Workplace Class Action Litigation

By Christopher J. DeGroff and Matthew Gagnon 

On May 14, 2012, the EEOC announced that for the first time it will post private sector workplace discrimination charge statistics for each of the fifty states and the U.S. Territories for EEOC fiscal years 2009-2011 online. The data is available here. 

The EEOC’s new state-specific statistics provide the total number of charges filed in each state, as well as the percentage of total U.S. charges represented by each state. The EEOC also breaks out the charge data according to subject matter, including race, sex, national origin, religion, color, retaliation, age, disability, Equal Pay Act, and GINA. For each category, the EEOC’s new statistics show what percentage of all U.S. charges were filed by category and state, and what percentage of the total number of state charges are attributable to a given category.

This new data is qualitatively different than the statistics that the EEOC has published to date,  which until now had been limited to nationwide aggregated data. This is an important development as the EEOC is organized into 15 separate geographical districts that operate with significant autonomy as to their enforcement objectives and initiatives. In our view, the new state-specific data provides valuable insight into how enforcement varies across different districts (although those districts do not always follow state boundaries).

Even a high-level review of the data reveals some interesting trends. For example, the new data shows that Texas and Florida occupied the top two spots in terms of the raw number of discrimination charges brought in FY2009, FY2010, and FY2011. Indeed, Texas accounted for a full 10% of all national EEOC charge filings, and 15% of the country’s religion and national origin charges. South Dakota experienced the greatest uptick in discrimination charges from FY2009 to FY2011 (up 81% between 2009 to 2011), and Montana experienced the greatest decrease in charge filings (down 43% from 2009 to 2011). These are just a handful of notable trends that can be gleaned from the EEOC’s state-specific data.

Why is this so important for employers?  

As we mentioned in our recent blog post, employers are well advised to keep statistics concerning their own charge data.  With enough data, employers will be able to spot trends and potential vulnerabilities before they become a larger problem for the company.  The EEOC’s new state-specific statistics provide another benchmark against which employers can compare their charge data. If, for example, an employer’s statistics reveal that it is experiencing greater charge activity in a part of the country where such charges are relatively rare, this could signal a potential problem that the employer can address pro-actively.  Conversely, lower than expected charge activity in a given state may be an opportunity to analyze and emulate that operational unit’s success. Comparing this new data against employer trends can be a powerful element in strategic decision-making. 

The EEOC’s statistics also provide valuable insight into the EEOC’s agenda.  As we noted earlier this year, the EEOC set strategic goals for 2012-2016 that will drive its enforcement efforts over the next few years. Those priorities include outreach efforts to target groups that the EEOC believes have been traditionally underserved by the Commission. Although the EEOC does not directly control the flow of charges filed in a given state, the new state-specific data - particularly when viewed over time - could reveal where the EEOC’s outreach programs have been successful, and the subject-matter thrust of those programs. 

The value of state-specific data cannot be understated. Given the huge costs associated with defending against employment-related lawsuits, employers can now mine this data for geographical trends that might affect their bottom line. Although it is unlikely that employers will make strategic operational decisions based solely on the number of charges filed in a given state, it certainly is one element of a larger risk analysis. 

Ultimately, the EEOC’s new statistical data is a treasure trove of information from an agency that touts transparency, yet often keeps employers in the dark. The EEOC is a metrics-driven agency. Employers can better position themselves to avoid costly litigation by familiarizing themselves with the EEOC’s state-by-state data, and analyzing the trends that it reveals.

By Gerald L. Maatman, Christopher DeGroff, and Brian Wong

As the U.S. Equal Employment Opportunity Commission this week can attest, what one hand giveth, the other may taketh away. 

Just one day after vacating its already well known February 22, 2012 opinion and judgment in EEOC v. CRST Van Expedited, Inc., 670 F.3d 897 (8th Cir. 2012), the U.S. Court of Appeals for the Eighth Circuit issued an opinion on Tuesday, May 8, 2012 - in EEOC v. CRST Van Expedited, Inc., Case Nos. 09-3764, 09-3765 & 10-1682 (8th Cir. May 8, 2012) - containing the same resounding criticism of the EEOC's  “sue first, ask questions later” tactics previously set forth in its vacated February 22 opinion. 

