasoning on the issue of concreteness, but based on the injury alleged, not on the fact that concrete harm wasn’t required. Id. at *3 (Ginsburg, J., dissenting). Under her analysis, Justice Ginsburg would have found that the nature of Robin’s injury was sufficiently concrete because of his allegation that the misinformation caused by Spokeo “could affect his fortune in the job market.” Id. at *3-5 (Ginsburg, J., dissenting).

Implications For Employers

Spokeo can be interpreted as a compromise – with some useful language and reasoning for employers to use in future cases. While the Supreme Court avoided a broader question of Congress’s ability to create private rights of action and other weighty separation of powers issues, it announced the proper analytic framework for assessing the injury-in-fact requirement under Article III. The Supreme Court provided some good news for employers, consumer reporting agencies, and other corporate defendants, as well as potential plaintiffs with respect to class action litigation under a variety of federal statutes, including the FCRA. In particular, the Supreme Court was clear that alleged injuries must be both particular and concrete, meaning that injuries must be “real” and not “abstract.” Thus, a mere procedural violation without any connection to concrete harm cannot satisfy the injury-in-fact requirement of Article III.

However, the Supreme Court may not have shut the door on lawsuits alleging intangible injuries based on violations of statutory rights. While the Supreme Court’s opinion today may discourage some consumer, workplace, and other types of class actions seeking millions in statutory damages, potential litigants will likely have to be more creative in how they frame alleged injuries tied to violations of statutory rights.

Spokeo also transcends the employment context, as the constitutional requirement of Article III applies in all civil litigation. Plaintiffs seeking to file lawsuits in other regulated areas, such as under ERISA, the Americans with Disabilities Act, as well as a host of other statutes are likewise affected by today’s decision. Without particularized, concrete injury, federal jurisdiction is beyond the reach of plaintiffs seeking statutory damages for technical violations.

Lesson On EEOC Language Litigation: Employer Denied Summary Judgment After Terminating Non-English Speaking Employees

Posted in EEOC Litigation

wiflagBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: Court denied employer’s motion for summary judgment in EEOC race and/or national origin discrimination case involving the termination of non-English speaking employees.

In EEOC v. Wisconsin Plastics, Inc., No. 14-C-663 (E.D. Wis. May 5, 2016), the EEOC brought an action alleging discrimination in the workplace based on race and/or national origin after Wisconsin Plastics, Inc. (“WPI”) laid off a number of non-English speaking Hmong and Hispanics employees.  WPI moved for summary judgment, arguing that neither the EEOC nor the individually aggrieved intervening Plaintiffs provided any evidence of prohibited discrimination.  Judge Griesbach of the U.S. District Court for the Eastern District of Wisconsin denied WPI’s motion, finding that the mass termination of mostly non-English speaking employees, coupled with the subsequent hiring of primarily English-speaking Caucasian employees, precluded the employer from obtaining summary judgment.

For employers considering terminating non-English speaking employees, this ruling illustrates that even where there is no direct evidence of discrimination, courts will consider other contextual factors when assessing potential illegal discrimination claims.

Case Background

Between October 2012 and January 2013, WPI laid off 38 of its 114 production operators.  Of the 114 production operators working for WPI as of September 2012, some 85, or about 75%, were of Asian descent and 6 (5%) were Hispanic.  Twenty-eight of the fired employees, or about 74%, were of Asian descent, and 3 of them (8%) were Hispanic.  The EEOC subsequently brought an action alleging discrimination in the workplace based on race and/or national origin.  Thereafter, the aggrieved individuals were granted permission to intervene in the Commission’s lawsuit.  Id. at 1.

WPI initially conceded the prima facie factors required to show a case of illegal discrimination, including (1) the employees were members of a protected class (Hispanic or Hmong); (2) the employees were terminated; and (3) the employees were living up to the employer’s expectations.  Specifically, WPI also conceded that the job of production operator may be performed adequately by people who do not speak or read English.  WPI asserted that its legitimate reason for selecting these individuals for termination, i.e., their inability to speak English, was the “but for” cause of their termination.  Id. at 3.  Despite conceding that English was not required to perform the job, WPI viewed the inability to speak English as a negative factor and used that factor to dictate the termination decision. Thus, WPI moved for summary judgement, among other motions.

