Workplace Class Action Blog

The EEOC’s Proposed Wellness Plan Regulation: Some Progress, But Issues Persist

Posted in EEOC Litigation

thCAD0SFA4By Paul H. Kehoe and Lawrence Lorber  

Earlier today, the EEOC published its much anticipated Notice of Proposed Rulemaking (“NPRM”) regarding the interaction between wellness plans and the Americans With Disabilities Act (“ADA”). As we have discussed here and here, the issue of whether an incentive or surcharge permitted (indeed, encouraged) under the Patient Protection and Affordable Care Act (“ACA”) is nonetheless impermissible under the ADA and GINA has caused consternation for the regulated community. The EEOC’s proposed rule provides some clarity on that issue, but raises or ignores additional concerns for employers offering wellness plan incentives to employees. The comment period on this proposed rule will close on June 19, 2015. This is important for all employers.

The 30% Rule

Under the Affordable Care Act (“ACA”) and its implementing regulations issued by the Departments of Labor, Treasury and Health and Human Services, employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and reaching certain health outcomes in a wellness plan and up to 50% for smoking cessation programs. The EEOC however, has added a nuance to the nicotine prevention component of the ACA and HIPAA. Under the NPRM, if an employer conducts a biometric exam to test for nicotine, any incentive would be capped at 30% instead of 50%. If no disability-related inquiry is made, a 50% incentive is permissible.

In addition, the NPRM does not specifically adopt the “HIPAA / ACA standard” but instead imposes hard percentage caps. If the percentages rise or fall in the future at the behest of those Secretaries, the EEOC’s adoption of hard numbers would then again leave the EEOC inconsistent with the Cabinet-level agencies.

The ADA Safe Harbor

Section 501(c) of the ADA provides that it cannot be construed to prohibit or restrict “a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.” In its discussion of Seff v. Broward Cty., 691 F.3d 1221 (11th Cir. 2012), the NPRM seems to definitively reject the notion that any wellness plan can be part of a bona fide benefit plan. In other words, the EEOC rejects the premise that a wellness plan can be structured to fall within the safe harbor established by the ADA. The fact is, some wellness plans fall within the safe harbor, and some do not. While the EEOC may disagree with the 11th Circuit’s decision in Seff, it seems to have gone beyond its disagreement with the Seff decision and has unilaterally written the safe harbor out of the statute. The EEOC lacks that authority.

A Question About Affordability

Under the ACA, employers are not required to provide health insurance.  Instead, an employer can choose to pay a fine. Even where an employer offers health insurance, it only must offer a single plan that is affordable, and even then, employees can choose whether to enroll in that plan or a more robust plan that may not meet affordability standards.

However, in the NPRM, the EEOC specifically requested comments on the following:

Whether to be considered “voluntary” under the ADA, the incentives provided in a wellness program that asks employees to respond to disability-related inquiries and/or undergo medical examinations may not be so large as to render health insurance coverage unaffordable under the Affordable Care Act and therefore in effect coercive for an employee…

Where such incentives would render a plan unaffordable for an individual, it would be deemed coercive and involuntary to require that individual to answer disability-related inquiries[.]

If an employer would have to test affordability under some  as yet to be determined test for each of its plans for each employee, then the same wellness plan incentives could conceivably be voluntary for some employees, and non-voluntary for other employees. Such an outcome was not contemplated by the ACA or the implementing regulations, and would likely chill employers from offering any wellness plan incentives — exactly the opposite of Congressional intent and contrary to White House statements. Nor does the EEOC provide statutory support for its question regarding affordability so that the basis of this discussion in the rulemaking process would seem to be unanchored to any statutory provision.

Spousal Incentives

The regulated community has, for years, raised concerns about EEOC investigations into incentives offered to employee spouses for completing health risk assessments where information related to manifested conditions is inquired about. Indeed, this was part of the Honeywell litigation late last year. Unfortunately, the EEOC failed to address the issue and continues to leave the regulated community and its career staff without guidance.

Implications For Employers

While the rule, if promulgated, would provide some clarity for employers, it would also raise some important questions related to the EEOC’s power to strip employers of a statutory defense, and potentially muddy the waters if an affordability standard is included.  In addition, the NPRM opens the door to uncertainty with reference to wellness program-related claims under Title VII and the ADEA as well. Given these potential issues and more that will inevitably arise in the coming weeks, it is important for the regulated community — employers, wellness program providers, and others — to consider submitting comments for the record regarding the pros and cons of the proposed rule.  As we have throughout this entire process, we will keep you posted on any developments.

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

The EEOC Settles Its First Transgender Suit Filed Under Title VII

Posted in EEOC Litigation

thCAD0SFA4By Gerald L. Maatman Jr. and Howard M. Wexler

As we have previously reported, the EEOC has decided to pursue protections for transgender workers under Title VII’s prohibition against “sex” discrimination and harassment as part of its strategic mission even though no federal statute, including Title VII, explicitly prohibits employment discrimination based on gender identity or expression. To this end, the EEOC filed two lawsuits on September 25, 2014 on behalf of transgender workers – EEOC v. Lakeland Eye Clinic, P.A. (Middle District of Florida, Tampa Division) and EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (Eastern District of Michigan, Southern Division) — on behalf of transgender workers.

