Workplace Class Action Blog

Views Of U.S. Workplace Class Actions From Europe

Posted in Class Action Litigation

By Gerald L. Maatman, Jr.

I had the privilege today of presenting on the topic of “The Risks U.S. Workplace Class Actions Pose For Businesses” to a group of European corporate counsel and business executives at the Swiss Re Centre For Global Dialogue in Zurich, Switzerland. It was a signal honor to present on this topic to business and legal leaders in Europe.

I offered a defense lawyer’s view of the landscape of workplace class action developments in the U.S. market over the last 24 months, and ventured some prognostications of likely trends for 2015.

Among other things, I offered that:

1. The EEOC, NLRB, and the DOL are apt to double-down in their campaigns to “regulate by enforcement litigation” in terms of pushing-the-envelope in enforcement litigation during the final year of the Obama Administration. In other words, businesses are likely to see very vigorous litigation and exceedingly aggressive litigation positions by the government.

2. The crest of the tidal wave of wage & hour class action litigation is not yet in sight. The volume of FLSA and state law wage & hour claims continues to increase; the cases are becoming more sophisticated; and able class action litigators on the plaintiffs’ side are migrating to this area in increasing numbers in their search for targets of opportunity.

3. Issue certification under Rule 23 is undergoing a re-birth. Plaintiffs’ class action lawyers are increasingly invoking its use to “certify something” – if even only a small portion of a case – in order to place pressure on employers to pay big dollars to settle and to lay the groundwork for a hefty fee petition.

In turn, my European hosts offered their reactions and perspectives from an “outsider’s view” looking inward to the U.S. legal environment. A summary take-away might best be encapsulated by the following:

- Really? [Reacting to the tidal wave of wage & hour class action litigation, and the relative ease by which plaintiffs’ lawyers can gain access to employee lists for purposes of sending out notice soliciting employees and ex-employees to join an FLSA lawsuit.]

- How can that be? [Reacting to the state of the law wherein workplace arbitration agreements are challenged - often successfully - and deemed insufficient to block a class action, and how such agreements do not prevent the EEOC from launching its own systemic investigation and subsequently suing an employer in the “public interest.”]

- Who is watching the store (or is the system out of control)? [Reacting to the agency positions advocated by the EEOC, NLRB, and DOL in pursuing high-stakes cases, pushing the outer edges of the law, and “regulating” through enforcement litigation.]

Interestingly, the perspective of these European corporate counsel and business leaders is based on their admiration for the “rule of law” in the United States – they respect our system for its stability, predictability, and efficiency in dealing with legal disputes. Workplace class actions may be another kettle of fish, and if nothing else, it proves the axiom that “perspective is everything.”

EEOC’s 2014 Performance And Accountability Report Reflects Continued Efforts To Pursue High Priority, Systemic Litigation

Posted in EEOC Litigation

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

On November 18, 2014, the EEOC released its 2014 Performance and Accountability Report (“PAR”).  The Report is an annual scorecard of sorts for the EEOC. It reflects the progress of the EEOC’s continued efforts to follow enforcement priorities outlined in its 2012 strategic enforcement plan (“SEP”) (read more here), including its systemic litigation initiative.

The Report ought to be required reading for any corporate counsel involved in compliance efforts relative to workplace laws. Upon reviewing the Report, one might ask if the Commission is doing its job in fair and effective fashion.

By way of background, the launch of the SEP underscored the EEOC’s efforts to champion bigger, more media-focused “systemic” cases, including pattern or practice cases where the alleged discrimination “has a broad impact on an industry, occupation, business, or geographic area.”  In the SEP, the EEOC set forth a goal to ensure that systemic cases make up at least 20% of its annual litigation docket and at least 22% to 24% of its litigation docket by 2016.

In its 2014 PAR, the EEOC reported that it has continued to implement its SEP and has met, partially met, or exceeded its target results.  Or so the Commission claims…

The EEOC’s Overall Results

The EEOC’s results reflect a mixed bag for employers, with fewer systemic lawsuits filed (17 in 2014, compared with 21 in 2013), but more on-going systemic lawsuits in the court system (57 in 2014, compared with 54 in 2013), and far more pre-lawsuit settlements (78 in 2014, compared with 63 in 2013).

Overall, we do not expect the EEOC to back off its systemic initiative in 2015, and but to be more aggressive in pursuing those cases that fit within its agenda. So numbers aside, these metrics reflect an agency committed to “big impact” lawsuits that “send a message” to the employer community.

Lawsuits

In its 2014 PAR, the EEOC reported that, in fiscal year 2014, the EEOC filed 133 merits lawsuits, 17 (13%) of which were systemic suits.  At the end of fiscal year 2014, the agency had 228 cases on its active docket, of which 57 (or 25%) involved challenges to systemic discrimination.  As a percentage, this represents the largest proportion of systemic suits on the EEOC’s active docket since tracking began in 2006. Yet, at the same time, the numbers are down, not up. One explanation is that the EEOC has pursued expensive, time-consuming cases, and it lacks the resources to increase its docket.