The Court’s Decision

The Court denied WPI’s motion for summary judgement.  Initially, the Court discussed how “[i]n some cases the lack of English language proficiency might not be a legitimate, non-discriminatory reason for termination, but that is essentially a question of fact that will turn on the particular circumstances of every case.”  Id.  Further, the Court opined that all things being equal, an employee who speaks fluent English is more valuable than one who does not because that employee has the potential to provide added value to the corporation in other capacities such as productivity and morale.  In other words, although the specific job at issue might not have required English proficiency, an employer’s preference for such a proficiency could be a legitimate consideration.  Nonetheless, Judge Griesbach noted this “does not mean a court can conclude, as a matter of law, that the ability to speak English is necessarily a legitimate, non-discriminatory reason” to terminate an employee.  Id.

While WPI cited English speaking as its legitimate, non-discriminatory reason for the terminations, the Court found that WPI did not provide a substantial justification for that reason, which was not surprising given WPI’s concession that English was not required to perform the job adequately.  Id. at 3-4.  WPI argued that because an inability to speak English was not the legal analog to race or national origin, the EEOC’s case must be dismissed.  The Court rejected this argument, noting that while it is “true that language ability per se is not the legal equivalent to a protected class like race or national origin, language can sometimes serve as a proxy, or stalking horse, for discrimination against a protected class.”  Id. at 5.

The Court further noted that “[o]n top of the unusual fact that the employer’s stated reason is conceded to be irrelevant to the employees’ job performance, the Plaintiffs point to the fact that during the same period the employer was hiring people — 88 people, of whom 62 were Caucasian.”  Id.  The Court found that the net effect of the firings and hiring resulted in a flip of the ethnic profile of the workplace, where Asians, who had been a significant majority of the assembly workforce, now constituted only a plurality.  Accordingly, the Court held that “[a] reasonable jury, faced with this evidence, might draw the conclusion that the company was reconstituting itself by race or national origin — particularly if that jury heard that language ability (WPI’s stated reason) did not affect job performance.”  Id.

Further, the Court took issue with WPI providing different reasons for the terminations at various times.  Id. at 6.  Early on, WPI suggested that employee performance was the problem, citing flunked performance improvement plans.  Later, WPI told the EEOC that the firings were done for economic reasons, despite the fact that WPI hired a substantial number of new assemblers during the same period, which happened to be its best sales years.  Finally, many WPI witnesses denied that language was a factor in the terminations, but during litigation, WPI seized on language as the reason for all of the terminations.

Finally, the intervening Plaintiffs argued that the WPI’s admissions were tantamount to direct evidence of discrimination, since language is closely linked to national origin.  Id. at 8.  WPI argued that Plaintiffs did not identify any memo, document, or oral testimony that suggested the reason for the firings was discriminatory on the basis of race or national origin.  Id. at 6.  While the Court noted the truth in WPI’s assertion, it nonetheless opined “[s]eldom is there a ‘gotcha’ moment (at least in cases that get this far) where an employer admits that race (for example) was the true reason for the termination.  Human resources staff are savvy enough to avoid putting things like that in writing, and so the mere fact that there isn’t direct (or even circumstantial) evidence of discrimination is merely to say that this is a case, like most, that relies on the indirect method established in McDonnell Douglass.”  Id.  Accordingly, the Court denied WPI’s motion for summary judgment.  Id. at 9.

Implications For Employers

While this ruling does not necessarily preclude employers from preferring English speaking employees, it does illustrate how courts will look at other factual circumstances when assessing whether terminations of non-English speaking employees could have amounted to discrimination.  Employers considering terminating such employees must be cognizant that other factors, such as the national origin and/or race of employees hired after the terminations, will be considered.  Accordingly, employers should exercise caution and thoroughly evaluate surrounding circumstances when considering a large scale termination of non-English speaking employees.

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

 

Court Curtails Relief For Age Discrimination Collective Action Litigation

Posted in Class Action Litigation

thYGT7TBUXBy Gerald L. Maatman, Jr. and Reanne Swafford-Harris

Seyfarth Synopsis: Relief sought in age discrimination litigation is limited to the specific remedies described in the Age Discrimination in Employment Act (“ADEA”).