On April 9, 2015, Judge Mary S. Scriven of the U.S. District Court for the Middle District of Florida approved a consent decree entered into between the EEOC  and Lakeland Eye Clinic, P.A. settling one of these two lawsuits. The terms of the Consent Decree, including the nature of the programmatic relief required by the EEOC make it crystal clear that this is an area that the EEOC will continue to pursue in 2015 and beyond.

Case Background

In EEOC v. Lakeland Eye Clinic P.A., the EEOC claimed that an organization of healthcare professionals fired an employee because she is transgender, because she was transitioning from male to female, and/or because she did not conform to the employer’s gender-based expectations, preferences, or stereotypes. The complaint alleged that even though the claimant had been performing her duties satisfactorily, she was terminated soon after she began presenting as a woman and informed her employer that she was transgender.

Terms Of The Consent Decree

The EEOC and Lakeland Eye Clinic, P.A. reached a settlement during the course of discovery. In full and complete settlement of the claims raised by the EEOC, the parties entered into a Consent Decree which Judge Scriven approved on April 9. The following are highlights of the terms of the Consent Decree:

  • Total payment of $150,000 to the aggrieved employee as well as a neutral letter of reference;
  • Revised employer discrimination and harassment policies stating that no employee will be terminated (or harassed) “based on an employee’s status as transgender, because of an employee’s transition from one gender to another, and/or because the employee does not conform to the Defendant’s sex or gender-based preferences, expectations or stereotypes”
  • Managerial and Employee Training including “an explanation of the prohibition against transgender/gender stereotype discrimination under Title VII” and “guidance on handling transgender/gender-stereotype complaints made by applicants, employees and customers.”
  • Monthly reports to the EEOC every six months certifying compliance with the terms of the Consent Decree; and
  • Two years of monitoring by the EEOC, including the right to conduct workplace inspections with 24 hours’ notice.

Implications For Employers

The theories of liability articulated by the EEOC in this case closely follow the EEOC’s prior landmark administrative ruling titled Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (April 23, 2012) (previously discussed here) in which it held that transgender individuals may state a claim for sex discrimination under Title VII.

We expect that EEOC-initiated ligation on behalf of transgendered individuals will continue to increase given the Commission’s enforcement strategy and desire to “push the envelope” in this area. As we previously advised employers must be mindful of issues related to gender identity and/or expression that might arise during interviewing, hiring, discipline, promotion and termination decisions. Employers should be particularly vigilant when an employee identifies as transgender, or announces a plan to undergo a gender transition. Stay tuned!

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

EEOC Issues Probable Cause Determination Against New York City To The Tune Of $246 million

Posted in EEOC Litigation

thCAD0SFA4By Gerald L. Maatman Jr. and Howard M. Wexler

On April 1, 2015 the EEOC’s New York District Office issued a Determination finding probable cause to believe that the City of New York’s Department of Citywide Administrative Services (“DCAS”) violated Title VII and the Equal Pay Act based on its “pattern of wage suppression and subjective promotion based on…sex, race, and national origin.” In the accompanying conciliation agreement proposal, the EEOC demanded numerous forms of programmatic relief from DCAS (e.g., EEOC monitoring, notice postings, etc.) as well as back pay, future pay, compensatory damages and legal fees and costs totaling over $246 million. For any employer, the EEOC’s position is one that ought to be heeded for “lessons learned….”

The Charge

The Communications Workers of America, AFL-CIO Local 1180 filed a charge of discrimination with the EEOC against DCAS in 2014 on behalf of a class of African-American and Hispanic women who were (or still are) employed as Administrative Managers in various NYC agencies. The Union asserted that a discriminatory pattern of wage suppression on the basis of sex, race and national origin exists as well as facially neutral policies governing assignment, promotion and wages that have a disparate impact on female African-American and Hispanic Administrative Managers. To this end, the Union alleged that the minimum salary for Administrative Managers – which is disproportionately paid to Hispanic and African-American women – has been frozen for many years whereas the maximum salary for Administrative Managers (a position held primarily by Caucasian males) has increased significantly.

In addition to arguing that the Union did not have standing to file a Charge with the EEOC, DCAS denied the allegations of discrimination and provided “a small sample of Administrative Managers along with their gender, race, agency, salary, and description of their job duties in an attempt to demonstrate that Administrative Mangers do not perform equal work.”

EEOC’s Determination And Proposed Conciliation Agreement

The EEOC agreed with the Union, opening that DCAS’ evidence “was insufficient” and did “not withstand scrutiny.” The EEOC also alleged that DCAS declined to provide certain requested information and “the Commission determines that the silence is an admission of the allegations in the charge, and exercises its discretion to draw an adverse inference with respect to the allegations.”

