Seyfarth Synopsis: On October 5, 2017, U.S. Attorney General Jeff Sessions issued an agency memorandum stating that the language contained in Title VII of the Civil Rights Act of 1964, “does not prohibit discrimination based on gender identity per se, including transgender status.” It represented a head-snapping pivot of the position of the U.S. Department of Justice. In this video, Jerry Maatman of Seyfarth Shaw, LLP gives blog readers an overview of the recent history regarding legal interpretation of Title VII. Jerry discusses potentially conflicting statutes and court rulings, as well as the ways in which this Department of Justice memorandum could affect businesses and those who litigate under Title VII.

Summary

Title VII of the Civil Rights Act of 1964 has been a prevalent federal statute since its passage over 50 years ago. Therefore, it is an especially important statute to understand for nearly every employer. During the Obama Administration, Attorney General Eric Holder stated in a 2014 memorandum that the Department of Justice does, in fact, apply the concept of sex discrimination in the workplace to transgender workers. However, Congress has rejected all attempts thus far to amend Title VII. To that end, the language of the law leaves legal interpretation open for debate.

The EEOC’s current view of Title VII is that it includes protections for transgender workers. In addition, 20 states and the District of Columbia include both sexual orientation and gender identity as protected categories under their discrimination statutes. The recent statement by the Department of Justice has renewed the widespread debate over the definition of sex discrimination, a dispute which we suspect will not end any time soon. Make sure to stay tuned to our blog and Twitter account for updates and insights on this important legal issue!

Seyfarth Synopsis: With the EEOC’s Fiscal Year ending on September 30, 2017, loyal blog readers know that our firm has been busy analyzing the major trends of FY 2017 on the EEOC litigation front. In this video, Jerry Maatman of Seyfarth Shaw, LLP provides an overview of the highlights from the EEOC’s “litigation scorecard” for the 2017 Fiscal Year. Jerry touches on this year’s overall filing trends, tracks the importance of Equal Pay claims filed, and lastly, gives our readers some ideas on possible implications for the future of the EEOC. Remember, if you are interested in the filing trends of the EEOC or in complex discrimination law in general, stay tuned for our full analysis of the 2017 EEOC Fiscal Year that comes out in late December.

Summary

2017 was a very interesting Fiscal Year for the EEOC. Though many predicted that EEOC filings would decrease in 2017 with the arrival of the Trump Administration, numbers were up by more than 50 filings in comparison to 2016. In fact, the month of September saw 88 filings alone, including 21 in the final 48 hours. Equal Pay claims were no exception to this trend. As Acting EEOC Chair Vicki Lipnic predicted during her presentation at Seyfarth Shaw in February 2017, the EEOC committed to focusing on Equal Pay Act filings. 11 of this year’s 184 merit filings involved Equal Pay claims, which nearly doubled last year’s total.

In terms of the future, the changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. As is emphasized above, EEOC filing numbers climbed back to numbers from past years. Changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda – although exactly what that impact will be remains to be seen.

Loyal blog readers should stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

 

 

By Matthew J. GagnonChristopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With uncertain times and profound changes anticipated for the EEOC, employers anxiously await what enforcement litigation the EEOC has in store. Although 2016 showed a marked decline in filings, fiscal year 2017 shows a return to vigorous enforcement filings, with a substantial number of filings in the waning days of the fiscal year.

Employers are living in uncertain times. The impact of a Trump Administration and the EEOC’s new Strategic Enforcement Plan (SEP) for fiscal years 2017-2021 are still working themselves out in the FY 2017 filing trends. Nonetheless, one trend has reemerged: a vigorous number of EEOC case filings. It looks like the anemic numbers of FY 2016 were just a bump in the road, as FY 2017 has revealed an increase in total filings, even eclipsing the numbers from FY 2015 and 2014. (Compare here to here and here.) This year, the EEOC filed 202 actions, 184 merits lawsuits and 18 subpoena enforcement actions.

The September filing frenzy is still an EEOC way-of-life, as this past month yet again holds the title for most filings compared to any other month. At the time of publication, 88 lawsuits were filed in September, including 21 in the last two days alone. In fact, the EEOC filed more cases in the last three months of FY 2017 than it did during all of FY 2016. The total number of filings for the remaining months remains consistent with prior years, including a noticeable ramp up period boasting double digit numbers through the summer.

Filings out of the Chicago district office were back up in FY 2017 after an uncharacteristic decline to just 7 total filings in 2016. This year, Chicago hit 21 filings, an enormous increase from last year. This is closer to the total number of Chicago filings in FY 2015 and 2014 (26 in each year). The Los Angeles district office also increased its filings, hitting a high of 22, a substantial jump compared to previous years and the most of any district office in FY 2017. On the other end of the spectrum, the Phoenix district office has seen a notable drop, with only 7 filings compared to 17 in FY 2016.

New SEP, Same Focus

Every year we analyze what the EEOC says about its substantive focus as a way to understand what conduct it is targeting. This year, Title VII takes center stage. Although Title VII has consistently been the largest category of filings, last year showed a dip in the percentage of filings alleging Title VII violations, at only 41%. Nonetheless, this year Title VII has regained its previous proportion, accounting for 53% of all filings. This is on par with FY 2015 and 2014, showing once again that FY 2016 seems to have been an outlier.

