Workplace Class Action Blog

Where’s the Beef Part II: Court Refuses To “Butcher” EEOC’s Religious Discrimination Claim

Posted in EEOC Litigation

Raw, Inside Round Beef Roast -Photographed on Hasselblad H3-22mb CameraBy Gerald L. Maatman Jr. and Howard M. Wexler

Our loyal blog readers may recall a post we authored in October 2013 regarding EEOC v. JBS USA, LLC (the “Nebraska Case”), where Chief Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska entered judgment for the employer, JBS USA, in a hotly contested religious discrimination case, finding that the employer established the affirmative defense of undue hardship since “a religious accommodation for Muslim employees [at its Grand Island, Nebraska processing facility] within the parameters requested [by the EEOC], would have caused more than a de minimis burden on JBS and on its non-Muslim employees.”

To quote former New York Yankee Yogi Berra, “It’s like Déjà vu all over again” for JBS, and this time, however, it was not as lucky. In EEOC v. JBS USA, LLC, Case No. 10-CV-02103 (d. Colo. July 17, 2015), Judge Philip A. Brimmer of the U.S. District Court for the District of Colorado denied JBS’ motion for summary judgment in connection with a similar case filed by the EEOC against JBS regarding a different facility, this one in Greeley, Colorado, which was based in part on JBS’ argument that its favorable decision in the Nebraska Case collaterally estopped the EEOC from advancing its claims. Judge Brimmer denied JBS’ motion and ordered that the case proceed to trial.

Background Facts

The EEOC filed the lawsuit based on a conflict between JBS and several hundred Muslim employees at a beef processing facility in Greeley, Colorado who sought accommodation from JBS for their religious beliefs.  Id. at 1-2.  The conflict reached its height during Ramadan 2008, when employees requested that JBS accommodate their need to leave the production line to pray at or near sundown. Id. at 2. The employees and JBS were unable to come to an agreement regarding the employees’ need to pray, leading to the suspension and termination of a large number of Muslim employees based on job abandonment. Id. On August 30, 2010, the EEOC filed suit claiming that JBS discriminated against its Muslim employees on the basis of religion by engaging in a pattern or practice of retaliation, discriminatory discipline and discharge, harassment, and denying its Muslim employees reasonable religious accommodations.  Id.

The Court bifurcated the case and the “Phase I” issues before the Court were: (1) the EEOC’s claim that JBS engaged in a pattern or practice of denying Muslim employees reasonable religious accommodations, (2) the EEOC’s retaliation pattern or practice claim, and (3) the EEOC’s discriminatory discipline and discharge pattern or practice claim. Id. At the close of “Phase I” discovery, JBS sought summary judgment on all three of EEOC’s Phase I claims. Id.

The Court’s Decision

JBS argued that Nebraska Case decision estopped the EEOC from: (1) claiming that its proposed accommodations of providing unscheduled breaks for prayer and moving scheduled breaks to sundown are non-burdensome; and (2) claiming that the termination and discipline of Muslim workers during Ramadan 2008 constituted a pattern or practice of retaliation and discrimination.  Id.  at 25.

In the Tenth Circuit, a party asserting collateral estoppel must satisfy four elements, including: (1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party, or in privity with a party, to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action. Id.

In opposing JBS’ motion for summary, judgment, the EEOC did not dispute that the accommodations it proposed were identical to those proposed in the Nebraska Case – which they were. Id. at 26-27. Rather, the question before the Court was whether EEOC was collaterally estopped from litigating the issue of whether those accommodations result in undue hardship at the Colorado facility given that they were held to pose an undue hardship at the Nebraska facility. Id. at 27.

In denying JBS’ request to estop the EEOC from challenging the undue burden defense, the Court focused on several differences between the two cases, including different staffing levels; different collective bargaining agreements between the two facilities with different break-time clauses; and different employee requests. Id. at 27-30. Accordingly, the Court held that, “although both cases involve application of the same rule of law and involve claims that are closely related, JBS has failed to establish that the factual differences between this case and the Nebraska case are legally insignificant and the Court further finds that the balance of considerations weighs against finding that the identity of issue element is satisfied.” Id. at 30.