In a ruling on April 26, 2016, in K.H., et al., v. Secretary of The Department of Homeland Security, Case No. 15-CV-02740 (N.D. Cal. Apr. 26, 2016), Judge Jon S. Tigar of the U.S. District Court for the Northern District of California issued an order granting in part and denying in part the U.S. Department of Homeland Security’s Motion to Dismiss and/or Strike portions of Plaintiffs’ First Amended Complaint.  Judge Tigar dismissed with prejudice any claim of relief sought by Plaintiffs that was not a specific remedy under the ADEA.

Case Background

In 2015, the named Plaintiff, K.H., a 47-year-old Federal U.S. Air Marshal (“FAM”), filed the complaint on behalf of himself and an estimated 300 other air marshals, alleging that air marshals over the age of 40 were disproportionately affected when the Transportation Security Administration (“TSA”), an agency within the Department of Homeland Security (“DHS”), closed six field offices with the highest percentage of older FAMs.  The Plaintiffs were given as little as 10 days to decide whether they would accept job reassignments, some of which were cross-country.

The Plaintiffs’ complaint – brought for relief on a collective action basis – included claims for all relief possible under the ADEA, including lost wages, a bid for “any relief that this court deems appropriate,” and two paragraphs describing the disruption the closures had on the FAMs’ families and their health.  The DHS asked the Court to dismiss the suit on the basis that it was brought on a theory of disparate impact, which is not recognized under the ADEA.  It further asserted that K.H.’s damages claim failed because monetary relief under the ADEA is limited to lost wages and K.H. did not lose his job as a result of the field office closures.

The Ruling

In his ruling, Judge Tigar dismissed the lost wages claims of four air marshals without prejudice, and dismissed the FAMs’ bid for “any relief that this court deems appropriate” with prejudice.  Id. at 8. Judge Tigar determined that the air marshals could only pursue relief for: legal costs, reinstatement, promotion, and unpaid minimum wages or overtime, as those are the specific remedies described in the ADEA.  Accordingly, the Court also dismissed with prejudice, Plaintiffs’ compensatory damages claim for alleged age discrimination.  At the same time, however, Judge Tigar declined to dismiss the two paragraphs of the complaint describing the negative effects of the closures, agreeing with Plaintiffs that these paragraphs were not requesting compensation for the alleged effects.

Implications For Employers

Lay-offs and personnel decisions impacting large groups of workers are “custom-made” situations where collective actions may be brought by plaintiffs under the ADEA. The ruling in K.H., et al. is a win for employers in that it limits the claims of relief that plaintiffs may seek from employers in age discrimination suits.

No Knocking Necessary: Court Rules EEOC Can Enter Employer’s Premises Without Warrant Or Consent

Posted in EEOC Litigation

imagesBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: Court ordered enforcement of the EEOC’s subpoena and authorized the Commission to conduct an on-site investigation without the employer’s consent.

The EEOC has conducted on-site inspections of employers’ business premises for decades, federal courts rarely have explored the authority of the Commission to conduct a warrantless, non-consensual search of such private commercial property.

In EEOC v. Nucor Steel Gallatin, Inc., No. 15-CV-53 (E.D. Ky. Apr. 28, 2016), the EEOC sought a ruling authorizing it to enter the private commercial property of defendant employer Nucor Steel Gallatin, Inc. (“Gallatin”), without Gallatin’s consent and without an administrative warrant, to investigate a hiring discrimination claim.  Judge Van Tatenhove of the U.S. District Court of the Eastern District of Kentucky ordered enforcement of the EEOC’s subpoena and authorized the Commission to conduct the on-site investigation of Gallatin’s property.

This decision arms the EEOC with precedent that it may conduct on-site investigations regardless of whether an employer consents, something employers should consider when contemplating whether to deny the EEOC access to its business during an investigation.

Case Background

On October 1, 2014, a Gallatin applicant filed a charge of employment discrimination with the EEOC alleging that Gallatin unlawfully rescinded a job offer after discovering his record of disability.  He also suggested that in his initial interview, a representative of Gallatin told him the job — titled Hot Rolling Department Shift Manager — would require only “hands off” work.  Gallatin answered the charge by stating that it rescinded his offer only after the occupational doctor who conducted his post-offer, pre-employment medical examination determined that he could not safely perform the essential functions of the highly safety sensitive position, with or without reasonable accommodation.