Following the Eighth Circuit’s February 22 opinion and judgment, in which a three-judge panel affirmed in part and reversed in part the dismissal by the U.S. District Court for the Northern District of Iowa of the EEOC’s sexual harassment action against CRST on behalf of scores of female truck driver trainees - in EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 (N.D. Iowa 2010) - the EEOC petitioned for reconsideration of the 8th Circuit's ruling and requested review by the Eighth Circuit’s full panel of eleven judges. On Monday, May 7, 2012, the Eighth Circuit granted the EEOC’s petition and vacated its February 22 opinion and judgment.

Key Holdings Of The Eighth Circuit

Any hope the EEOC may have harbored for a change of heart by the Eighth Circuit proved short-lived. The Eighth Circuit’s May 8 opinion leaves undisturbed its prior holding that the EEOC must engage in pre-lawsuit investigation and good-faith conciliation of each claim it intends to litigate in court under § 706 of Title VII, and that the EEOC may not use discovery in a later lawsuit as a fishing expedition to uncover additional violations.  Id. at 19-21. Our recent analysis of the Eighth Circuit’s February 22 holding on this issue, which remains unchanged in this week’s opinion, can be found here.

Notably, the Eighth Circuit once again emphasized the impropriety of the EEOC’s litigation tactics:

There was a clear and present danger that this case would drag on for years as the EEOC conducted wide-ranging discovery and continued to identify allegedly aggrieved persons. The EEOC’s litigation strategy was untenable: CRST faced a continuously moving target of allegedly aggrieved persons, the risk of never-ending discovery and indefinite continuance of trial.

Id. at 22 (internal quotation marks and citations omitted).

As before, the Eighth Circuit affirmed the district court’s dismissal of nearly all the EEOC’s remaining claims, including those dismissed due to the EEOC’s failures to investigate and conciliate. Id. at 53-54. 

Also as before, the Eighth Circuit revived the EEOC’s claims as to only two female claimants.  In particular, the Eighth Circuit reversed the district court’s grant of summary judgment on the EEOC’s claims as to one woman whose underlying claims were estopped for failure to disclose the claims in bankruptcy proceedings, and as to another because a genuine issue of material fact existed regarding the severity or pervasiveness of the harassment she alleged. Id. at 53-54. That is little solace to the Commission, for the remainder of the decision strikes at the heart of its systemic litigation tactics.

The Eighth Circuit’s May 8 order also included a strongly-worded dissent by Judge Diana Murphy, which tracked her position in her prior dissent to the February 22 order, including her concern that the majority’s holding would reward employers for withholding information from the EEOC prior to litigation. Id. at 54.

Implications Of The Eighth Circuit’s Ruling

The February 22 ruling received widespread media attention. The EEOC's general counsel P. David Lopez told the Associated Press, “[w]e are an agency with limited resources already, and [CRST ] is something that, if it stands, would make it even more challenging for us to address and vindicate discriminatory violations in the Eighth Circuit.” Our comments were also juxtaposed against Mr. Lopez in the same AP article, as well as in articles run by Inside Counsel and the ABA Journal.

With the new Eighth Circuit ruling on May 8, it would appear the EEOC’s worst-case scenario has been realized. It is our wager that the EEOC will now lodge a petition for certiorari with the U.S. Supreme Court to challenge the decision.

The holding in EEOC v. CRST is a very positive development for employers faced with the prospect of litigating against the EEOC, and will significantly affect the EEOC’s strategic decisions and processes both before and during litigation. Specifically, employers now have a strong argument that the EEOC no longer has the luxury of using discovery in litigation to identify new claims and claimants in the Eighth Circuit and beyond.

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

In the concluding chapter of a long-running class action saga, on May 1, 2012, the Seventh Circuit vacated its order enjoining putative class members in Thorogood v. Sears, Roebuck & Co., Nos. 10-2407 & 11-2133 (7th Cir. May 1, 2012) (“Thorogood IV”), from trying to certify copy-cat class actions in other courts around the country. 