The Court then turned to the aspect of JBS’ motion and went through the record in painstaking detail and reached the decision that there were genuine disputes of material fact which prevented JBS from obtaining summary judgment on its undue hardship defense as well as their retaliation and discrimination claims. Although the Court acknowledged similarities between the Nebraska and Colorado facilities, “genuine disputes of material fact exist as to the feasibility of the EEOC’s proposed accommodations…thus the…EEOC has raised a genuine dispute of material fact as to the effectiveness and facial reasonableness of its proposed accommodations” as well as whether granting such accommodations would have posed an undue burden. Id. at 50 & 62.

Implications For Employers

Employers faced with a claim of religious discrimination under Title VII who refuse an accommodation request must be prepared to come forward with specific evidence demonstrating the “undue burden” that granting the request would cause. Employers must be prepared to demonstrate that the proposed accommodations pose an undue hardship in order to escape liability. That JBS obtained summary judgment in the Nebraska case, however, was not able to do so in the Colorado case, is a perfect example of the case-by-case analysis that courts utilize in deciding these type of accommodation cases, especially when an employer argues the undue hardship defense to a failure to accommodate claim under either Title VII or the ADA. A “one size fits all” approach will not pass muster and will result in employers ending up on the chopping block.

The EEOC Rules That Existing Federal Law Prohibits Employment Discrimination Based On Sexual Orientation

Posted in EEOC Litigation

thCAD0SFA4By Laura Maechtlen and Sam Schwartz-Fenwick

In a landmark ruling on July 15, 2015 in _____ [name of charging party kept secret] v. Foxx, EEOC Appeal No. 2012-24738–FAA-03 (July 15, 2015), the U.S. Equal Employment Opportunity Commission (“EEOC’) held for the first time that Title VII extends to claims of employment discrimination based on sexual orientation. Specifically, the EEOC determined that sexual orientation discrimination is per se sex discrimination, stating that: “We …conclude that allegations of discrimination on the basis of sexual orientation necessarily state a claim of discrimination on the basis of sex.” Foxx at 14.

While not surprising, the EEOC’s action is nothing short of controversial. It opined on a legal issue where the relevant statute and case law have offered an opposite conclusion. Critics no doubt will complain that the ruling manifests an activist agenda by the Commission in seeking to regulate through enforcement litigation.

Background

While the EEOC has yet to rule on the merits of the sexual orientation discrimination alleged in the Charge, its ruling is significant because it forcefully articulates an expansive view of Title VII that protects employees (both homosexual and heterosexual) from workplace discrimination, and relies on existing Title VII authority to do so. To date, federal courts have been largely reluctant to apply Title VII to claims of sexual orientation discrimination. In the administrative context, and if courts begin to adopt the reasoning of the EEOC, the ruling can significantly bolster the workplace protections of LGB (Lesbian, Gay and Bisexual) employees because federal law does not explicitly protect workers based on sexual orientation, and an overwhelming number of states do not include sexual orientation as a protected class in state anti-discrimination statutes.

EEOC Administrative Decision

Complainant in the case is a temporary worker for the Federal Aviation Agency (the “FAA”). He alleges that he was not selected for a permanent position at the FAA because he is gay. He further alleges that his supervisor repeatedly made homophobic comments about him. His name was kept confidential in the ruling.

Complainant’s EEO complaint was first evaluated through the FAA’s administrative EEO process, resulting in a Final Agency Decision from the EEOC denying the claim.  Complainant appealed, and the administrative decision addressed two issues, one relevant here:  (1) whether the charge was filed timely (the EEOC determined it was); and (2) whether the EEOC had jurisdiction over a claim of sexual orientation discrimination.