Systemic Investigations

With respect to investigations, the agency reported that it, in fiscal year 2014, it completed 260 systemic investigations.  The EEOC resolved 78 (30%) of those by voluntary agreements, including 34 pre-determination settlements before any findings of discrimination and 44  conciliation agreements.  The EEOC secured $13 million in monetary relief.

These numbers are down from fiscal year 2013 in several categories.  In 2013, the EEOC reported that it had filed 131 merits lawsuits, 21 (16%) of which were systemic suits.  At the end of fiscal year 2013, the EEOC had 231 cases on its active docket, of which 54 (23%) involved challenges to systemic discrimination.  And, by the end of 2013, the EEOC had launched 300 systemic investigations, resulting in 63 settlements or conciliation agreements that recovered approximately $40 million.

According to the PAR, based on the volume of systemic charges currently in investigation, the EEOC expects the quantity of systemic lawsuits and their representation on its total docket to remain high.  As defense counsel in many of these cases, we sense the EEOC means what it says.

Pushing-The-Envelope Activities

As we discussed in previous blog posts (read more here), the SEP also reinforced the Commission’s efforts to continue addressing emerging and developing legal theories.  To that end, in 2014, the EEOC launched a series of novel attacks that sought to expand the reach of Title VII.  Those efforts, to put it mildly, met some resistance.  One view is that these efforts to “push-the-envelope” backfired, and represented wasteful expenditures of time and costs, with little to nothing to show for it.

For example, most notably, on October 7, 2014, in EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863 (N.D. Ill.), Judge John Darrah of the U.S. District Court for the Northern District of Illinois dismissed the EEOC’s efforts to challenge provisions of CVS’s settlement agreements, holding that there is no separate cause of action for “resisting” employment laws.  (Read more here.)  On November 6, 2014, in EEOC v. Honeywell International, Inc., Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945 (D. Minn. Nov. 6, 2014), Judge Ann Montgomery of the U.S. District Court for the District of Minnesota denied the EEOC’s request for a preliminary injunction to prevent Honeywell from levying penalties against employees who refuse to participate in Honeywell’s corporate wellness program.  (Read more here.)

Thus far, the EEOC has experienced more defeats than successes when it comes to expanding the frontiers of employment discrimination laws.

Implications For Employers

Although the EEOC filed fewer systemic cases in fiscal year 2014, and completed fewer systemic investigations, it settled a higher number of systemic cases pre-litigation — but for less money.  We expect the trends revealed by the 2014 numbers to continue.  We expect the EEOC to continue to search for and to initiate systemic investigations, but to focus its efforts and invest its resources on those cases that it views as priority cases, including those that seek to expand the reach of Title VII.  In spite of several stunning defeats, we do not expect the EEOC to back down on its systemic initiative in 2015.  Rather, we anticipate that those defeats will inspire the EEOC to more aggressively pursue those actions that fit within its agenda.

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

Senators Grill EEOC General Counsel Lopez In Confirmation Hearings

Posted in EEOC Litigation

By Paul Kehoe and Gerald L. Maatman, Jr.

Yesterday, the U.S. Senate Health, Education, Labor and Pensions (“HELP”) Committee held a confirmation for Charlotte Burrows as a new EEOC Commissioner for a five year term and David Lopez for another four year term as General Counsel. The Senate HELP Committee expects to vote on the nominations on November 19, 2014, sending the nominations to the full Senate after that.  All signs point to an effort to confirm both Mr. Lopez and Ms. Burrows during the lame duck session of Congress.

As hearings go, this one was pretty remarkable. Indeed, it is well worth a viewing on the Senate’s website – the link is here. The comments and criticisms leveled during the Senate hearing encapsulate many of the issues – and frustrations – that employers currently face vis-à-vis the EEOC’s litigation enforcement program.

In his opening remarks and questions, Senator Lamar Alexander (R-TN), the likely Chairman of the HELP Committee come January, expressed significant concerns regarding the EEOC’s litigation practices, its focus on mandatory retirement provisions voluntarily agreed up by partners in accounting firms, a lack of transparency related to the EEOC’s sub-regulatory guidance process, and its questionable focus on prosecuting employers who offer wellness plans to its employees in light of the Affordable Care Act’s encouragement of wellness plans.

Notably, several Senators took exception with the EEOC’s recent litigation filed against Honeywell regarding its wellness program (our post on the EEOC v. Honeywell litigation is here). There, just eleven days after receiving a charge, the Commission filed suit seeking a temporary restraining order prohibiting Honeywell from continuing its wellness program as designed.  Given the short timeline, it is clear that little to no investigation occurred, good faith conciliations efforts were virtually non-existent, and the litigation was never submitted to the Commissioners for authorization.