In previous posts (here and here), we reviewed the complicated history that led to the Seventh Circuit’s fourth pass on class counsel’s “crusade” against the Sears stainless steel clothes dryer. On November 2, 2010, following its decision to decertify Thorogood’s proposed class, the Seventh Circuit issued an order directing the district court to enjoin all putative plaintiffs in that case from pursuing similar claims on a class basis. Thorogood v. Sears, Roebuck & Co., Case No. 10-2407 (7th Cir. Nov. 2, 2010) (“Thorogood III”). 

On May 1, 2012, in the wake of the Supreme Court’s decision in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011) (previously discussed here), the Seventh Circuit reluctantly vacated its order, effectively allowing the other 500,000 members of Thorogood’s decertified class to try their luck with copycat suits in other courts.  

Thorogood IV is a case study on the circumstances in which finality can be achieved in dismissing class claims.

Background

Thorogood brought suit claiming that Sears misrepresented the “stainless steel” composition of its clothes dryer when it advertised the dryer as having a “stainless steel” drum. Thorogood IV, at 4. Thorogood claimed that he understood this to mean that Sears made the drum entirely of stainless steel, but part of the front of the drum in fact was comprised of a ceramic coated “mild” steel, which rusted and stained his cloths. Id. at 4. Judge Leinenweber of the U.S. District Court for the Northern District of Illinois certified a class, but the Seventh Circuit reversed, finding it “inconceivable that all or even many of the proposed class members had the same understanding of Sears’ advertising.” Id. at 4-5. The Seventh Circuit held that “there would be no economies from allowing his suit to be litigated as a class action because there would be no issues that could be resolved in a single, class-wide evidentiary hearing.” Id. at 6. On remand, Sears made an offer of judgment that covered Thorogood’s individual damages and mooted the case. Id.  

Subsequently, Murray filed another suit in California state court, and Sears removed the case to federal district court in California. Murray had been a member of Thorogood’s proposed class and was represented by the same counsel who had represented Thorogood. Id. at 2. Sears asked Judge Leinenweber to enjoin the California suit based on the All Writs Act, 28 U.S.C. § 1651(a), which empowers federal courts to issue commands necessary or appropriate to effectuate and prevent the frustration of their orders. Id. at 3. Although the district court denied the motion, the Seventh Circuit again reversed and ordered the district court to issue an injunction not only against Murray but also against the other members of Thorogood’s decertified class “so that additional Murrays wouldn’t start popping up, class action complaint in hand, all over the country.” Id. at 8. 

The Supreme Court granted certiorari, vacated the decision, and remanded the case for reconsideration in light of Smith v. Bayer Corp., 131 S. Ct. 2368 (2011), rendered after the Seventh Circuit’s decision in Thorogood III. In Smith, the Supreme Court considered whether a district court could enjoin a litigant from seeking class certification in state court after a federal district court had denied certification of a similar class under federal rules that differed from state class action rules. Thorogood IV, at 9. In its ruling, the Supreme Court answered the question in the negative and held that “neither a proposed class action nor a rejected class action may bind nonparties.” Id. at 10 (quoting Smith, 131 S. Ct. at 2380). 

The Seventh Circuit’s Opinion

In a ruling authored by Judge Posner, the Seventh Circuit concluded that, because it had decertified Thorogood’s class, Murray never became a party to Thorogood’s suit. Under Supreme Court precedent, being neither a party nor in privity with one, he could not be bound by the judgment. Id. at 10. Judge Posner reasoned that, had the district judge (as he should have) refused to certify the class, there would be no argument that Murray had been a party to the suit and therefore no obstacle to Murray’s filing his own class action – “and it would be odd if by virtue of a mistaken ruling by the district judge Murray is barred.” Id. at 11. Further, during the interval in which a class existed, Thorogood did not notify the class members, including Murray, of its pendency so Murray did not have the opportunity to opt out. The Seventh Circuit reasoned that as he was “[d]enied the opportunity to opt out, he was not bound by our ruling and is therefore free to file his own class action against Sears.” Id. at 11.

Judge Posner noted that the Supreme Court could have changed the rule of non-party preclusion but instead decided to stick with it and list alternatives, such as stare decisis, comity, and consolidation of overlapping suits by the Panel on Multidistrict Litigation, for parties seeking relief from copy-cat claims. Judge Posner noted that Sears would have to tread one or more of these paths to obtain relief from Murray’s and perhaps other plaintiffs’ copy-cat actions – “we can’t save it.” Id. at 12.