Traditionally, it has been excepted that Title VII does not extend to claims of sexual orientation discrimination as “sexual orientation” is not listed anywhere in the statute or its underlying legislative history.  However, the EEOC held differently here.  In holding that allegations of sexual orientation state an actionable claim under Title VII, the EEOC opined that while Title VII does not expressly list “sexual orientation” as a prohibited bases for discrimination, such discrimination was prohibited as a form of sex discrimination.

The EEOC had several bases for the decision. First, it noted that sexual orientation discrimination is sex-based because it is “premised on sex-based preferences, assumptions, expectations, stereotypes, or norms.”  Second, the EEOC opined that sexual orientation discrimination is sex-discrimination because it is “relational discrimination,” in that it involves treating a male employee who loves a man differently than a male employee who loves a woman, noting that courts regularly have applied this notion of relation discrimination in the race discrimination context. Third, the EEOC determined that discrimination based on sexual orientation was sex discrimination because it relies on gender stereotypes as to how “real men” and “real women” should behave, and in so doing seeks to “enforce heterosexuality defined gender norms.”

The EEOC also attempted to pre-empt the anticipated criticism of its expansive view of Title VII. It cites the Supreme Court’s decision in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998), for the proposition that even if Congress did not intend Title VII to apply to this type of claim “statutory prohibitions often go beyond the principal evil [they were passed to combat] to cover reasonably comparable evils.” The EEOC goes on to note that it is no matter that since the dawn of the Clinton administration in the early 1990s, Congress has been debating the extension of federal anti-discrimination legislation to LGB individuals through the oft-proposed, but never passed, Employment Non-Discrimination Act (“ENDA”). The EEOC reasoned that this Congressional inaction may simply be the result of a recognition that Federal law already covers such claims. For support, the EEOC noted that the creation of a new protected class is not required to extend protections to individuals claiming sexual orientation discrimination, given that in its view claims of sexual orientation discrimination were simply claims of sex discrimination– a category expressly found in Title VII.

Implications

While the EEOC had been pushing toward this decision with administrative guidance addressing coverage under Title VII for LGB individuals, the significance of this new ruling from the EEOC cannot be understated. In ruling that employees may state a claim for sexual orientation discrimination as a form of “sex” discrimination under Title VII, the EEOC explicitly issued a holding that is contrary to certain federal court rulings interpreting Title VII.  Going forward, it is expected that the EEOC’s decision will result in an increased number of charges of discrimination filed and investigated based on sexual orientation. Moreover, given the EEOC’s key objectives in its Strategic Plan for 2012-2016 to ensure that members of the public understand their rights as well as the recourse available to them, employers can expect that the EEOC will take additional measures to educate future and potential claimants regarding this ruling.

While the EEOC’s ruling is not binding on federal courts, employers should be mindful that any allegations concerning sexual orientation discrimination – to the extent they can be interpreted to fall within the EEOC’s interpretation of “sex” – may expose them to liability, in addition to any protections that may exist under state or local laws. Certainly, the extensive rationale provided by the EEOC in this decision was clearly intended to serve as a road map for individuals hoping to press their claims of sexual orientation discrimination at the administrative level, and in Federal Court. The decision sets forth extensive references to case law that individuals can cite in support of this expansive view of Title VII. Whether, the line of argument advanced by the EEOC will be adopted by Federal Courts remains an open question. To date, Federal Courts have by an overwhelming margin been unwilling to allow such claims to survive the motion to dismiss stage. However, given that the EEOC’s decision comes just weeks after the seminal gay-marriage victory in Obergefell v Hodges, courts may be more open to revisiting this issue and more generally the question of using courts, not the legislature, to advance LGB rights.

Based on these developments, and this evolving area of law, employers must familiarize themselves with issues related to sexual orientation to avoid potential liability. Employers may wish consider the following:

  • Revisit Non-Discrimination Policies: Although the EEOC’s decision is not binding and there is no federal law which explicitly protects LGB employees from discrimination, employers should consider revising internal equal employment, non-discrimination and anti-harassment policies to include sexual orientation as protected categories.