After issuing a Request for Information, the EEOC eventually procured a list of the persons involved in the applicant’s recruiting and interview process.  In an email sent to Gallatin on March 5, 2015, the EEOC’s investigator informed the company that “the next step in my investigation is to conduct an on-site visit and conduct interviews with individuals that I think will have relevant information to aid in my investigation.”  Id. at 2.  In its April 16, 2015 response, Gallatin replied, “we simply do not feel that coming onsite is necessary []or relevant to your investigation.”  Id.  Instead, the company offered to provide the individuals requested for interviews at the EEOC office or an alternative offsite location.

Shortly thereafter, the EEOC issued a subpoena requiring Gallatin to permit on-site access “to conduct witness interviews, examine the facility, and obtain/request any additional information as it pertains to the Rolling Shift Manager position.”  Id.  On May 5, 2015, Gallatin filed a Petition to Revoke and/or Modify the Subpoena with the EEOC, claiming that on-site interviews were not relevant nor material, placed an unnecessary burden on the employer, and required a judicial warrant.  The EEOC denied Gallatin’s petition in June 2015, directing Gallatin to permit an on-site examination of its facility within ten days of the receipt of the Determination.  In a letter sent to the EEOC a few days later, Gallatin informed the EEOC that it would not consent to an on-site visit “without a court order and/or valid warrant.”  Id. at 3.

The EEOC then petitioned the Court to order Gallatin to show cause why it should not be compelled to comply with the subpoena issued upon it.  The Court ordered the parties to convene for an oral argument, which was held on January 6, 2016, and thereafter directed the parties to file additional briefing.  In its April 28, 2016 ruling, the Court ordered (1) Gallatin shall permit an investigator of the EEOC to perform an on-site inspection of Gallatin’s business premises; and (2) the investigator shall limit his or her inspection to evidence directly related to the Hot Rolling Department Shift Manager position and its associated responsibilities.  Id. at 17.

The Decision

Before reaching the warrant issue, the Court addressed the threshold question raised by Gallatin.  Although Gallatin only objected to the EEOC’s warrantless entry in its initial briefing and at oral argument, the company tangentially claimed that the EEOC simply does not have the statutory authority to conduct any on-site examination of commercial property, regardless of whether an owner consents to that entry.  Id. at 3.  The Court rejected this argument, noting that Gallatin’s position failed to account for the EEOC’s long and untroubled history of conducting myriad on-site investigations of private commercial property throughout the United States.  Id. at 3-4.

Further, the Court addressed Gallatin’s argument that, regardless of whether the EEOC has the statutory right to enter private commercial property, that entry cannot take place without an administrative warrant.  To address this argument, the Court noted its present task was to (1) consider the “probable cause” standard for issuing an administrative warrant, and (2) compare that standard to the pre-compliance review procedures embedded in the EEOC’s enabling statute and implementing regulations.  Id. at 8.  The Court noted that to be consistent with the Fourth Amendment, the EEOC’s statute and implementing regulations must permit the Court to ensure that (1) the EEOC’s request for access flows from specific evidence of an existing violation, and (2) the investigator’s search bears an appropriate relationship to the violation alleged in the complaint.  Id. at 8-9 (quotations omitted).  Further, when the EEOC seeks enforcement of a subpoena, reviewing courts must determine whether the subpoena is within the agency’s authority, the agency has satisfied its own due process requirements, compliance would be unduly burdensome, and the information sought is relevant to the charges filed.  Id. at 10 (quotations omitted).  Ordering Gallatin to submit to the on-site investigation, the Court found that “[j]ust as the warrant process requires courts to identify ‘specific evidence of an existing violation’ and order only those inspections that bear ‘an appropriate relationship to the violation,’ the Commission’s statutory and regulatory schemes permit only those inspections that are ‘relevant to the charges filed’ and ‘not unduly burdensome.’”  Id. at 10-11.

Having concluded that a formal judicial warrant was not required here, the Court then addressed Gallatin’s five specific challenges to the EEOC’s subpoena.  First, the Court rejected Gallatin’s argument that it provided the EEOC more than sufficient information concerning the allegations, and agreed with the EEOC’s position that it cannot merely accept employer declarations as true without conducting appropriate investigations.  Id. at 12.  Second, the Court dismissed Gallatin’s argument that an on-site investigation would be “irrelevant,” noting that an on-site visit would aid in determining (1) the amount of time spent performing the function, (2) the consequences of not requiring performance of the function, and (3) the current work experience of incumbents in similar jobs.