Implications

With the Seventh Circuit’s decision to vacate its injunction in Thorogood IV, defendants involved in class action litigation lost a powerful precedent to prevent copy-cat actions. Under Thorogood IV, putative class members, having lost motions for certification in one district, seemingly now may try their luck in other jurisdictions free of the constraints of the All Writs Act. It remains to be seen whether the other options suggested by the Seventh Circuit will gain traction, particularly if – as in Murray’s case – courts in subsequent forums have a different take on the viability of the class actions. 

By Rebecca Pratt Bromet

We often receive the question - "What is the best way to avoid workplace class action litigation?"

That answer is deceptively simple - "Don't get sued."

In other words, identify your potential vulnerabilities, remediate those issues, and decrease the potential for ever getting sued. 

What Are The Numbers To Examine? 

To that end, when asked “where are the diversity issues in your company,” most employers immediately turn to their workforce demographics, be they EEO-1 reports, human resources information systems, or plain old employee lists. Naturally, comparatively low numbers of particular minorities may signal lurking HR issues and litigation exposures. An expensive statistical analysis may also reveal other problem areas. But is that enough? 

One often overlooked but crucial piece of information when assessing the overall “diversity health:” of an employer is considering the nature and number of discrimination complaints. As we have blogged about previously, employers faced an all-time record of charge filings with the EEOC in the agency’s 2011 fiscal year. Those statistics are extremely helpful to track litigation trends across the country, and are closely scrutinized by corporate counsel and external defense lawyers trying to read the tea leaves of how to best prevent future litigation. Indeed, Seyfarth Shaw’s Administrative Charge Team ("ACT") routinely analyzes and processes this data to keep our clients one step ahead of key litigation trends. In so doing, however, the ACT has also made an important, practical observation: these same statistics examined at the company level can give our clients a unique window into the perception of diversity in their own workforce.  

For most companies, a charge filed with the EEOC is a matter for the legal department. The charge is handled by either corporate counsel or external defense counsel, and human resources and operations are often asked to assist with those investigations. An EEOC charge is viewed as a threat, and there is typically a “circle the wagons” mentality when responding to that threat. A frequent goal when responding to the charge is often to compartmentalize the problem and insulate it from spreading. Employers will strive for a swift response that will have the least impact on day-to-day operations. 

Once that threat is addressed, and the charge is dismissed or otherwise resolved, most employers want nothing to do with revisiting the issue. Seyfarth’s ACT has concluded that this traditional approach results in lost opportunities. A discrimination charge - regardless of the merits of the allegations - is a barometer of employee perception of fairness in the workplace. Naturally, there will be opportunistic claimants who are only out to squeeze undeserved money from their employer. But most who file a charge have sincere (albeit misguided) feelings that there is a problem. Hence, hiring and promotion claims are particularly important to consider when getting a ground-level view of employee perceptions of diversity. 

One challenge is collecting this information. Charges typically "live in legal" or some insulated arm of HR or operations. The nature of the charge, where the charge was filed, and the specifics of the allegations are seldom tracked, or if they are, the data is kept only for legal review. With the proper database tool, however, a company can efficiently compile charge data for current and historical charges. Employers can develop these programs themselves or use pre-existing tools like the EEOC Charge Tracker program we have created here at Seyfarth Shaw to develop a charge database. As each new charge arrives, it should be logged into this database. If the opportunity and resources exist, historical charge data should be added to this tool. The more data that is collected, the more trends that are apt to emerge. In our experience, with some foresight and discipline, an analysis can be developed that will be useful not only for legal, but also for those focused on diversity issues as well. 

As mentioned above, once an employer has all of its charge data in one place, there are a number of different analyses it can conduct. The types of analyses are limited only by one’s imagination, but some examples:  

·        Benchmarking against national trends - How do the charges stack up against national charge trends? Are there, for example, more race claims than would be expected based on EEOC national data trends? That could represent an employee perception that the workforce is not diverse vis-a-vis a particular protected group.  

·        Geographical/operational trends - Are there particular hot spots, either in a given operational division or geographical area? It may be wise to consider more focused diversity attention to those areas, even though the raw EEO-1 numbers would otherwise suggest that all is well in that region/business unit. A geographical analysis may also reveal problem areas before they attract the EEOC's attention.  