Although the 2017-2021 SEP outlined the same general enforcement priorities as the previous version of the SEP (covering FY 2012 to 2016), the new SEP added “backlash discrimination” towards individuals of Muslin/Sikh/Arab/Middle Eastern/South Asian communities as an additional focus. One would expect this focus might increase the number of Title VII claims alleging either religious, racial, or national origin discrimination. However, those filings stayed relatively even, and were even a bit down from previous years. Religious, national origin, and race discrimination claims made up 42% of all Title VII claims, compared to 50% in 2016 and 46% in 2015.

Uncertainty For Equal Pay Claims

With a new administration came a new Acting Chair for the EEOC. President Trump appointed Victoria Lipnic as Acting Chair on January 25, 2017. Employers expected the EEOC’s new leader to steer the EEOC’s agenda in a different direction. Some believed Lipnic was foreshadowing future trends when she made it clear at her first public appearance – hosted by none other than Seyfarth Shaw – that she is “very interested in equal pay issues.” (See here.) And indeed, we have seen a slight uptick in the number of EPA claims filed in FY 2017. In FY 2017, The EEOC filed 11 EPA claims, compared to 6 in 2016, 5 in 2015, and 2 in 2014.

However, on June 28, 2017, President Trump tapped Janet Dhillon as Chair of the EEOC. Dhillon would come to the EEOC with extensive experience in a big law firm and as the lead lawyer at three large corporations, US Airways, J.C. Penney, and Burlington Stores Inc. Although it is too early to know how she could change the direction of the agency if confirmed, it is entirely possible that she could back away from previous goals to pursue equal pay claims more aggressively.

The Trump Administration has also made other moves that may indicate a change in direction with respect to equal pay initiatives. On February 1, 2016, the EEOC proposed changes to the EEO-1 report that would require all employers with more than 100 employees to submit more detailed compensation data to the EEOC, including information regarding total compensation and total hours worked by race, ethnicity, and gender. This was a change from the previous EEO-1 report, which only required employers to report on employee gender and ethnicity in relation to job titles. However, on August 29, 2017, the new EEO-1 reporting requirements were indefinitely suspended. We will have to wait and see whether the slight uptick in EPA claims in FY 2017 was a one-year anomaly.

Implications For Employers

The changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. The EEOC is no exception. Despite all of the unrest and uncertainty about where the EEOC may be headed, the FY 2017 filing trends largely show a return to previous years, albeit with a slight uptick in EPA claims. Certainly, changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda. Exactly what that impact will be remains to be seen.

Loyal readers know that this post is merely a prelude to our full analysis of trends and developments affecting EEOC litigation, which will be published at the end of the calendar year. Stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

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

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

Seyfarth Synopsis:  In the latest chapter of the ongoing legal battle between the EEOC and delivery company CRST Van Expedited regarding the agency’s sexual harassment claims, a federal district court ordered the EEOC to pay $1.9 million in attorneys’ fees to the company for pursuing claims that it knew or should have known were frivolous.

Employers should have this ruling handy when challenging whether the EEOC fulfilled its pre-suit obligations under Title VII. It is undoubtedly a signal ruling relative to the agency’s missteps in “suing now and aiming later…”

***

In a long and winding legal journey that made a pit stop at the U.S. Supreme Court, the EEOC v. v. CRST Van Expedited, Inc., No. 07-CV-95, 2017 LEXIS 155134 (N.D. Iowa Sept. 22, 2017),  litigation involves the largest fee sanction award ever levied against the EEOC – nearly $4.7 million. In August 2013, after the U.S. District Court for the Northern District of Iowa imposed the nearly $4.7 million award, the EEOC appealed, and the Eighth Circuit reversed and remanded several fee issues for further proceedings.  Id. at *2.  Following CRST’s appeal, the U.S. Supreme Court reversed and remanded the Eighth Circuit’s ruling.  On remand, the Eighth Circuit vacated its prior judgment and remanded back to the District Court.  Thereafter, CRST moved for a supplemental fee award in the amount of approximately $975,000, consisting of attorneys’ fees for work performed in the case following the District Court’s August 1, 2013 Order.  Judge Linda R. Reade of the U.S. District Court for the Northern District of Iowa ordered the EEOC to pay approximately $1.9 million in attorneys’ fees, out-of-pocket expenses and taxable costs to CRST, but denied CRST’s motion for a supplemental fee award.

For employers embroiled in EEOC litigation, the $1.9 million fee award is an exceedingly important example of a court holding the Commission accountable when it fails to satisfy its pre-suit investigation duties under Title VII.

Case Background

As we discussed in our blog post here, Section 706(k) authorizes district courts to award attorneys’ fees to the “prevailing party” in a Title VII case.  In relevant part, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978) held that fee awards to a prevailing defendant are permissible only if the plaintiff’s lawsuit was “frivolous, unreasonable, or without foundation.”  After CRST successfully obtained the dismissal of the EEOC’s Title VII claims for sexual harassment, the District Court granted CRST’s motion for an award of attorneys’ fees and costs and directed the EEOC to pay CRST nearly $4.7 million, finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on both CRST and the District Court.

After the EEOC appealed, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that the District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations did not constitute a ruling on the merits, and that therefore, CRST was not a prevailing party as to these claims.  The Eighth Circuit also held that CRST could not satisfy the Christianburg standard for the same reason: “[P]roof that a plaintiff’s case is frivolous, unreasonable, or groundless is not possible without a judicial determination of the plaintiff’s case on the merits.”  Thereafter, following CRST’s petition for certiorari, the U.S. Supreme Court accepted the case for review.