Third, Gallatin claimed the EEOC’s subpoena was overbroad given that it did not state with any specificity what was being sought.  The Court found that the subpoena’s nebulous request to ‘examine the facility,’ without any limitation to those areas of the facility that specifically relate to the job functions in dispute, was overbroad; at the same time, the Court held that Gallatin’s related claim that the subpoena should “state with . . . specificity what is being sought” was unpersuasive.  Id. at 13.  In view of these two competing considerations, the Court ordered that the EEOC’s investigator may only inspect those areas of the facility that he or she reasonably believes to be relevant to the charges filed.  Id. at 14.  Specifically, the Court directed the investigator to focus his or her inquiry on those items of evidence directly relevant to the position at issue, noting that “[a]lthough the investigator cannot anticipate with particularity every piece of relevant information that he or she may uncover at the facility, this uncertainty does not provide the Commission with an unmitigated license to roam the property in search of relevant information.”  Id.

Fourth, Gallatin asserted that the amount of time necessary for the investigator to gain a reliable understanding of the essential functions of the shift manager position would be unduly burdensome and disruptive to business operations.  The Court rejected this argument, finding that Gallatin did not persuasively explain how the presence of an investigator at the facility would actually impose an undue burden.  Id.  Finally, Gallatin claimed that permitting the EEOC to enter the facility would raise safety concerns related to the inherent dangers of the work environment and industrial equipment machinery.  Id. at 16.  The Court dismissed this argument, noting that the EEOC is well-equipped to take reasonable precautions before inspecting potentially dangerous worksites.  Id. at 16-17.

Accordingly, the Court ordered (1) Gallatin shall permit an investigator of the EEOC to perform an on-site inspection of Gallatin’s business premises; and (2) the investigator shall limit his or her inspection to evidence directly related to the Hot Rolling Department Shift Manager position and its associated responsibilities, and that “[t]he investigator may not generally or indiscriminately search the facility for evidence relevant to [the] claims, and must only inspect those areas that he or she reasonably believes will provide evidence relevant to the position.”  Id. at 17.

Implications For Employers

Most employers are well aware that the EEOC routinely conducts on-site investigations.  For employers who may have considered challenging that governmental authority, this ruling is instructive in demonstrating how courts will likely enforce EEOC subpoenas to conduct such investigations.  Further, if the EEOC ever did have any hesitance about conducting an on-site investigation without an employer’s consent, this ruling likely alleviates any such concern.  Accordingly, employers should choose their battles carefully when thinking about opposing an EEOC on-site investigation.

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

History Repeats Itself: The EEOC Scores Big Judgment Against Absent Party

Posted in EEOC Litigation

th7OX71VIZBy Julie G. Yap and Alison H. Hong

Seyfarth Synopsis: The EEOC obtains a multi-million dollar default judgment against an out-of-business company in a case alleging “human trafficking” discrimination claims.

In a ruling on April 26, 2016, in EEOC v. Global Horizons, Inc., Case No. 2:11-CV-03045 (E.D. Wash. Apr. 26, 2016), Judge Edward F. Shea of the U.S. District Court for the Eastern District of Washington entered a default judgment of over $7.6 million in the EEOC’s favor against an essentially defunct business, Global Horizons, Inc.  This multi-million dollar judgment harkens back to the $8.7 million default judgment entered in favor of the EEOC against this same defendant (and another out-of-business defendant) less than two years ago in the U.S. District Court for the District of Hawaii, the agency’s biggest judgment in 2014.  This Judgment – most likely symbolic, as it is apt to be uncollectable – finally closes the door on five years of litigation arising from the EEOC’s purported pursuit of “human trafficking” discrimination claims.

Background To The Case

In 2011, the EEOC brought claims against Defendant Global Horizons, Inc. (“Global Horizons”), among others, in federal district courts in both Hawaii and Washington, alleging a pattern or practice of unlawful discriminatory employment practices against foreign migrant workers based on their Asian race and/or Thai national original.  The EEOC also asserted claims for harassment and hostile work environment, retaliation, and constructive discharge.  The Asian and Thai workers were employed by Global Horizons under the U.S. Department of Labor H2‑A guest worker program to provide farm labor at various locations in California, Hawaii, and Washington.  The Commission had additionally sued other companies that had contracted with Global Horizons to supply workers to their farms and operations.  Subsequent to the litigation, Global Horizons went out of business.