·        Year-over-year comparisons - Comparing how particular categories of charges are increasing or decreasing over time is also a key consideration. Significant increases in failure-to-hire cases, for example, would require a qualitatively different response than an increase in workplace harassment claims. Simply examining the total number of charges, however, would not expose these distinctions.  

Of course, this sort of analysis approach is only useful if it translates to action. The real challenge is taking these trends and converting them into a plan for addressing diversity issues in the workplace - be they real or perceived. For example, if the data shows that the employer has more than expected gender discrimination claims compared to national benchmarks, this may suggest revisiting hiring and promotion policies to determine if there may be “glass ceiling” or “sticky floor” problems. A spike in failure-to-promote claims for a certain racial or ethnic group would signal that the company’s diversity efforts are potentially ineffective or, at a minimum, not being effectively communicated. A disproportionate number of age charges in a geographic region or operating unit may prompt an employer to focus additional diversity training in that area. The point is, simply relying on employee demographic data is not enough. Discrimination charge data provides unique and critical insight into a workplace - a view that is lost if ignored. 

A modified version of this article originally appeared in Diversity Executive Magazine January/February 2012.

By Pamela Devata and Frederick Smith

Today, by a 4 to 1 vote of its Commissioners, the EEOC published its long-awaited and much-anticipated Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. After the Commissioners' vote, the EEOC issued a press release about the Guidance along with a Q & A sheet on its new interpretation of Title VII.

If you are an employer, this is required reading for your hiring officers.

Overview Of The EEOC's Guidance

The EEOC's Guidance is aimed at employers (best practices for employers are included), as well as for use by the EEOC's staff. Undoubtedly, the concepts within it will also impact litigation issues in cases brought by the EEOC over use of criminal background checks in the hiring process, especially the EEOC's high profile litigation alleging systemic violations under Title VII against African-American and Hispanic applicants.

While not binding on employers, because the EEOC will be enforcing Title VII with this Guidance in mind, employers are well advised to consider adjusting their use of criminal history in accordance with it. This is especially true given that Commissioner Ishimaru stated in his remarks at the public meeting this morning that the EEOC was currently investigating hundreds of cases where employers illegally (allegedly, according to the EEOC) used criminal history in employment decisions. This comes on the heels of the EEOC's high profile $3.13 million settlement with Pepsi earlier this year in a  hiring discrimination case over the use of criminal background checks.

The Guidance starts from the premise that "national data support a finding that criminal record exclusions have a disparate impact" and  has roots in EEOC’s E-RACE (Eradicating Racism and Colorism in Employment) Initiative. The Guidance also cites studies finding that criminal records are often incomplete and inaccurate. Today’s release follows two previous releases by the EEOC on the subject in 1987 and 1990 and two public meetings. See November 20, 2008 Meeting on Employment Discrimination Faced by Individuals with Arrest and Conviction Records. Most recently, on July 26, 2011, the EEOC had a meeting again revisiting the use of arrest and conviction records in employment. 

What an Employer Can Ask

Taking a cue from state “ban the box” laws, the EEOC's Guidance recommends that employers not ask about convictions on applications. If and when they are made, inquiries about convictions should be limited to those which are job-related.   

Many employers currently ask about convictions in a blanket fashion or with minimal exclusions required by state laws. Per the Guidance, employers should review job applications and pre-employment inquiries based.

Arrest Records

The Guidance makes clear that use of arrest records is not job related and consistent with business necessity. The Guidance, however, states that an employer may make a decision on the underlying conduct if the conduct makes the individual unfit for a position. The Guidance does not specifically discuss how, if at all, pending records are different from arrests, except to state that a person can be placed on an unpaid administrative leave while an employer investigates the underlying facts. 

Factors To Consider When Evaluating Criminal History

It is no surprise that the EEOC reinforced its earlier position that bright line policies relating to the use of criminal history will be unlawful. The good news is that the Guidance does not contain any rule specifically limiting an employer’s ability to consider recent criminal records, or only a specified list of offenses - which many thought would be contained in the Guidance. Rather, the Guidance gives more insight into the factors that were originally set forth in the February 4, 1987 EEOC Policy Statement on the Issue of Conviction Records under Title VII, as well as adding some additional factors to be considered, specifically an individualized assessment. 