 

  • Conduct Training: Employers should also make their managers and employees more sensitive to sexual orientation by incorporating these topics in EEO and harassment training programs.

 

  • Health Insurance and Benefits: Employers may also consider whether changes can be made to its health benefits to extend such coverage to same-sex spouses and/or domestic partners.

In sum, employers should increase their awareness of and sensitivity to issues related to sexual orientation in the workplace. Employers must be aware that LGB individuals may be protected under federal law in addition to relevant state or local laws, and that any allegations concerning sexual orientation discrimination require the same analysis, investigation and response as a traditional sex discrimination complaint. Finally, employers must evaluate their internal policies, practices and procedures with an eye toward sexual orientation issues to avoid potential complaints and liability.

 

Time’s Up! Court Refuses To Equitably Toll Statute Of Limitations In EPA Action

Posted in Class Action Litigation

pugg-wall-clock__13080_PE040801_S4By Gerald L. Maatman Jr. and Howard M. Wexler

In a decision worth reading for all class action practitioners, especially those who face Equal Pay Act (“EPA”) issues, Judge Ronnie Abrams of the U.S. District Court for the Southern District of New York denied equitable tolling of the statute of limitations period in a high profile gender discrimination case.  Judge Abrams’ decision in Barrett, et al. v. Forest Laboratories, Inc., et al., 12-CV-5224 (S.D.N.Y.  July 8, 2015), serves a great primer as to the differences between calculating the limitation periods in Title VII class actions as compared to EPA collective actions and the significant impact of these differences.

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 2.  Plaintiffs’ subsequently filed a First and Second Amended Complaint, which Defendants moved to dismiss and the Court decided in August 2014. Id.

In connection with a joint report in anticipation of the parties’ Initial Conference, Plaintiffs, for the first time, raised the issue of equitable tolling for their EPA claims.  Id.  Notably, at no point during the entirety of the action – dating back to the filing of the Complaint in July 2012 – had the Court ordered or any party sought a stay of discovery.  Id.  Eventually, Plaintiffs filed a formal motion in January 2015 seeking to toll the statute of limitations from April 2013 (the date Defendants filed their motion to dismiss) through the date conditional certification for the collective action is granted. Id.  at 3.

The Court’s Decision

The Court began with a primer concerning the difference between collective actions and class actions with respect to the accrual of claims.  Id.  Relevant here, under the EPA (which incorporates various provisions of the FLSA), the statute of limitations for each plaintiff runs until the individual opts into the lawsuit by filing written consent. Id.  at 4.  Accordingly, such signed consent forms from class members do not relate back to the filing date of the Complaint as compared to Rule 23 class action claims, whereby “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.”  Id. Equitable tolling creates an exception to the “potential harshness” of the FLSA’s limitation period by allowing courts to extend the limitations period to avoid “inequitable circumstances,” however, must be “cautious” in doing so…lest they transform it into the Rule 23 scheme.” Id.  A litigant seeking equitable tolling bears a “high burden” of establishing both: “(1) that [s]she has been pursuing [her] rights diligently; and (2) that some extraordinary circumstance stood in [her] way.” Id.  at 5.

Applying this “high burden” to the facts before it, the Court refused to equitably toll the statute of limitations as “Plaintiffs cannot reasonably argue that they have been diligent in pursuing their rights or that some extraordinary circumstance stood in their way to be diligent.” Id. In so holding, the Court noted that Plaintiffs’ argument that discovery was “effectively stayed” based on the Defendants’ motion to dismiss did not hold water since the case was never stayed, nor did either party ask the Court to do so.  Id. at 5-6.  Accordingly, while there were delays in the briefing process and in the Court deciding Defendants’ motion, Plaintiffs “failed to explain how these delays erected any barrier to their seeking the discovery necessary to pursue conditional certification” Id. at 7.