The U.S. Supreme Court reversed the Eighth Circuit and remanded the case for further proceedings.  Id. at *5.  On June 28, 2016, the Eighth Circuit entered a judgment vacating its prior panel opinion and remanding to the District Court for further proceedings.  The District Court ordered briefing on the issues remanded by the U.S. Supreme Court, where CRST requested an additional a supplemental fee award in the amount of approximately $975,000, consisting of attorneys’ fees for work performed in the case following the District Court’s August 1, 2013 Order.

The Court’s Decision

On September 22, 2017, the District Court awarded nearly $1.9 million in attorneys’ fees, out-of-pocket expenses and taxable costs to CRST, but denied CRST’s motion for a supplemental fee award.  In ordering the $1.9 million award, the District Court found that CRST was the prevailing party as to the sixty-seven claims at issue, that the sixty-seven claims met the standard announced in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), and made individualized findings as to seventy-eight of the individual claimants for which the court granted CRST summary judgment.  Id. at *5-6.

CRST had moved for a supplemental fee award of $975,000 for the following work it performed: (1) briefs, oral argument, and rehearing petition in the EEOC’s appeal to the Eighth Circuit from the August 1, 2013 Order; (2) CRST’s petition for certiorari, briefs, and oral argument in the Supreme Court resulting in reversal of the Eighth Circuit’s opinion vacating the August 1, 2013 fee award; (3) CRST’s brief  resisting the Rule 60(b) Motion; and (4) CRST’s briefs on remand as required by the Eighth Circuit’s now vacated decision with respect to the fees awarded for claims dismissed on summary judgment.  Id. at *6-7.  The EEOC argued that CRST’s application for fees was untimely and that CRST could not demonstrate that any of the actions that the EEOC took with respect to the requested categories of fees were frivolous, unreasonable or groundless.  The EEOC further argued that the fees sought by CRST were unreasonable.

Regarding timeliness, the District Court accepted the EEOC’s argument and held that CRST’s motion for a supplemental fee award was filed more than 120 days after the latest final judgment for which CRST requests attorneys’ fees.  Regarding the EEOC’s argument that the fees sought by CRST were unreasonable, the District Court similarly found in favor of the EEOC, noting that neither its appeal of the District Court’s fee award to the Eighth Circuit nor CRST’s appeal to the Supreme Court were amenable to fees.  Id. at *12-13.  Accordingly, the District Court denied CRST’s motion for a supplemental fee award.

Implications For Employers

Although the formerly $4.7 million fee sanction against the EEOC was reduced to $1.9 million, this is nonetheless a major victory for employers.  This ruling will serve as a cautionary tale for the EEOC when it attempts to speed through its mandatory pre-suit duties in rushes to the courthouse to litigate claims.  For employers who are blindsided by such EEOC tactics, this ruling can be used as precedent to hold the Commission accountable when it abandons its pre-suit duties required under Title VII.

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

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

Seyfarth SynopsisAfter a federal district court dismissed the EEOC’s unlawful-interference claim against a private college that had sued a former employee for allegedly breaching a settlement agreement by filing an EEOC charge, the Tenth Circuit reversed the dismissal of the EEOC’s unlawful-interference claim, citing the employer’s introduction of a new case theory relative to the EEOC’s still-pending retaliation claim.

This ruling serves a cautionary tale for employers regarding the timing of their assertion of new case theories in EEOC litigation involving multiple claims.

***

After CollegeAmerica resolved a dispute with a former employee by entering into a settlement agreement, upon belief that the employee breached the settlement agreement, CollegeAmerica sued the employee in state court.  Id. at *1-2.  Thereafter, the EEOC sued CollegeAmerica in federal court alleging that CollegeAmerica’s interpretation and enforcement of the settlement agreement was unlawfully interfering with statutory rights of the former employee and the EEOC.  Following the U.S. District Court for the District of Colorado’s dismissal of the EEOC’s claim for unlawful-interference with statutory rights, on appeal in EEOC v. CollegeAmerica Denver Inc., No. 16-1340, 2017 U.S. App. LEXIS 17094 (10th Cir. Sept. 5, 2017), the Tenth Circuit reversed the dismissal, holding that the EEOC’s unlawful-interference claim should not have been dismissed as moot in light of a new theory asserted by CollegeAmerica prior to its trial regarding the EEOC’s pending retaliation claim.

Employers should keep this ruling in mind when preparing trial theories that may have implications on claims that had previously been dismissed as moot.

Case Background

The EEOC brought a claim for unlawful-interference with statutory rights, which the District Court ultimately dismissed as moot.  Regarding the EEOC’s retaliation claim, which remained for trial, CollegeAmerica presented a new theory against the employee: that she had breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica.  In response, the EEOC argued that by presenting this new theory, CollegeAmerica was continuing to interfere with the statutory rights of the former employee and the EEOC.  As such, the EEOC appealed the dismissal of its unlawful-interference claim, arguing that the claim was no longer moot in light of CollegeAmerica’s new theory.

The Tenth Circuit’s Decision

The Tenth Circuit reversed the dismissal of the of the EEOC’s unlawful-interference claim.  First, the Court instructed that in determining whether a claim is moot, a special rule applies when the defendant voluntarily stops the challenged conduct.  Id. at *4-5.  When the conduct stops, the claim will be deemed moot only if two conditions exist: (1) it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur, and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.  In arguing that the case was moot, CollegeAmerica submitted two declarations from its general counsel assuring that CollegeAmerica would not take the “positions known to trouble the EEOC.”  Id. at *6.  In response, the EEOC argued that the declarations should not be relied upon since CollegeAmerica presented a new theory after the filing of the declarations–that the employee had breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica–an argument that continued CollegeAmerica’s unlawful interference with statutory rights.  The Tenth Circuit held that because CollegeAmerica planned to present its new theory in its state court suit, the potential for CollegeAmerica to repeat its allegedly wrongful behavior remained, and CollegeAmerica thus did not satisfy its burden of demonstrating the absence of a potential for reoccurrence.  Id.