By 2014, the EEOC litigation initiated in Hawaii had largely resolved, with most of the companies securing dismissals of the EEOC’s claims against them or reaching resolutions.  In December 2014, the EEOC obtained default judgment against Global Horizons and another out-of-business defendant in the amount of $8.7 million. It was the largest judgment obtained by the Commission that year.

In early 2015, in the U.S. District Court for the Eastern District of Washington, the EEOC sought default judgment against Global Horizons.  The other companies the Commission had sued in Washington obtained dismissal of the EEOC’s claims against them and were awarded attorneys’ fees and costs just shy of $1 million against the EEOC.

However, with respect to its claims against Global Horizons, the EEOC sought $300,000 for both compensatory and punitive damages for 66 individual claimants, submitting a 152 page supplemental table in support of its request as well as a number of declarations from the individual claimants.  In total, the EEOC sought entry of default judgment against Global Horizons in the amount of $19.8 million.  Based on those submission, the Court entered findings of fact and conclusions of law relative to the EEOC’s claims against Global Horizons on April 26, 2016 in a 30-page order.

The Court’s Ruling

The Court rejected the EEOC’s requests and entered an award of compensatory damages of $5,000 per month worked for Global Horizons to every claimant based on the Defendant’s default and uncontested liability for the pattern or practice of discrimination, a hostile work environment, and retaliation relative to the claimants that Global Horizons brought to work in Washington state.  In addition to compensatory damages, the Court also awarded each claimant $15,000 per month in punitive damages.  The Court further concluded that claimants who were detained by police for almost an entire day were each entitled to additional compensatory damages in the amount of $2,500 per claimant and additional punitive damages in the amount of $7,500 per claimant.  Based on these conclusions, the Court apportioned judgments to claimants ranging from $4,000 (for six days of work) to $210,000 (for ten months of work as well as police detention).  In total, the Court entered default judgment in the amount of $7,658,500.

It remains to be seen what to make of the judgment. It may be worth less than the paper on which it is written, as it is likely not collectable.

Implications For Employers

Since the judgment is likely not to be paid, the EEOC may still hope to use it as a basis for negotiation in like cases. Employers should be mindful of the Commission’s likely arguments as to the “value” of such cases.

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

Investigating Illegal Aliens’ Charges: Fourth Circuit Says EEOC Can Serve Subpoena On Employer

Posted in EEOC Litigation

thSYZKELTSBy Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: This Fourth Circuit ruling opens the door for the EEOC to investigate employers as a result of EEOC charges brought by unauthorized employees, even though an illegal alien worker may not be able to seek certain legal remedies.

Undocumented workers and immigration reform are part of the political debate for the upcoming Presidential election.

The Fourth Circuit’s recent validation of an EEOC enforcement subpoena regarding the government’s investigation of an employer’s alleged discrimination against an illegal alien is certainly an eye-opener for employers. It manifests that the Commission will vigorously investigate and litigate claims involving alleged workplace discrimination against unauthorized workers.

In EEOC v. Maritime Autowash, Inc., No. 15-1947 (4th Cir. Apr. 25, 2016), the Fourth Circuit reversed a ruling from the U.S. District Court for the District of Maryland that had denied an application for subpoena enforcement following an illegal alien’s EEOC charge brought against his employer.  This ruling opens the door for the EEOC to investigate employers as a result of EEOC charges brought by illegal alien employees, even though the charging parties may not even be able to seek certain legal remedies.

Case Background

In May 2012, Maritime Autowash, Inc. (“Maritime”) hired Elmer Escalante as a vacuumer at its carwash in Edgewater, Maryland.  At the time, Escalante lacked authorization to work in the United States.  On July 27, 2013, Escalante and other Hispanic employees complained to Maritime of unequal treatment and discrimination targeting Hispanics.  All of them were terminated the day they raised the complaint.  Escalante then filed charges with the EEOC on February 6, 2014 for discrimination on the basis of national origin and retaliation as prohibited under Title VII.   The complaint detailed the unequal employment conditions facing Hispanic employees at Maritime, including longer working hours, shorter breaks, lack of proper equipment, additional duties, and lower wages.  Ten other terminated Hispanic employees lodged similar complaints with the EEOC.  The Commission served Maritime with a notice of the charges on February 25, 2014.  Id. at 3-4.