With respect to the second requirement for the Court to apply equitable tolling – that some extraordinary circumstance stood in their way – the Court distinguished the cases relied upon by Plaintiffs since in those cases (unlike in this case) where equitable tolling was ordered, there was “something – whether discovery disputes, a discovery stay, or the court’s election to stay a certification motion pending a motion to dismiss” which prevented plaintiffs from notifying potential collective action members. Id. at 8-9.

Based on Plaintiffs’ failure to satisfy either required test for the application of equitable tolling, the Court denied Plaintiffs’ request since “to grant the exceptional remedy of equitable tolling for the pendency of a motion to dismiss when there was nothing standing in the way of a plaintiff’s pursuing collective certification would be tantamount to tolling the statute of limitations for FLSA claims as a matter of course for all potential plaintiffs whenever the first plaintiff files her complaint – a result plainly contrary to the procedural rules that govern FLSA collective actions.”  Id. at 10-11.

Implication For Employers

This decision serves as a great reminder of the differences between class action certification and collective action certification and the real world impact of these differences as it pertains to the statute of limitations period. Given such differences, employers should always be mindful of the limitations period and that short of a court order otherwise, the limitations period continues to run in collective actions under the EPA and FLSA. While equitable tolling is a powerful tool for Plaintiffs’ counsel in collective actions, this decision highlights the high burden that plaintiffs’ counsel must satisfy to warrant its application in a particular case.

Nominate The Workplace Class Action Blog For The Expert Institute’s 2015 Best Legal Blog Award!

Posted in Uncategorized

trophy-clip-art-154708Seyfarth’s Workplace Class Action Blog is a one-of-a-kind reference site and thought leadership forum that analyzes the latest trends in complex employment litigation. The Workplace Class Action blog is also one of the primary vehicles for disseminating Seyfarth’s Annual Workplace Class Action Litigation Report. We were honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”).

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

Help us gain some extra recognition by casting your vote in The Expert Institute 2015 Best Legal Blog competition!

When: Nominations are now open.

Where: https://www.theexpertinstitute.com/blog-contest/.  You will need to provide your full name, e-mail address, blog address (www.workplaceclassaction.com), blog category (Labor and Employment), and a brief description on why the Workplace Class Action Blog deserves to be nominated.

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Sixth Circuit Gives Dukes Class Members A Re-Do, Allowing Them To Pursue Class Certification Of Sex Bias Claims Against Wal-Mart

Posted in Class Action Litigation

sixth-circuit2By Gerald L. Maatman, Jr. and Jennifer A. Riley

Whereas Wal-Mart scored a major victory for employers in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), its saga continues as former class members continue to pursue class claims in regional forums.  As we previously have discussed (here, herehere and here), former Dukes plaintiffs have attempted to pursue follow-on lawsuits with varying degrees of success.

Recently, in Phipps, et al. v. Wal-Mart Stores, Inc.,, No. 13-6194 (6th Cir.), the U.S. Court of Appeals for the Sixth Circuit reversed the U.S. District Court for the Western District of Tennessee and found that plaintiffs’ class claims were not time-barred.  As a result, the plaintiffs can pursue class certification of the same gender discrimination claims formerly at issue in Dukes.

The decision is an important read for employers. It strikes a blow to the impact of orders denying class certification and may open the door for losing plaintiffs to shop different class certification theories in different forums.

Background

On June 8, 2001, six named plaintiffs filed suit under Title VII in the Northern District of California on behalf of all former and current female employees of Wal-Mart Stores nationwide.  Id. at 2-3.  The plaintiffs sought certification of a nationwide class of current and former female employees under Rule 23(b)(2), or alternatively, under Rule 23(b)(3).  Id. at 3.  In 2004, the district court certified a nationwide class under Rule 23(b)(2).  Id.  In 2007, the Ninth Circuit affirmed the district court’s certification of a nationwide class under Rule 23(b)(2) for current employees and remanded for the district court to consider certification of punitive damages classes under Rule 23(b)(2) or Rule 23(b)(3) and certification of former employees classes under Rule 23(b)(3).  Id.