Next, the Tenth Circuit rejected CollegeAmerica’s argument that the case was moot because the outcome “would not affect anything in the real world.”   Id. at *7.  The Tenth Circuit noted that in its state court suit, CollegeAmerica planned to argue that the employee breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica. The EEOC alleged that this argument would constitute unlawful-interference with the employee’s rights, and thus sought a permanent injunction prohibiting CollegeAmerica from unlawfully interfering with the statutory rights of the employee and the EEOC.  The Tenth Circuit accepted the EEOC’s argument, holding that if the EEOC prevailed on the merits and obtained an injunction, CollegeAmerica could not present its new theory in the state court suit against the employee, which “would constitute an effect in the real world.”  Id.

Finally, the Tenth Circuit declined to consider CollegeAmerica’s argument that the EEOC’s unlawful-interference claim brought under 29 U.S.C § 626(f)(4) failed as a matter of law since it could not be used as an affirmative cause of action, noting the District Court had not yet ruled on the issue and therefore it was to consider that issue on remand.  Id. at *7-8.  The Tenth Circuit also refused to consider CollegeAmerica’s argument that the EEOC sought overly broad, unauthorized injunctive and declaratory relief, explaining it would not consider this issue since it was raised on appeal for the first time.  Accordingly, the Tenth Circuit reversed and remanded the District Court’s dismissal of the EEOC’s unlawful-interference claim.

Implications For Employers

For employers facing litigation, this ruling provides an important lesson: when considering the defense of one claim, it is imperative to be cognizant of how that argument can impact the defense of another claim, even if the other claim has been dismissed.  Further, this decision illustrates the EEOC’s willingness to combat employers who bring causes of action against former employees who may have breached settlement agreements by asserting discrimination claims.  As such, employers should be cautious when suing former employees who later file EEOC charges, and must exercise further caution when considering how their strategies to defend one claim may affect another.

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

Seyfarth Synopsis: The plaintiffs’ bar has recently brought a flurry of class action lawsuits against businesses under the Illinois Biometric Information Privacy Act, commonly known as “BIPA.”  In this Vlog, Seyfarth Shaw Associate Alex Karasik sits down with esteemed class action litigator, Partner Jerry Maatman, to discuss this emerging legal trend, and to provide employers guidance on how to prevent and defend against BIPA class actions.

Background

Unique to the state of Illinois, the Biometric Information Privacy Act was the first of its kind enacted by a state legislature.  In light of the technological advancements of the past decade, the Illinois legislature enacted this law to protect the “biometric data” of individuals, including their fingerprints, retinal scans, and facial recognition.  Since BIPA’s passage in 2008, a number of states have followed suit and added “biometric data” to their privacy laws. 

Implications For Employers

Recently, there has been a major uptick in ligation across the country involving biometric technology, and there are no signs of this trend slowing down.  In terms of preventive measures, business should establish sound protocols for the handling and dissemination of biometrics.  This is important because, in this day and age, biometric data can be used to access sensitive personal information.  Businesses should thus be cognizant of the biometric data laws in the states where they operate and closely examine whether their own policies and procedures are compliant.

Businesses must also be prepared to defend against a potential lawsuit under a biometric privacy statute.  Following the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins 136 S. Ct. 1540 (2016), the concept of “standing” has become highly relevant in employment law.  As such, when confronted with a BIPA suit, businesses should focus on whether the plaintiffs suffered a traceable harm stemming from the actions taken on their biometric data.

 

 

By Gerald L. Maatman, Jr. and John S. Marrese

Seyfarth Synopsis:  In In Re Subway Footlong Sandwich Mktg. & Sales Practices Litig., No. 16-1652 (7th Cir. Aug. 25, 2017), the U.S. Court of Appeals for the Seventh Circuit overturned a district court’s approval of a class action settlement involving Subway sandwich purchasers who sued for alleged consumer fraud.  The Seventh Circuit called the settlement “worthless” in terms of alleged relief to the class. The decision illustrates that companies defending class action litigation cannot exit such lawsuits by simply “buying peace” by paying-off plaintiffs’ lawyers without providing any value to the class. In this respect, it is one of those unique rulings that is well worth a read by corporate counsel and business executive alike.

***

In In Re Subway Footlong Sandwich Mktg. & Sales Practices Litig., No. 16-1652, 2017 U.S. App. LEXIS 16260 (7th Cir. Aug. 25, 2017), the U.S. Court of Appeals for the Seventh Circuit addressed the propriety of an injunctive relief settlement for a class of Subway “Footlong” sandwich purchasers.

A number of state-law consumer protection class actions were filed against Subway based on Subway’s alleged failure to ensure that its Footlong sandwiches were actually 12 inches long.  Id. at *3-5.  Limited discovery showed that the claims had little merit. Subway had always taken steps to ensure that its sandwiches were proper length, but bread length nonetheless varies due to natural and unpreventable variation in the bread-baking process.  Id. at *5.

Rather than pursue resolution on the merits, the parties reached a class-wide settlement for injunctive relief whereby Subway agreed to implement redundant and futile measures in an attempt to ensure Footlongs lived up to their name.  Id. at *7.  Plaintiffs’ attorneys received $520,000 in return for attorneys’ fees.  Id. at *8.  The district court approved of the settlement over objections by certain class members.  Id.