In responding to the charges, Maritime denied all allegations of discrimination and stated that Escalante had been terminated for failing to appear for a scheduled work shift.  The EEOC served Maritime with a Request for Information (“RFI”) on May 27, 2014 seeking personnel files, wage records, and other employment data related to Escalante, the other charging parties, and similarly-situated employees dating from January 1, 2012 to the time of the request.  Maritime refused to provide records for any Hispanic employee other than Escalante, and further objected that certain of the agency’s requests were unduly burdensome, overly broad, and/or irrelevant. Faced with Maritime’s incomplete response to its RFI, the EEOC issued a subpoena on June 10, 2014, which focused only on Escalante’s charges.  Maritime produced none of the subpoenaed documents.  Id. at 4-5.

The EEOC filed an application to the District Court seeking to enforce the subpoena, which was denied.  Thereafter, the EEOC appealed to the Fourth Circuit, which reversed and remanded the District Court’s denial of the application to enforce the subpoena.

The Decision

The Fourth Circuit noted that it cannot yet know whether the agency’s investigation will uncover misconduct by the employer or ever ripen into a lawsuit, nor could it assess what causes of action or remedies might lie down the road.  Id. at 2.  As such, the only issue it considered was whether the EEOC’s subpoena, designed to investigate Escalante’s Title VII charges, was enforceable.  Id. at 6.  The Fourth Circuit noted that central to the EEOC’s authority to enforce Title VII’s provisions against employment discrimination “is the power to investigate charges brought by employees, including the right to access any evidence . . . that relates to unlawful employment practices covered by [the statute] … as well as the authority to issue administrative subpoenas and to request judicial enforcement of those subpoenas.”  Id. at 6-7 (internal quotation marks omitted).  Further, “The [judicial review] process is not one for a determination of the underlying claim on its merits … courts should look only to the jurisdiction of the agency to conduct such an investigation.” Id. at 7 (quoting EEOC v. Am. & Efird Mills, Inc., 964 F.2d 300, 303 (4th Cir. 1992)).

Noting that the jurisdictional question was central to the dispute here, the Fourth Circuit reasoned that the plain language of Title VII provides that jurisdiction is attained if there is a “plausible” or “arguable” basis for the EEOC’s subpoena.  Id. at 8-9.  Also at issue was Title VII’s definition of employee, which does not specifically bar undocumented workers from filing complaints.  Id. at 9.  Since the charging party was employed at Maritime’s car wash, his charge of discrimination rested squarely on one of the protected grounds.  Accordingly, the Court held that “[t]he EEOC’s investigation of Escalante’s charges was therefore at least plausibly and arguably related to the authority that Congress conferred upon the Commission.  Since Maritime challenged only the agency’s subpoena authority, the district court should have stopped at that point and enforced the subpoena accordingly.”  Id. at 9.

Maritime argued that a reviewing court must ascertain a valid charge of discrimination, which must incorporate a viable cause of action or remedy as a “jurisdictional prerequisite” to enforcing the agency’s subpoena.  Id.  The Fourth Circuit rejected this argument, opining that courts should not venture prematurely into the merits of employment actions that have not been brought.  Id. at 11.  Considering the pragmatic effect of the employer’s argument, the Fourth Circuit explained “Maritime’s challenge to the EEOC’s subpoena envisions a world where an employer could impose all manner of harsh working conditions upon undocumented aliens, and no questions could be asked, no charges filed, and no agency investigation even so much as begun.  The employer is asking the court for carte blanche to both hire illegal immigrants and then unlawfully discriminate against those it unlawfully hired.”  Id. at 14.  Accordingly, the Fourth Circuit reversed and remanded the District Court’s judgement, holding that when the EEOC  is investigating charges plausibly within its delegated powers, the courts should not obstruct.  Id. at 15.

Implications For Employers

This ruling absolutely belongs on the radar of any employer who may have undocumented workers in its labor force.  Even if those workers are unable to seek certain legal remedies, should they bring EEOC charges, the employer will likely have to cooperate with any governmental investigation.  Accordingly, employers should exercise caution in this context, as EEOC investigations can penetrate their walls regardless of the legal status of those employees.

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