The Supreme Court granted certiorari and, in June 2011, issued its landmark decision, reversing certification of a nationwide class of current employees under Rule 23(b)(2).  The Supreme Court held, among other things, that the plaintiffs did not demonstrate questions of law or fact common to the class because they failed to provide “significant proof” of a nationwide policy or other “specific employment practice” that affected 1.5 million class members in the same way.  Id. at 4.

Thereafter, plaintiffs promptly filed a motion in the California district court to extend tolling of the statute of limitations.  The district court granted the motion and directed all class members who had not filed administrative charges with the EEOC to do so on or before May 25, 2012.  The plaintiffs then amended their California case to narrow the scope of the proposed class to current and former female employees who had been subjected to gender discrimination within California regions.  Id. at 5.  In addition, plaintiffs filed suits in four other jurisdictions – including Tennessee, Texas, Florida, and Wisconsin – to bring individual and class claims concerning other Wal-Mart regions.  Id.

In Tennessee, three unnamed class members filed their own lawsuit asserting individual and putative class claims under  Rule 23(b)(2) and Rule 23(b)(3) on behalf of current and former female employees in Wal-Mart “Region 43” – a region allegedly centered in Middle and Western Tennessee, and including portions of Alabama, Arkansas, Georgia, and Mississippi.  All three plaintiffs had filed administrative charges with the EEOC within the deadline ordered by the district court, and they filed suit within 90 days of receiving right-to-sue letters.

Wal-Mart moved to dismiss the putative class claims under Rule 12(b)(6), arguing that Sixth Circuit precedent prohibited tolling for any purported class action brought after a previous denial of class certification.  The district court agreed and dismissed the class claims with prejudice, but certified its decision for interlocutory appeal.  Id. at 6.

The Sixth Circuit’s Opinion

The timely filing of a class action complaint normally tolls the statute of limitations for all members of the putative class until a court decides that the suit is not appropriate for class treatment.  Id. at 7.  At that point, the putative class members can move to intervene as plaintiffs in the pending action or can file their own lawsuits. Id.

In Phipps, Wal-Mart argued that, because the Supreme Court already had rejected class certification of plaintiffs’ claims in Dukes, tolling was not available for plaintiffs’ rebooted class theory.  The Sixth Circuit disagreed.

With respect to their Rule 23(b)(3) claims, the Sixth Circuit found that, when plaintiffs initiated their action in Tennessee, no court in any jurisdiction had denied certification of a Rule 23(b)(3) class of current and former female employees.  Id. at 13.  Indeed, the original motion for class certification under Rule 23(b)(3) filed by the Dukes plaintiffs remained pending in the California district court after the Supreme Court issued its decision.  Id.at 15.

With respect to their Rule 23(b)(2) claims, the Sixth Circuit held that the issue was not whether the class action was timely filed but whether plaintiffs’ class claims were precluded by the Supreme Court’s decision inDukes.  It found no preclusion.  Plaintiffs, for the first time, sought certification of a regional class under Rule 23(b)(2) for themselves and all other current Wal-Mart employees in Region 43.  Id. at 18.  “These substantive claims are within the scope of those asserted by the nationwide class in Dukes, . . . but the class seeks neither relitigation nor correction of the earlier class claims.”  Id.

The Sixth Circuit rejected Wal-Mart’s argument that it is unfair to permit absent class members to “stack” one class action onto another, noting that “this form of argument flies in the face of the rule against non-party preclusion.”  Id. at 21.  “We follow the Supreme Court’s lead and trust that existing principles in our legal system, such as stare decisis and comity among courts, are suited to and capable of address these concerns.”  Id.