On appeal, the Seventh Circuit reversed, finding that the settlement was “worthless” to the class.  Id. at *14.

Case Background

In 2013, after an online photo went viral showing one customer’s Footlong Subway sandwich was in fact only 11 inches, a slew of plaintiffs’ attorneys filed putative class actions against Subway for damages and injunctive relief.  Id. at *3-4.   The class actions were consolidated in a multidistrict litigation in the U.S. District Court for the Eastern District of Wisconsin.  Id. at *4-5.

Limited discovery revealed that the claims had little merit as: (i) Subway had taken steps to ensure that its Footlongs were in fact 12 inches long; (ii) the minor variability in bread length revealed was due to natural and unpreventable variability in the baking process; and (iii) irrespective of bread length, customers received the same amount of meat, cheese, and other toppings on a sandwich.  Id. Such facts eliminated any hope of certification of a damages class under Rule 23(b)(3), so class counsel focused on certification of a Rule 23(b)(2) injunctive relief class instead.  Id. at *5-6.

The parties subsequently reached a settlement for injunctive relief whereby Subway agreed to implement measures aimed at ensuring Subway Footlongs were in fact 12 inches long, including: (i) requiring franchisees to use a measuring tool for sandwiches; (ii) requiring corporate quality-control inspectors to measure baked bread and check oven operation during regularly scheduled visits; and (iii) posting a notice on its website and in restaurants notifying customers of the variability in baked bread.  Id. at *7.

In return, the plaintiffs agreed to cap their requests for attorneys’ fees at $525,000 and incentive awards at $1,000.  Id. The district court preliminarily approved the settlement, and class counsel filed a motion seeking $520,000 in fees for class counsel and $500 incentive awards for each named plaintiff.  Id. at *8.

A professional objector who was also a member of the class objected to the settlement.  However, the district court overruled the objection, approved the settlement, and certified a class of persons nationwide who had purchased six-inch and Footlong Subway sandwiches between 2003 and 2015.  Id.

The objector appealed.

The Decision

On appeal, the U.S. Court of Appeals for the Seventh Circuit reversed the district court’s approval of the class action settlement.  Id. at *14.

The Seventh Circuit found that the settlement was “worthless” and that “[n]o class action settlement that yields zero benefits for the class should be approved[.]”  Id. at *11.  The Seventh Circuit explained that irrespective of the measures Subway promised to take under the settlement, “there’s still the same small chance that Subway will sell a class member a sandwich that is slightly shorter than advertised.”  Id. at *13 (emphasis in original).

Moreover, the Seventh Circuit found that class members’ right under the settlement to hold Subway in contempt for violating the injunction did not add any value.  Id. at *14.  “Contempt as a remedy to enforce a worthless settlement is itself worthless.  Zero plus zero equals zero.”  Id.

Finally, though not part of its holding, the Seventh Circuit expressed its disdain for the Footlong lawsuits by proclaiming that, because the consolidated class actions sought worthless relief, they “should have been dismissed out of hand.” Id. at *14 (internal quotations and citation omitted).

Implication For Employers

As shown by the Seventh Circuit’s decision, paying-off class action plaintiffs’ counsel can be a poor strategy for efficient resolution of class litigation.  If an employer wishes to realize the cost-savings of early settlement, it must ensure that settlement provides actual value to the class and fees to class counsel commensurate with that value.  Otherwise, expected cost-savings are squandered on opposing objectors (or the trial judge), with the possibility that the trial or an appellate court rejects the settlement and returns the litigation to where settlement talks began.

As an alternative approach, employers should consider efficient and realistic paths to summary judgment.  That approach can make good sense in the face of attorney-driven class litigation with no emotional appeal like the Subway case.  The Seventh Circuit’s emphatic command that meritless class actions should be “dismissed out of hand” should give employers and counsel more confidence in that regard.

 

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

Seyfarth Synopsis:  After an employer circulated a letter to 146 employees discussing an employee’s EEOC Charge that alleged discrimination on the basis of his disability in violation of the ADA, a federal district court in Connecticut denied both parties’ motions for summary judgment.

This ruling provides valuable lessons for employers on the risks of widespread internal communication regarding pending EEOC charges.

***

In EEOC v. Day & Zimmerman NPS, Inc., Case No. 15-CV-1416, 2017 U.S. Dist. LEXIS 133918 (D. Conn Aug. 22, 2017), a Day & Zimmerman NPS, Inc. (“DZNPS”) employee filed a charge with the EEOC alleging that DZNPS violated the ADA by denying him a reasonable accommodation.  As part of its investigation of the Charge, the EEOC sought information from DZNPS, including the names and contact information of other DZNPS employees.  Prior to providing the requested information to the EEOC, DZNPS sent a letter to approximately 146 employees that identified the Charging Party by name, and noted that he had filed a charge of discrimination with the EEOC.  The EEOC alleged that by sending the letter, DZNPS retaliated against the employee for filing a charge with the EEOC in violation of the ADA and interfered with the Charging Party and letter recipient employees’ exercise and enjoyment of rights protected by the ADA.

As we previously blogged about here, the Court previously denied DZNPS’s motion to dismiss.  After the EEOC filed a motion for partial summary judgment on its interference claim under the ADA, and DZNPS filed a motion for summary judgment as to the Complaint in its entirety, Judge Victor A. Bolden of the U.S. District Court for the District of Connecticut denied both parties’ motions for summary judgment.

For employers considering whether to communicate internally about the pending EEOC charges, this ruling illustrates they should be careful to avoid creating the perception that they are retaliating against employees who bring charges or interfering with other employees’ rights to file future charges.