The lawsuit arguably represents an effort to circumvent the EEOC Commissioners, as according to an informal discussion letter, “[t]he EEOC has not taken a position on whether and to what extent a reward amounts to a requirement to participate, or whether withholding of the reward from non-participants constitutes a penalty, thus rendering the program involuntary.”  See here.  Instead, the litigation represents a policy-making effort without either guidance or authorization from the EEOC’s policymakers — the Commissioners.

Senators Scott (R-SC) and Paul (R-KY) continued to pursue similar issues with Mr. Lopez. For example, Senator Scott raised serious concerns about the wellness plan litigation and with the EEOC’s pursuit of large scale litigation where no aggrieved person filed a discrimination charge in the accounting industry. Senator Paul questioned how the EEOC could litigate massive age discrimination class claims without an underlying complaint in the restaurant industry. He considered the EEOC’s pursuit of such litigation as an “absurd abuse of government.”

Implications For Employers

In all likelihood, the Senate will look to hold confirmation votes during the lame duck Congress in the coming weeks. While other important issues must be addressed before the Senate adjourns, including funding for the government and a potential showdown over immigration reform, time is running short to confirm any Presidential nominees including Mr. Lopez and Ms. Burrows.  These appointments, in addition to the recent nomination of Lauren McFerran to the National Labor Relations Board, would likely face stiff opposition come January.  The coming months will be critical in determining how a Republican Congress and Democratic Administration will approach these questions and other important labor and employment issues. Regardless, there will be plenty of activity from agencies trying to adopt new policy positions in the final two years of the Administration. If the tenor of this hearing is any indication, the Senate HELP Committee may consider conducting significant oversight into the EEOC’s activities in the coming months and years.

Minnesota District Court Shoots Down The EEOC’s Request For Preliminary Injunction Over Wellness Program

Posted in EEOC Litigation

By Gerald L. Maatman, Jr., and Alexis P. Robertson

On November 6, 2014, in EEOC v. Honeywell International, Inc. Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945, (D. Minn. Nov. 6, 2014), Judge Ann Montgomery of the U.S. District Court for the District of Minnesota denied the Equal Employment Opportunity Commission’s (“EEOC”) request for a preliminary injunction enjoining Honeywell International Inc. (“Honeywell”) from levying penalties against employees who refused to undergo biomedical testifying in conjunction with Honeywell’s corporate wellness program.  The Court held that, amongst other things, no irreparable harm would result from the refusal to issue an injunction.

The EEOC made much of this case filing in the press, and the Court’s rejection of the EEOC’s request for a preliminary injunction is a significant set-back for the Commission.

Case Background

Honeywell employees and their families had the option of participating in the Corporation’s wellness program, which was designed to inform participants about their health status, encourage improvements of specific health goals and to ultimately reduce claim costs.  Employees who participated in the program had to undergo biometric testing. Employees who declined participation were not disciplined or terminated, but were subject to financial surcharges.

The biomedical testing, administered as part of the program, required a blood sample the screened for various data points. Employees completed the testing for free through Quest Diagnostics (“Quest”), or, in the alternative, employees could have their personal physician fill out a form providing the same health information. Quest would relay the collected data to an independent health management company. Honeywell would receive the aggregate data, but was not informed of the individual employee results.

Employees who participated in the program, and who earned less than $100,000 a year, were eligible to participate in the company’s Health Savings Account (“HSA”). Honeywell would then make an annual contribution to the HSA, ranging from $250 to $1500. Employees who choose not to participate in the wellness program did not qualify for the company-sponsored HSA and had to also pay a $500 surcharge that went towards their annual health insurance contribution.  Honeywell employees and their spouses could also be subject to a $1000 nicotine surcharge. Those how refused to undergo the biomedical testing were presumed to be tobacco users. However, this presumption could be rebutted by enrolling in a tobacco cessation program (actual cessation not required), submitting a report from their physician, or working with a health advocate to establish that they are nicotine free.

Three employees filed complaints with the EEOC alleging that the program violated the Americans With Disabilities Act (“ADA”) and the Genetic Information Non-discrimination Act (“GINA”). All three employees had already submitted to biometric testing. Subsequently, the EEOC sued Honeywell over the wellness program, and moved for immediate injunctive relief.

The Decision Of The District Court

The Court applied the traditional factors reviewed in determining whether to issue a preliminary injunction, including: (1) threat of irreparable harm to the movant, (2) the balance between the harm alleged and the harm that the relief may cause the non-moving party, (3) the likelihood of success on the merits, and (4) the public interest. Based on these factors, the Court denied the EEOC’s motion.

The Court held that the EEOC could not establish the threat of irreparable harm. The Honeywell employees did not face an actual threat of injury because all three had already submitted to biometric testing for the 2015 calendar year.  Further, the EEOC had failed to demonstrate that the biometric testing jeopardized any employees’ right to privacy in their health information. And, even if the EEOC were to go on to prevail on the merits, “the only harm suffered by Honeywell employees is monetary,” which could be cured “through the most basic legal remedies: monetary damages.” Id. at *6.