Based on the new Guidance, employers should consider the following factors when evaluating criminal history:

(i) the nature and gravity of the offense or offenses (which the EEOC explains may be evaluating the harm caused, the legal elements of the of a crime, and the classification, i.e, misdemeanor or felony);

(ii) the time that has passed since the conviction and/or completion of the sentence (which the EEOC explains as looking at particular facts and circumstances and evaluating studies of recidivism); and

(iii) the nature of the job held or sought (which the EEOC explains requires more than examining just the job title, but also specific duties, essential functions, and environment).

Individualized Assessment

The biggest area of change in the Guidance is the EEOC's recommendation that an “individualized assessment” can help employers avoid Title VII liability. Reading between the lines, although the Guidance states that “Title VII does not necessarily require individualized assessment in all circumstances,” employers may be challenged by the EEOC or private litigants if they do not do so. According to Commissioner Lipnic’s opening statement at the public meeting this morning, there may be instances “when particular criminal history will be so manifestly relevant to the position in question that an employer can lawfully screen out an applicant without further inquiry. A day care center need not ask an applicant to 'explain' a conviction of violence against a child, nor does a pharmacy have to bend over backward to justify why it excludes convicted drug deals from working in the pharmacy lab.”  

The EEOC sets forth a number of individual pieces of evidence that an employer should review when making an individualized determination including:

• The facts or circumstances surrounding the offense or conduct;
• The number of offenses for which the individual was convicted;
• Older age at the time of conviction, or release from prison;
• Evidence that the individual performed the same type of work, post conviction with the same or a different employer, with no known incidents of criminal conduct;
• The length and consistency of employment history before and after the offense or conduct;
• Rehabilitation efforts, e.g., education/training;
• Employment or character references and any other information regarding fitness for the particular position; and
• Whether the individual is bonded under a federal, state, or local bonding program.

This is perhaps the most concerning areas of the Guidance. Clearly, this list is extremely burdensome and will cause employers to spend time and resources in evaluating criminal history.  One saving grace is the Guidance does indicate if the applicant does not respond to the employer’s attempt to gather data, the employer can make the determination without the additional information.

Compliance With Other Laws

The EEOC's new Guidance acknowledges that compliance with “federal laws and regulations” disqualifying convicted individuals from certain occupations is a defense to charges of discrimination (e.g., convictions of theft and fraud that disqualify in the financial services industry).

In addition, the Guidance recognizes that denying employment based on failure to obtain a federal security clearance is not unlawful if the clearance is required for the job. However, the EEOC opines that compliance with state and local laws and regulations will not shield employers from Title VII liability due to Title VII pre-emption of state and local laws.

Best Practices.  Finally, the Guidance sets forth a few employer “best practices." They include:

• Eliminate policies or practices that exclude people from employment based on any criminal record;
• Train managers, hiring officials, and decision-makers about Title VII and its prohibition on employment discrimination;
• Develop a narrowly tailored written policy and procedures for screening for criminal records;
• Identify essential job requirements and the actual circumstances under which the jobs are performed;
• Determine the specific offenses that may demonstrate unfitness for performing such jobs;
• Identify the criminal offenses based on all available evidence;
• Determine the duration of exclusions for criminal conduct based on all available evidence;
• Record the justification for the policy and procedures;
• Note and keep a record of consultations and research considered in crafting the policy and procedures;
• Train managers, hiring officials, and decision-makers on how to implement the policy and procedures consistent with Title VII;
• When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity; and
• Keep information about the criminal records of applicants and employees confidential (only use it for the purposes for which it was intended).

Seyfarth Webinar

Due to the importance of the EEOC's new Guidance, we are holding a webinar on the EEOC's action on April 26, 2012 at 2:30 p.m. to 3:30 p.m. Eastern; 1:30 p.m to 2:30 p.m. Central; 12:30 p.m. to 1:30 p.m. Mountain; 11:30 a.m. to 12:30 p.m. Pacific.

We invite you to participate in our webinar tomorrow by registering through the following link: http://www.seyfarth.com/events/webinar0426.