Implications

In Phipps, the Sixth Circuit allowed former class members to re-assert the same class claims that the Supreme Court rejected in Dukes, primarily because plaintiffs invoked a different rule and certification theory (Rule 23(b)(3)) on behalf of a smaller group of class members (Region 43).  As such, the Sixth Circuit’s opinion seemingly opens the door for plaintiffs who lose class certification in one forum to file the same claims in other forums, “stack” their tolling periods, and “shop” different class certification theories in the hopes of exhausting their opponents or obtaining more favorable rulings.  If successful, such plaintiffs can raise the stakes for defendants by subjecting them to never-ending series of lawsuits involving claims that, because of extended tolling, reach back years or even decades.  It remains to be seen whether Wal-Mart will seek further review of the Sixth Circuit’s decision or, if plaintiffs proceed with their motion for class certification, whether the district court indeed will resolve the matter based on principles of “stare decisis and comity.”  Stay tuned.

Court Shoots Down The EEOC At “Mach” Speed Based On “Sham” Conciliation Process

Posted in EEOC Litigation

gavel on white backgroundBy Gerald L. Maatman Jr. and Howard M. Wexler

Amid the flurry of major U.S. Supreme Court decisions that were decided towards the end of the 2014-2015 term, the landmark decision in Mach Mining v. EEOC, No. 13-1019 (U.S. April 29, 2015), seems like ancient history. As we previously blogged about, most recently here and here, the Supreme Court concluded in Mach Mining, in a unanimous opinion authored by Justice Kagan, that federal district courts have the authority to review the EEOC’s conciliation efforts.

After Mach Mining, class action practitioners were left to wonder how lower federal courts would view their job in reviewing the adequacy of the EEOC’s conciliation efforts. On June 29, 2015, Judge Gregory L. Frost of the U.S. District Court for the Southern District of Ohio applied Mach Mining and “bench-slapped” the EEOC, holding it failed to satisfy its obligation to pursue conciliation, and thus, stayed the case and ordered the EEOC to engage in good faith conciliation.

This decision appears to be the first post-Mach Mining decision to find that the EEOC failed to fulfill its conciliation obligation and boy, is it a doozy!

Background Facts

In August 2013, the EEOC filed a complaint alleging OhioHealth Corporation failed to reasonably accommodate a former employee in violation of the Americans With Disabilities Act. Id. at 1. OhioHealth filed a motion for summary judgment in which it argued, in part, that the EEOC failed to satisfy all required conditions precedent to filing its lawsuit, including good faith conciliation. Id. The Court held that this threshold issue of conciliation must be decided before reaching the merits since if it did otherwise, it would be “put[ting] the cart before the horse” Id.

The Court’s Decision

The Court described the EEOC’s duty under Mach Mining as two-fold: first, the EEOC must inform the employer about the specific allegation; and second the EEOC must try to engage the employer in some form of discussion so as to give the employer an opportunity to remedy the allegedly discriminatory practice. Id. at 3. In OhioHealth, the issue presented to the Court was whether the EEOC met its second required duty. Id.

In trying to demonstrate that it satisfied its conciliation obligation, the EEOC presented a sworn affidavit attesting to the agency’s conciliation efforts. Id. at 4. In relevant part, the EEOC’s affidavit indicated that it issued a determination on September 15, 2011, engaged in communications with OhioHealth until October 14, 2011, and only brought suit after OhioHealth rejected the EEOC’s conciliation proposal. Id.

OhioHealth came forward with its own declaration, the crux of which was that the EEOC presented its demand as a take-it-or-leave-it proposition, failed to provide OhioHealth with requested information and declared conciliation efforts failed even though OhioHealth made it clear they were “ready and willing to negotiate.” Id. at 4-5.

Preliminarily, the Court rejected the EEOC’s argument that OhioHealth waived its failure to conciliate defense by not raising it sooner because failure to conciliate is not an affirmative defense; rather, is a condition precedent for the EEOC brining suit which did not have to be raised prior to summary judgment. Id. at 5.