The Court also found that the balance of harms favored Honeywell. If an injunction, freezing all surcharges was ordered, Honeywell employees who opted-out of the biometric testing may ultimately need to pay a surcharge if Honeywell prevailed on the merits. In contrast, if the EEOC were to prevail on the merits, Honeywell employees who were initially wrongfully assessed a surcharge based on their decision to forego the testing could easily be made whole by a refund.

Finally, the Court reviewed the EEOC’s likelihood of success and the public interest in issuing a preliminary injunction. Amongst other things, the EEOC argued that Honeywell violated the ADA because the biomedical testing constituted an involuntary medical exam that was not job-related, and that Honeywell violated GINA because it collected medical information about family members. Honeywell countered that its wellness program was covered under the ADA’s safe harbor provisions, and that its testing was not considered a “genetic test” under GINA. The Court ruled that there was uncertainty surrounding the interaction of the ADA, GINA, and the Affordable Care Act.  The Court reasoned that this uncertainty surrounding the legal questions presented in the case prevented it from being able to determine whether one party was more likely to succeed on the merits.

Implications For Employers

The ruling was a slap-down of the EEOC. What it claimed was clear and illegal was nothing of the sort based on the Court’s decision.

Employers will have to wait and see how the Court rules once it is able to review the merits of the unique issues presented in this case. In the interim, we are reminded that a Court will not issue a preliminary injunction when employees are not at risk for immediate injury and when monetary damages can easily cure any damages incurred by them. Employers should pay attention to this case as it will likely influence the fate of corporate wellness programs across the country.

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

Washington Court Holds Employer Farm’s Ban On Guests In Employee Housing Illegal

Posted in Class Action Litigation

By Courtney K. Bohl and Laura J. Maechtlen

On November 3, 2014, Honorable Susan K. Cook of the Superior Court of the State of Washington in and for the County of Skagit entered an order granting Plaintiff Familias Unidas Por La Justicia’s (“Familias”) Motion for a Preliminary Injunction against Sakuma Bros. Farms & Market (“Sakuma”). The Court found that portions of Sakuma’s Employee Handbook and Employee Housing Agreement interfered with its seasonal employees’ right to self-organize and engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.

This order is an interesting read for companies involved in workplace class action litigation, especially employers who utilize seasonal workers, as it discusses what policies may run afoul to the National Labor Relations Act (NLRA) or similar state statutes.

Background

Familias Unidas Por La Justicia is a community organization that was formed in 2013 to improve the working conditions of farm workers at Sakuma, a berry farm located in Washington State.   Sakuma hires seasonal workers for harvest, providing workers temporary housing at its labor camps located on its property.

In 2013, members of the Familias engaged in organizing activity at Sakuma’s labor camps. In response, Sakuma hired security guards to survey the workers. The security guards conducted surveillance of the Familias’ members and even followed them and their supporters on public roads.

Sakuma also modified its 2014 Employee Handbook to prohibit: (1) solicitation by employees of other employees for any purpose, (2) solicitation by non-employees of employees, and (3) the distribution of literature in non-work areas of the property, including parking areas, rest and break areas and company-provided housing. Additionally Sakuma’s Employee Handbook prohibited access to these areas by all non-employees, except with company authorization.

Additionally, Sakuma modified its 2014 Employee Housing Agreement to prohibit visitors of employees or occupants from going inside an employee’s housing unit. Instead, employees could only meet with visitors at the Sakuma visitor center between the hours of 9:00 a.m. and 9:00 p.m.  The security guards were able to survey the meetings at the visitor center.

Familias subsequently filed suit against Sakuma. On October 25, 2013, the Court found that Sakuma had interfered with Familias’ members’ rights under the Little Norris LaGuardia Act (“LNLA”) by hiring the security guards to conduct surveillance on the workers’ housing. Then in June 2014, the Court again ruled for Familias, finding that Sakuma had interfered with rights under the LNLA and retaliated against Familias’ members for exercising their rights under LNLA by denying members housing at Sakuma’s labor camps, and classifying members as ineligible for work because of their organizing activity.

In October 2014, Familias sought a preliminary injunction against Sakuma. Familias sought an order requiring Sakuma to remove its policies that: (1) prohibit visitors from going in workers’ housing units;  (2) prohibit the distribution of materials in non-work locations; and (3) prohibit workers from engaging in any other act that would interfere with the their right to self-organize or engage in concerned activities.   The Court granted the preliminary injunction.

The Court’s Decision

The Court first analyzed the LNLA.  The LNLA, like the NLRA, provides that workers “shall be free from interference, restraint, or coercion of employers . . . in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protections.”   The Court noted that time outside working hours, whether before or after work, or during breaks is an employee’s time to use as he or she pleases.  Thus, an employer cannot promulgate and enforce a rule prohibiting union solicitation by an employee outside working hours, although such activity occurs on company property.