Case Background

In or around the fall of 2012, DZNPS hired 147 temporary electricians, including the Charging Party, who was a member of Local 35 of the International Brotherhood of Electrical Workers (“Local 35”).  Id. at *4.  After the Charging Party began training for the position, he provided a doctor’s note to a DZNPS representative indicating that he could not work around radiation.  The note requested a reasonable accommodation.  After receiving the doctor’s note and the request for a reasonable accommodation, DZNPS terminated the Charging Party’s employment.

In October 2012, the Charging Party filed a charge of discrimination with the EEOC, alleging that DZNPS failed to accommodate his disability reasonably and unlawfully terminated his employment.  Id. at *5.  In March 2014, the EEOC sought information from DZNPS as part of its investigation of the employee’s charge, including the names and contact information of other electricians who had worked for DZNPS at the Millstone Power Station in Waterford, Connecticut in the fall of 2012.

In June 2014, before providing the requested information to the EEOC, DZNPS sent a letter to approximately 146 individuals, all of whom were members of Local 35 and all of whom had worked or continued to work for DZNPS.  Id. at *6-7.  In the June 2014 letter, DZNPS identified the allegedly aggrieved employee by name and indicated that he had filed a charge of discrimination on the basis of disability.  The letter identified his union local, the medical restrictions on his ability to work, and the accommodation he had requested.  It further informed the recipients of their right to refuse to speak to the EEOC investigator, and offered them the option to have DZNPS counsel present if they chose to speak to the EEOC.

The EEOC moved for partial summary judgment on its interference claim under the ADA.  DZNPS moved for summary judgment as to the Complaint in its entirety, arguing that: (1) the EEOC’s legal theories would violate DZNPS’s free speech rights under the First Amendment of the United States Constitution; (2) that the June 2014 letter is protected by the litigation privilege under Connecticut law; (3) that the EEOC cannot, as a matter of law, make out a claim for retaliation under the ADA; (4) that the EEOC cannot, as a matter of law, make out a claim for interference under the ADA; and (5) that the EEOC lacks standing to bring this case under Article III of the United States Constitution.

The Court’s Decision

The Court denied both parties’ motions for summary judgment.  First, the Court rejected DZNPS’s claim that the EEOC lacked Article III standing to bring the case because no punitive or compensatory damages were available to the EEOC.  Id. at *13-14.  The Court noted that DZNPS cited to no legal authority supporting that proposition.  DZNPS also argued that if the Court found that its sending of the letter was either retaliation or interference in violation of the ADA, then the Court would be establishing a content and speaker-based restriction on speech that violated the First Amendment.  The Court rejected this argument on the basis that DZNPS identified no authority supporting its argument that the First Amendment protects speech from a defendant if that speech gives rise to liability under the ADA or other employment discrimination statutes.  Id. at *16-19.  Further, after analyzing Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981), and subsequent cases interpreting Gulf Oil, the Court held that the Gulf Oil line of cases did not prevent courts from imposing restrictions on employer communications in situations where those communications could amount to “coercion” or prevent employees from exercising their rights.  Id. at *20-22.

Turning to the ADA retaliation claim, DZNPS argued that there was no genuine dispute of material fact that the EEOC would not be able to establish the third and fourth prongs of the prima facie case of retaliation under the ADA, either an adverse employment action or a causal connection between the protected activity and the adverse employment action.  Id. at *26-28.  DZNPS also argued that, even if the EEOC showed a genuine dispute of material fact as to the prima facie case for retaliation, the EEOC did not rebut DZNPS’s legitimate non-retaliatory reasons for sending the letter.  The Court found that when an employer disseminates an employee’s administrative charge of discrimination to the employee’s colleagues, a reasonable factfinder could determine that such conduct constitutes an adverse employment action.  In regards to DZNPS’s proffered legitimate, non-discriminatory reason for sending the letter, to “minimize business disruption” and notify the recipients that DZNPS had disclosed their “home telephone numbers and addresses . . . to the EEOC,” the Court found that a reasonable jury could also conclude that DZNPS’s explanation was pretextual because the letter did not need to explain that recipients need not speak to the EEOC investigator and that counsel for DZNPS could be present if the recipient chose to speak to the EEOC.  Id. at *34.

Finally, the Court addressed both parties’ motion for summary judgment on the ADA interference claim.  Id. at *35-39.  The EEOC argued that DZNPS interfered with the rights under the ADA of all the letter recipients because a reasonable jury would need to conclude that the letter had a tendency to chill recipients from exercising their rights under the ADA.  Citing its previous order denying DZNPS’s motion to dismiss, where the Court held that the disclosure of sensitive personal information about an individual could well dissuade that individual from making or supporting a charge of discrimination under the ADA, the Court found that a reasonable jury could conclude that the letter could have the effect of interfering with or intimidating the letter’s recipients with respect to communicating with the EEOC about possible disability discrimination by DZNPS.  Accordingly, explaining that because this question should be reserved for the jury, the Court denied both parties’ motions for summary judgment.

Implications For Employers

For employers considering whether to internally disclose information on a widespread basis regarding charges of discrimination filed by employees, this ruling should serve as a cautionary tale.  Further, it illustrates how widespread internal communication regarding such charges could potentially be viewed as retaliation or interference under the ADA in the context of motions for summary judgment.  As such, employers should exercise caution when considering when and to whom it should internally disclose information about pending administrative charges.