With respect to the merits, the Court held that the conciliation obligation was not satisfied because there were numerous conflicting facts which gave the appearance that the EEOC was “engaged in the production of bookend letters that failed to reflect a good faith conciliation effort” and thus,  “if the proceedings were for appearances only, then there never was a real attempt to engage in conciliation as the law requires.” Id. at 6.

The Court also found that conciliation failed because the EEOC indicated in its original determination letter that an EEOC representative would “prepare a dollar amount that includes lost wages and benefits, applicable interest, and any appropriate attorney fees and costs.” Id. at 6-7. Tellingly, nothing the EEOC presented to the Court demonstrated that it ever provided OhioHealth with such a proposal. Id. at 7. As viewed by the Court, “absent disclosure of this calculation to OhioHealth, the conciliation process could have been nothing but a sham.” Id. Absent this information, “the EEOC can hardly be said to have given the employer an opportunity to remedy the allegedly discriminatory practice.” Id. As such, the Court held that “an unsupported demand letter such as the one involved here alone cannot logically constitute an attempt to inform and engage in the conciliation process.” Id.

As a result of the EEOC’s failure to conciliate, the Court stayed the case pending the EEOC’s mandated efforts to obtain voluntary compliance. Id. at 8.

The Ruling’s Admonition

In closing, the Court took one final swing at the EEOC for its hubris. During a telephonic conference with the Court, the EEOC stated that because it had already filed a complaint, “only a public resolution would be possible,” or, “in other words…the EEOC simply would not reach a private resolution via conciliation. Id. at 8-9. In response to this position, the Court did not mince words and forcefully stated that:

This policy or position is of course contrary not only to the purpose of the workplace discrimination statutes upon which the EEOC bases this case, but is also directly contrary to the holding of Mach Mining. In that case, the United States Supreme Court expressly endorsed implementing a stay and ordering conciliation efforts when the EEOC has failed to engage in conciliation before filing suit. The EEOC’s position that resolution via conciliation is now impossible ignores controlling precedent…

The EEOC’s position is ridiculous. It defies the statutory scheme, binding case law, this Court, and common sense. Accordingly, if the EEOC continues down this dangerous path and fails to engage in good faith efforts at conciliation as ordered, this Court will impose any or all consequences available, including but not limited to contempt and dismissal of this action for failure to prosecute.

Id. at 9 (emphasis added).

Implication for Employers

This decision demonstrates the powerful tool that the Supreme Court provided to employers in Mach Mining. Because of the Supreme Court’s decision, the EEOC can no longer file suit against employers after paying mere lip-service to its conciliation efforts, and give them the back of the hand in response to requests for fulsome information about liability and exposure in a threatened lawsuit. Such a “sham” of a conciliation process is no longer countenanced. In OhioHealth, the EEOC did not even have the courtesy to give the employer a comprehensive settlement demand, as it had promised. Such conduct is diametrically opposed to the very employment discrimination statutes the EEOC is charged with enforcing and was flatly rejected in Mach Mining. As a result, we expect to see more and more decision like OhioHealth unless the EEOC meaningfully changes the way in which it conciliates. Stay tuned!

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

 

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

Posted in Class Action Litigation

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

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

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

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

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

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

Case Background

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

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

The Supreme Court’s Decision

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

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

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

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

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

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

Implications For Employers

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

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

 

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

Posted in EEOC Litigation

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

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

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

Background Of The Case

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

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

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

The District Court’s Decision

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

The Fourth Circuit’s Opinion

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

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

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

Implications For Employers

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

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

Posted in Class Action Litigation

same_sex_marriage_fast_factsBy Gerald L. Maatman, Jr.

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

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

More Lawsuits?

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

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

Health And Welfare Plans Update

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

Employee Handbook And Company Policies Update

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

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

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

Posted in Class Action Litigation

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

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

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

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

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

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

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

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

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

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

Implications For Employers

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