The Court held that workers also have a right to be free from surveillance that restrains and/or deters protected activity. Thus, Sakuma’s use of guards at the labor camps was illegal as it restricted workers’ ability to meet together and engage in organizing activities.

The Court also found that Sakuma changed its Employee Handbook and Employee Housing Agreement to retaliate against Familias’ members because of their protected concerted activity. The Court noted that Familias’ members have a right to be free from retaliation due to their LNLA-protected activity, a right to invite visitors into their housing units, and right to engage in protected concerted activity.

The Court then ordered that: (1) Sakuma remove the prohibitions on solicitation and distribution of literature in non-work areas and on non-work time from its employee handbook; and (2) remove the provision from its handbook that requires all guest visits to take place in the visitor center and prohibits visitors in the housing units. The Court held, however, that Sakuma may keep records of who enters the labor camps, may inquire as to the general purpose of the visit, may exclude individuals who previously committed crimes on the property, and may establish reasonable curfews for visitors. The Court made clear, however, Sakuma may not ask who the visitor is visiting.

Implications for Employers

The Court’s ruling is a good read for any employer faced with union activity on their property or involved in a class action where union issues are lurking. It is a reminder that employers must be careful when regulating certain employee activity, as it may be seen as restricting or prohibiting employees’ rights to organize or engage in concerted activity. For more information on current developments in traditional labor law and labor relations, including recent NLRB and court decisions, legislative and regulatory updates, and labor relations and collective bargaining current events, please visit our Employer Labor Relations Blog.

“Exceptional” Class Action Dismissed By Supreme Court Of Louisiana

Posted in Settlement Issues

By Gerald L. Maatman, Jr.

On October 31, 2014, in Oliver v. Orleans Parish Sch. Bd., No. 2014-C-0329 (La. Oct. 31, 2014), the Supreme Court of Louisiana reversed a Fourth Circuit Court of Appeal decision and dismissed a class action lawsuit brought by Plaintiffs, 7,600 former teachers and permanent school district employees who were terminated following Hurricane Katrina in 2005, against their school board and a host of State Defendants. While decision agreed with the Court of Appeal’s analysis of the res judicata doctrine (as the Plaintiffs had previously reached a settlement agreement with Defendant Orleans Parish School Board (“OPSB”), and the State of Louisiana (“State”), and those Defendants were previously dismissed from the lawsuit), the Supreme Court reversed the Court of Appeal’s application of the  “exceptional circumstances” exception to the res judicata doctrine. The Supreme Court also rejected Plaintiffs’ due process claims, citing the exigent circumstances caused by Hurricane Katrina.

This ruling from the Bayou country provides a valuable framework for how employers can use settlement agreements to preserve potential res judicata defenses in future litigation.

Case Background

On behalf of Plaintiffs, the Unified Teachers of New Orleans (“UTNO”), the exclusive bargaining representative for all Orleans Parish teachers, filed three lawsuits against the OPSB and the State defendants, alleging wrongful termination and a violation of due process rights, among other things. Id. at 11-12. Plaintiffs alleged that Defendants improperly placed class members on disaster leave, terminated them in violation of their employment contracts, and placed their schools in the hands of the State Defendants who failed to abide by certain statutes when re-staffing the schools, all as a result of Hurricane Katrina and the allegedly unconstitutional State Legislature Act 35. Id. at 24. While the claims against the State Defendants were dismissed, UTNO and OPSB reached a global settlement on September 18, 2007. Id. at 4, 8. A few months prior to settlement, Plaintiffs filed a class action lawsuit against the same OPSB and State Defendants, seeking class certification and damages.  Id. at 9.  In rejecting Defendants’ res judicata claims, both the trial court and the Court of Appeal let the newly filed lawsuit stand and subsequently allowed damages. Id. at 11-12.

The Decision Of The Supreme Court Of Louisiana

In reversing the Court of Appeal’s judgment, the Supreme Court of Louisiana held that the doctrine of res judicata applied, without any preclusion due to exceptional circumstances. Id. at 24. The Supreme Court applied the five requirements for a finding of res judicata under Burguieres v. Pollingue, 843 So. 2d 1049, 1052-53 (La. Feb. 25, 2003), including: (1) the judgment is valid; (2) the judgment is final; (3) the parties are the same; (4) the cause or causes of action asserted in the second suit existed at the time of the final judgment in the first litigation; and (5) the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matter of the first litigation. Id. at 13. The Supreme Court held that all five factors were satisfied here. Id. at 24. The Supreme Court discussed and rejected the potential “exceptional circumstances” exception to the res judicata defense based on the facts present. Id. at 20-21. Finally, in light of institutional damage caused by Hurricane Katrina, the Supreme Court held that Defendants’ post-termination staffing procedures satisfied due process. Id. at *22-23.

Implications For Employers

 Oliver is instructive for employers because it underscores the long-standing doctrine that settlement agreements are favored in the law and will be broadly construed. It also teachers that when reaching class action settlements with allegedly aggrieved workers, employers are well served to utilize the broadest possible language to document the resolution. This practice will often provide a res judicata defense in the face of later filed actions.