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

By Gerald L. Maatman, Jr. and John S. Marrese

Seyfarth Synopsis:  In Love v. Wal-Mart Stores, Inc., No. 15-15260 (11th Cir. Aug. 3, 2017), the U.S. Court of Appeals for the Eleventh Circuit ruled that the deadline for putative class members to appeal the dismissal of class claims was triggered by the filing of a stipulation of dismissal by named plaintiffs and defendant.  The decision adds to the growing body of jurisprudence concerning the limits on the ability of absent class members to continue class litigation after named representatives abandon it.

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In Love v. Wal-Mart, No. 15-15260, 2017 U.S. App. LEXIS 14261 (11th Cir. Aug. 3, 2017), the Eleventh Circuit addressed the timeliness of putative class members’ appeal of the dismissal of class claims filed more than 30 days after the named class representatives and defendant filed a stipulation of dismissal.  Id. at *5.

Putative class members had moved to intervene in the district court not long after the stipulated dismissal was filed.  Id. at *4. On the same day their motion to intervene was denied, but 34 days after the filing of the stipulated dismissal, putative class members appealed the denial of the motion as well as the district court’s prior dismissal of the class claims.  Id. at *4.

The Eleventh Circuit held that the putative class members’ appeal was untimely pursuant to the 30-day deadline set forth in Rule 4 of the Federal Rules of Appellate Procedure (“FRAP”).  Id. at *9.  The Eleventh Circuit reasoned that a stipulated dismissal under Rule 41(a)(1)(A)(ii) is effective immediately upon filing, unless its effectiveness is conditioned on a subsequent occurrence. Id. at *6-7.  No such condition existed in the stipulated dismissal at hand and, as such, the putative class members’ appeal 34 days after the filing of the stipulated dismissal ran afoul of FRAP 4.

Case Background

After the U.S. Supreme Court reversed the certification of a nationwide gender discrimination class in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), some members of the putative class in that case filed new, regional class actions against Wal-Mart, including Love v. Wal-Mart Stores, Inc. Id. at *1-2.  Putative class members were able to do so because Wal-Mart Stores v. Dukes tolled the statute of limitations with respect to their filing claims with the EEOC, which is a prerequisite to filing a federal discrimination suit.  Id. at *3.  However, in the Eleventh Circuit, such tolling is limited to individual, not class, claims.  Id.

Accordingly, the district court in Love allowed the individual claims of named plaintiffs to proceed, but dismissed the class claims as untimely.  Id. The named plaintiffs subsequently settled their individual claims with Wal-Mart.  Id.

On October 16, 2015, the named plaintiffs and Wal-Mart filed a stipulation of voluntary dismissal under Rule 41(a)(1)(A)(ii).  Id. On October 23, 2015, the district court entered an order acknowledging the stipulated dismissal and dismissing pending motions as moot. Id.

On November 6, 2015, a group of putative class members moved to intervene in the district court solely to appeal the district court’s dismissal of the class claims.  Id. at *4.  On November 19, 2015, the district court denied the motion to intervene on the grounds that the stipulated dismissal stripped the district court of jurisdiction to hear the motion. Id.  That same day, 34 days after the filing of the stipulated dismissal, the putative class members appealed both the denial of their motion to intervene and the dismissal of the class claims.  Id.

The Decision

On appeal, the Eleventh Circuit ruled that it did not have jurisdiction over the putative class members’ appeal of the dismissal of the class claims because it was filed more than 30 days after the filing of the parties’ stipulated dismissal.  Id. 

In doing so, the Eleventh Circuit rejected the putative class members’ argument that only the named plaintiffs’ appeal deadline was triggered by the stipulated dismissal and that the putative class members’ deadline was not triggered until the district court’s subsequent order on October 23, 2015.  Id. at *4-6.  The Eleventh Circuit explained that “the plain language of Rule 41(a)(1)(A)(ii) requires that a stipulation filed pursuant to that subsection is self-executing and dismisses the case upon its becoming effective, i.e., upon filing unless it explicitly conditions its effectiveness on a subsequent occurrence.”  Id. at *6-7 (internal quotations and citations omitted).

Without any condition in the stipulation here, the Eleventh Circuit found that the stipulated dismissal was effective upon filing and triggered the putative class members’ 30-day deadline under FRAP 4 to appeal dismissal of the class claims.  Id. at *7.  The putative class members’ appeal, filed 34 days after the filing of the stipulated dismissal, was therefore untimely.  Id. at *8-9.

In turn, although the putative class members’ appeal of the denial of their motion to intervene was timely filed, such an appeal was moot as the putative members had intervened solely for the purpose of appealing the dismissal of the class claims.  Id. at *9.

Implication For Employers

This decision is a great victory for the employer. It also offers insight into how an employer can protect itself from continued class litigation after settling individually with named plaintiffs.

In particular, an employer should endeavor to file a stipulation of dismissal in short order because, in certain jurisdictions, the district court may find that the filing of such a stipulation precludes absent class members’ from intervening and pursing class litigation further.  Employers should also try to prevent the inclusion of conditions in stipulations of dismissal which delay the effectiveness of such stipulations.

Furthermore, given the application of FRAP 4 here, employers should anticipate receiving notices of appeal from absent class member-intervenors with, or soon after, the filing of their motion to intervene.

By Gerald L. Maatman, Jr., Pamela Q. Devata, & Robert T. Szyba

Seyfarth Synopsis: Following remand from the U.S. Supreme Court, the Ninth Circuit found that the plaintiff suing Spokeo, Inc. under the Fair Credit Reporting Act alleged sufficient injury to establish standing to proceed in federal court and to proceed with his class action.