Eleventh Circuit Refuses To Enforce EEOC’s Broad Subpoena

Posted in EEOC Litigation

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

As we noted in our EEOC Fiscal Year 2014 Scorecard, the EEOC has been steadily increasing its use of its subpoena power to gather as much information as possible from employers prior to filing suit. In fact, in FY 2014, the EEOC prosecuted 24 subpoena actions versus the 17 that were filed in 2013.

FY 2015 has started out with a big win for employers fending off overly broad and unduly burdensome EEOC administrative subpoenas. In EEOC v. Royal Caribbean Cruises, Ltd., No. 13-13519 (11th Cir. Nov. 6, 2014), the Eleventh Circuit Court upheld a decision of the U.S. District Court for the Southern District of Florida refusing to enforce an administrative subpoena served by the EEOC on grounds that the information sought was not relevant to the individual charge the EEOC was investigating and because compliance with the subpoena would be unduly burdensome. Id. at 4.

The Eleventh’s Circuit’s ruling is a big win for employers, and a must read for corporate counsel involved in EEOC litigation.

Background

In 2010 Royal Caribbean discharged an Argentinean national employed as an assistant waiter on one of its cruise ships because he was diagnosed with HIV and Kaposi Sarcoma. Id. at 2. The employee subsequently filed a charge with the EEOC. Id. Royal Caribbean admitted discharging the employee based on his medical condition, but argued both that the Americans With Disabilities Act was inapplicable as the charging party was a foreign national who worked on a ship that operated in the Bahamas and because the Bahamas Maritime Authority’s (“BMA”) medical standards – which Royal Caribbean is required to follow – mandated discharge given the employee’s diagnosis. Id. at 2-3.

During the investigation the EEOC issued an administrative subpoena seeking a list of all employees who were discharged due to a medical reason for the year preceding the filing of the charge along with detailed information for each of these discharged employees, including their personnel files, contact information and information concerning who from Royal Caribbean hired/fire each employee. Id. at 3. The EEOC also requested similar information with respect to any person Royal Caribbean did not hire because of a medical reason. Id. at 4. Both a Magistrate Judge and District Court Judge in the U.S. District Court for the Southern District of Florida refused to enforce the EEOC’s subpoena. Id.

The Eleventh Circuit’s Decision

The Eleventh Circuit’s acknowledged that the EEOC is entitled to inspect and copy any evidence that is “relevant to the charge under investigation,” but it cautioned that such a standard, while broad, should not be construed “so broadly that the relevancy requirement is rendered a nullity.” Id. at 4-5.

The Eleventh Circuit determined that the disputed information at issue did not concern the Charging Party who filed the EEOC charge; instead, it concerned the EEOC’s attempt to discover “a potential class of employee or applicants who suffered from a pattern or practice of discrimination rather than fleshing out [the Charging Party’s] charge.” Id. at 5. While statistical and comparative data in some cases may be relevant, the EEOC is nonetheless required to make “some showing that the requested information bears on the subject matter of the individual complaint.” Id. at 5-6.

The Eleventh Circuit rejected the EEOC’s argument that the requested information “might cast light on the allegations” against Royal Caribbean given that it is not clear “why company-wide data regarding employees and applicants around the world with any medical conditional, including conditions not specifically covered by the BMA medical standards or similar to [Charging Party’s], would shed light on [the Charging Party’s] individual charge that he was fired because of his HIV and Kaposi Sarcoma diagnoses.” Id. at 6.

In arguing that its subpoena should be enforced, the EEOC contended that the information was relevant because “the EEOC is entitled to expand the investigation to uncover other potential violations and victims of discrimination on the basis of disability.”  Id. at 7. The Eleventh Circuit rejected this argument, as it refused to construe the relevancy standard so broadly and because “the relevancy that is necessary to support a subpoena for the investigation of an individual charge is relevant to the contested issues that must be decided to resolve that charge, not relevance to issues that may be contested when and if future charges are brought by other.” Id. at 7 (emphasis added). On this basis the Eleventh Circuit rejected the EEOC’s subpoena as the information sought was “at best tangentially relevant” to the claims of the Charging Party and because it “failed to present a cogent argument as to how the additional information sought…would further aid the Commission in resolving the issues in dispute…” Id. at 9.

The Eleventh Circuit acknowledged that the EEOC has the ability to file a Commissioner’s Charge alleging a pattern or practice of discrimination that could support a request for the broad scope of information that it sought. However, the Eleventh Circuit rejected the EEOC’s apparent attempt to short circuit this process and cautioned the EEOC that it “may not enforce a subpoena in the investigation of an individual charge merely as an expedient bypass of the mechanisms required to file a Commissioner’s charge.” Id.

Finally, the Eleventh Circuit also held that the burden on producing the requested information – which Royal Caribbean estimated would require between five to seven employees working forty hours per week for two months solely to gather the requested information – outweighed the “limited need” of the subpoenaed information. Id. at 10.

Implications For Employers

Case law authority supports the notion that significant deference is accorded the EEOC’s subpoena powers, and the EEOC likes to remind employers of this when it seeks information that goes far beyond the individual charge that it is investigating. However, as this decision highlights, employers caught in the crosshairs of the EEOC’s subpoena enforcement activity are not without recourse. The Eleventh Circuit’s ruling demonstrates that simply because the EEOC says certain information is relevant does not make it so. Employers should keep this decision in their back pocket as ammunition against a runaway EEOC investigation.

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

Amicus Filed Today In Support Of The Government’s Position In Mach Mining v. EEOC

Posted in Class Action Litigation

By Gerald L. Maatman, Jr.

This afternoon six advocacy groups representing the interests of workers and plaintiffs’ class action lawyers filed an amicus brief with the U.S. Supreme Court in Mach Mining v. EEOC, No. 13-1019. A copy is here. Authored by the Civil Rights Clinic of the Dickinson School of Law and The Impact Fund, the amicus brief represents the collective views of multiple public interest organizations, including the National Employment Lawyers Association, The Impact Fund, the American Association of Retired Person, the Asian Americans Advancing Justice-Asian Law Caucus, Disability Rights California, and Public Counsel.

The amicus brief was filed in support of the U.S. Equal Employment Opportunity Commission, which filed its Reply Brief with the SCOTUS on October 27, 2014. In supporting the government’s position, the amicus asserted that the its brief represents the “perspective of the victims of discrimination of workplace discrimination whom Title VII is intended to protect.” See Amicus Brief at 4.

Given the importance of this case and the issue presented, the new amicus brief is well worth a read by employers.

The Context And The Stakes

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the EEOC. That decision had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes – “pay millions or we will sue and announce it in a media release – prior to suing employers.

We have blogged on this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). Readers can find the previous posts here and here and here. In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed. Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations. Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Amicus Briefs For The Defense

Employer groups have lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For our loyal blog readers interested in our amicus brief, a copy is here.

Today’s Amicus Brief Filed In Support Of The EEOC

Today’s amicus submission to the Supreme Court asserts that interpreting Title VII to allow judicial review of conciliation efforts by the EEOC would harm alleged victims of discrimination by violating the mandate of the statute that conciliation remain confidential. Judicial review, the amicus brief asserts, would chill full and frank settlement discussions; expose sensitive information about pre-lawsuit negotiations to the public, and hurt the cases of allegedly injured workers because federal judges might be potentially influenced by irrelevant settlement communications. The amicus brief also argues that if the SCOTUS interprets the statute to allow judicial review of pre-lawsuit conciliation efforts by the EEOC, dismissal is an overly harsh remedy where those efforts are determined to be inadequate (and instead the parties should be ordered to engage in further settlement negotiations).

The point of the amicus brief about compromising the impartiality of federal judges – by exposing the court to settlement discussions in conciliation – is somewhat surprising. Federal judges conduct mediations and settlement conferences as a matter of course, and are “exposed” to settlement discussions routinely.

Next Up On The Docket

Mach Mining’s answering brief is due on November 26, 2014, and then the SCOTUS will set the case for oral argument for January of 2015.

We will keep our loyal blog readers updated as developments occur in this litigation.

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

Texas Court Finds That Comity Is No Barrier To Human Trafficking Class Action Claims Brought By Filipino Workers

Posted in Class Action Litigation

By Gerald L. Maatman, Jr. and Kathryn “Chris” Palamountain

A recent Texas Court of Appeals case involving claims of human trafficking of workers recruited in the Philippines and brought to work in Texas provides insight into how principles of international comity may be applied in Texas state courts in the class action context. This ruling – Villareal v. International Plant Services, LLC, Case No. 01-13-00310 (Ct. App. 1st Dist. Tex. Oct. 28, 2014) – is instructive for agencies that recruit foreign workers and their counsel.

It also demonstrates to extent to which workplace class actions are on the increase for alleged abuses against workers across international borders.

Case Background

The Plaintiffs were recruited under a highly regulated program governed by the Migrant Workers and Overseas Filipino Act of 1995, a law which provides that the Filipino National Labor Relations Commission (NLRC) “original and exclusive jurisdiction to hear and decide…claims arising out of an employer-employee relationship…involving Filipino workers for overseas deployment….” Republic Act 8042, s 10 (2004) (Phil.). Given the jurisdictional language of this statute, it is unremarkable that, after the Plaintiffs filed claims in Texas state court, defendants moved to dismiss on grounds that the court should decline to exercise jurisdiction based upon principles of international comity. The trial court granted the motion and the Plaintiffs appealed.