On August 15, 2017, the U.S. Court of Appeals for the Ninth Circuit issued the latest opinion in the Robins v. Spokeo, Inc. litigation that gave us last year’s U.S. Supreme Court opinion on Article III standing (which we discussed here).  After the Supreme Court found that the Ninth Circuit, in its prior February 2014 opinion (found here), had analyzed only whether the alleged injury was particular to Plaintiff, it remanded the case back for the second part of the analysis to determine whether Plaintiff alleged a concrete injury-in-fact, as required by Article III.

This new ruling is a “must read” for employers, as it has the potential to allow plaintiffs to launch more workplace class actions.

Case Background

The case was originally filed in the U.S. District Court for the Central District of California in 2010 against Spokeo, Inc., which operates an online search engine by the same name that compiles publicly available information on individuals into a searchable database on the internet.  The plaintiff alleged that Spokeo’s database showed inaccurate information about him, such as that he had a greater level of education and more professional experience than he in fact had, that he was financially better off than he actually was, and that he was married (he was not) with children (he did not have any).  Instead of any actual damages, the plaintiff alleged that Spokeo, as a consumer reporting agency, failed to “follow reasonable procedures to assure maximum possible accuracy of the information concerning” Plaintiff, and that its violation of section 1681e(b) of the Fair Credit Reporting Act (FCRA) was “willful” in order to seek statutory damages of between $100 and $1,000 for himself, as well as for each member of a putative nationwide class.

U.S. Supreme Court Decision

The issue of whether the plaintiff had standing to sue for the alleged statutory violation made its way to the U.S. Supreme Court, which in 2016 (in a 6 to 2 opinion by Justice Samuel A. Alito, Jr.) explained that “an invasion of a legally protected interest” that is both “concrete and particularized” is required to establish standing to proceed in federal court.  To be concrete, the alleged injury must “actually exist” and must be “real” and not “abstract.”  The Court further discussed that plaintiffs do not “automatically” meet the injury-in-fact requirement where the violation of a statutory right provides a private right of action.   The plaintiff here, therefore, “could not, for example, allege a bare procedural violation divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”  Because the Ninth Circuit had not completed both parts of the standing analysis, however, the case was remanded for further review.

Ninth Circuit’s Standing Analysis

In light of the Supreme Court’s directive, the Ninth Circuit opened by affirming the threshold principle that “even when a statute has allegedly been violated, Article III requires such violation to have caused some real—as opposed to purely legal—harm to Plaintiff.”  The Court explained that intangible harms, such as restrictions on First Amendment freedoms and harm to one’s reputation, can be concrete enough for standing, though the Court noted this is a “murky area.” Either way, Plaintiff cannot simply point to a statutory cause of action to establish an injury-in-fact.

Turning to its standing analysis of the plaintiff’s particular allegations, the Ninth Circuit conducted a two-step inquiry:

  1. “whether the statutory provisions at issue were established to protect [the plaintiff’s] concrete interests (as opposed to purely procedural rights)”; and, if so
  2. “whether the specific procedural violations alleged in [the] case actually harm, or present a material risk of harm to, such interests.”

First, the Ninth Circuit cited a long history of protections against dissemination of false information about individuals that underlies the FCRA, including common law protections against defamation and libel, to find that the interests protected by the FCRA are real and concrete.  The harm alleged in the case, the Ninth Circuit concluded, “has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit,” even if it is not the exact historical harm itself.

In the second step, the Ninth Circuit reasoned that in many cases, “a plaintiff will not be able to show a concrete injury simply by alleging that a consumer-reporting agency failed to comply with one of the FCRA’s procedures.”  The statute may be violated, but the violation alone is not enough.  Here, however, the plaintiff pointed to multiple examples of information (e.g., his education level, etc.) that might be relevant to a prospective employer.  A court also has to look at the nature of the inaccuracy as part of its analysis.  Even if the inaccuracy has a debatable negative impact (e.g., a greater level of education could make a plaintiff deemed to be overqualified and passed over for a job), the information is nevertheless relevant, and the Court held, its dissemination is not simply a technical statutory violation.  The Ninth Circuit also pointed out that the injury alleged in this case was not speculative because the dissemination of information already occurred, and the dissemination itself was the harm.  The Court commented that further alleged harm, such as being able to point to an actual missed job, was not required.

Outlook

Overall, the Ninth Circuit’s decision adopted an expansive interpretation of the type of harm that will suffice for Article III standing, though indicating that this interpretation will not extend so far as to find standing to sue for bare statutory or procedural violations.  In the present case, however, the Ninth Circuit focused on the specific allegedly inaccurate information to find harm, in line with Justice Ginsburg’s dissent (found here) to the Supreme Court’s majority, which was concerned more with the reporting of allegedly false information that “could affect [the plaintiff’s] fortune in the job market.”  Further allegations of actual injury, according to the Ninth Circuit, were not required to establish standing.  However, the Ninth Circuit stopped from opining on other specific circumstances and noted that the specific facts will need to be considered to determine if the threshold of “concrete harm” is satisfied.

Thus, the Ninth Circuit provides further guidance on standing, affirming that bare statutory violations continue to be insufficient.  The specific factual allegations of such cases, however, may present courts with greater latitude to find standing in civil litigation alleging violations of the FCRA, as well as cases under ERISA, the Americans With Disabilities Act, and a host of other workplace statutes.  As courts address similar inquiries, we are likely to see increased guidance regarding standing.   Additionally, with this decision, there seems to be more evidence of a potential split among the federal Courts of Appeals, which could result in another petition to the U.S. Supreme Court.