The Appellate Decision Reversing The Dismissal Of Plaintiffs’ Claims

The threshold issue on appeal was the standard of review that the Court of Appeals would apply to the trial court’s decision. Defendant argued that because the underlying issue was jurisdictional, a de novo standard of review should apply. Plaintiffs countered that because dismissal based on comity is “voluntary and not obligatory,” an abuse of discretion standard should apply. Foreshadowing the substantive outcome, the Court of Appeals cited Fifth Circuit and Texas Supreme Court authority to find that the abuse of discretion standard applied. Id. at 7.

Turning to the comity issue, the Court of Appeals noted that both state and federal courts apply Sections 402 and 403 of the Restatement (Third) of the Foreign Relations Law of the United States to “determine whether dismissal based on principles of international comity is appropriate.” Id. at 9. Under the Restatement, the factors used to determine whether an exercise of jurisdiction would be unreasonable include the following: (1) the extent to which the challenged activity takes place or has a direct effect in the territory; (2) connection between the regulating state and the person principally responsible for the activity regulated; (3) the nature of the regulated actions; (4) whether the regulation upsets justifiable expectations; (5) importance of the regulation to the international economic system; (6) the extent to which the regulation is consistent with traditions of the international system; (7) extent of another state’s interest in regulating the activity; and (8) the likelihood of conflict. Id. at 11-12. Noting that the Texas Supreme Court has not yet expressly adopted the Restatement, the Court of Appeals nevertheless decided that the Restatement provided a proper analytical framework. Id. at 12.

In applying the factors, the Court of Appeals repeatedly found that, for most of the factors, each side presented some evidence relevant to the factor that supported their respective positions. However, the existence of some evidence supporting Plaintiffs’ position on most factors “does not support a conclusion that the district court’s exercise of jurisdiction would be unreasonable.” Id. at 15. In other words, since Plaintiffs could provide some argument to support their position on many of the factors, the Court of Appeals concluded that “the exercise of jurisdiction over this case by Texas is not unreasonable, and, accordingly, that the trial court erred in dismissing the case.” Id. at 21.

Implications For Recruiters

Given the somewhat factual nature of the evaluation of the factors, one could argue that this case could be limited to its facts. However, the fact that the Court of Appeals set up a framework in which the existence of arguments for both sides in essence prevents a trial court from declining to exercise jurisdiction based on comity appears to put a thumb on the scale of state law rather than the law of a foreign sovereign.

The EEOC’s Most Important Brief Of The Year Filed With The U.S. Supreme Court – The Lines Are Drawn In The Mach Mining Appeal

Posted in Class Action Litigation

By Gerald L. Maatman, Jr. and Rebecca Bjork

Yesterday evening the U.S. Equal Employment Opportunity Commission filed its Reply Brief with the U.S. Supreme Court in Mach Mining v. EEOC, Case No. 13-1019. It draws the battle lines for the upcoming oral argument before the SCOTUS in January of 2015. Given the importance of this case and the issue presented, the Commission’s pleading is well worth a read.

The Context

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the EEOC. That decision had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes – “pay millions or we will sue and announce it in a media release – prior to suing employers.

We have blogged on this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). Readers can find the previous posts here and here.  In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed.

Grant Of Certiorari

Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations.

Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Amicus Briefs For The Defense

Employer groups have lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For our loyal blog readers interested in our amicus brief, a copy is here.

The EEOC’s Brief

The Commission’s submission to the Supreme Court last night asserts that federal judges cannot adjudicate any issue relative to the EEOC’s conciliation efforts. It relies heavily on the statutory language of Title VII, and argues that Congress left it to the Commission “to decide which informal methods of conference, conciliation, and persuasion would be appropriate.” EEOC Reply Brief at 8. Given that that Congress entrusted the Commission exclusive authority of whether to enter into pre-lawsuit settlements, this demonstrates that the process “is committed to the agency’s discretion” and further any such settlements – by way of a conciliation agreement – are confidential and cannot be made public. Id. at 9. Hence, the EEOC contends, this process is fundamentally “incompatible with judicial review of the conciliation process.” Id.

Not surprisingly, the EEOC also argues that judicial review of the adequacy of the Commission’s conciliation efforts “undermines the effective enforcement of Title VII.” Id. at 11. It asserts that employers have used the defense as a potent weapon to fight EEOC litigation through discovery and delay. Id. The EEOC contends that allowing for judicial review of its conciliation efforts would mean that employers would exploit it for litigation advantage, “stockpiling exhibits for the coming court battle.”  Id. at 40.

Next, in reciting legislative history for Title VII to support its view that the adequacy of its conciliation should not be reviewed, the EEOC relies on “basic principles of administrative law” to conclude that because conciliation failure is not final agency action, it is committed to the agency’s discretion.  Id. at 32-33.

Finally, and not unexpectedly, the EEOC contends that judicial review is unnecessary, as it has “powerful incentives” to conciliate in good faith and “has a long history of doing so.” Id.

Next Steps

We anticipate that worker advocacy groups will file their own amicus briefs with the SCOTUS supporting the EEOC in the next 10 days. Thereafter, Mach Mining will file its final brief before oral argument is set. So stay tuned for more developments…

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