In addition to its Determination, the EEOC provided a proposed Conciliation Agreement to resolve the Charge against DCAS. The Conciliation Agreement, were DCAS to accept it, would require DCAS to, at a minimum, award raises via “an annual step process”; increase the minimum salary for all Administrative Managers; and agree to “proper oversight, opportunity and enforcement of equal employment,” which would include the appointment of an EEO Monitor; amended job descriptions, with a revised posting and bidding process; and the provision of tuition assistance to union members to “level the playing field” for union members so that they can “effectively compete with their white male colleagues in the workplace.”

With respect to monetary damages, the EEOC demanded $188,682,531.00 in back pay; a new starting salary for Administrative Managers of no less than $92,117.00; $56,922,000.00 in compensatory damages under Title VII; and no less than $1,000,000.00 in legal fees and costs.

The EEOC gave DCAS until April 17, 2015 to provide a written counter-proposal or advise if it did not wish to engage in conciliation. Absent what it deems a “reasonable written counter-proposal” from DCAS, the EEOC warned that it may deem conciliation futile and fail conciliation.

Implications or Employers

The headline grabbing dollar amount requested by the EEOC in this proposed conciliation agreement is certainly staggering and catapults this case into the “one to watch” column. Furthermore, this confirms what we predicted in our EEOC-Initiated Litigation Report – that the EEOC is going to focus this year on recovering large settlements and verdicts to try to make up for low recoveries in fiscal year 2014. As DCAS has already publically stated that it intends on participating in the conciliation process, we will be sure to monitor developments.  Stay tuned!

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

The EEOC Snares A $12.2 Million Settlement In Colorado, Representing More Than Half The $22.5 Million The EEOC Recovered In The Entirety Of FY 2014

Posted in EEOC Litigation

thCAD0SFA4By Christopher M. Cascino and Gerald L. Maatman, Jr.

The EEOC recently announced reaching its largest settlement in the last 2 years in EEOC v. Patterson-UTI Drilling Co. LLC, No. 15-CV-600 (D. Colo. Mar. 24, 2015). In this case, Patterson-UTI agreed to settle a race and national origin pattern or practice claim brought by the EEOC for $12.2 million. This settlement almost equals the approximately $13 million the EEOC received in litigation settlements for the entirety of its Fiscal Year 2014, and represents more than half of the $22.5 million it recovered, in total litigation settlements and verdicts, during the same period.  The high value of this settlement comes as no surprise.  As we reported in our 2014 EEOC-Initiated Litigation Report, found here, the EEOC is focused on achieving high value settlements and verdicts this year to make up for its low recoveries in 2014. This case also confirms another trend we also reported in our 2014 EEOC-Initiated Litigation Report – the EEOC is focused on bringing systemic, class-like cases.

Case Background

The EEOC received a number of charges of discrimination filed by employees and former employees of Patterson-UTI, a Texas-based oil and gas drilling company, alleging discrimination based on race or national origin.  The EEOC concluded that there was reasonable cause to believed that Patterson-UTI engaged in nationwide discrimination against its minority employees.

On March 24, 2015, the EEOC filed suit against Patterson-UTI, alleging that individuals of Hispanic, Latino, African American, American Indian, Asian, and Pacific Islander race and/or national origin were subject to harassment, a hostile work environment, and disparate treatment. Specifically, the EEOC alleged that Patterson-UTI’s minority employees were subject to racial and ethnic slurs, jokes, and comments and verbal harassment and intimidation. The EEOC further alleged that Patterson-UTI’s minority employees were relegated to lower-level positions, were denied training, and were subject to disparate treatment in discipline. Finally, the EEOC alleged that Patterson-UTI retaliated against employees who complained about discrimination or harassment. The EEOC alleged that Patterson-UTI engaged in this prohibited conduct on a nationwide basis.

Settlement Agreement

Patterson-UTI and the EEOC entered into a settlement on the same day the Complaint was filed.  To that end, the parties filed a Proposed Consent Decree with the Court. Under the terms of the settlement as outlined in the Proposed Consent Decree, Patterson-UTI agreed to pay $12,260,000 to a settlement administrator to provide compensation to Patterson-UTI’s purportedly aggrieved minority employees. Such compensation will be available to any minority employee who worked for Patterson-UTI from January 1, 2006, to the date the Proposed Consent Decree is entered.

In addition to agreeing to provide monetary relief, Patterson-UTI also consented to wide-ranging equitable relief.  Among other things, Patterson-UTI agreed to be enjoined from engaging in any employment discrimination practice which discriminates on the basis of race or national origin. It agreed to develop new Equal Employment Opportunity policies and to annually train its employees on its Equal Employment Opportunity policies. It also agreed to create a Vice President position dedicated implementing the Consent Decree and ensuring Patterson-UTI’s employees were protected from unlawful discrimination.

Implications For Employers

This settlement confirms what we predicted in our annual EEOC-Initiated Litigation Report – the EEOC is going to focus this year on recovering large settlements and verdicts this year to try to make up for low recoveries in fiscal year 2014. Employers who find themselves the subject of EEOC conciliation or litigation this year can expect that the EEOC will demand larger recoveries than it has in prior years. Moreover, employers can expect that the EEOC will continue focus on large-scale, systemic litigation. Whether this focus will result in more successes like it achieved in this case or defeats like it received last year in cases like EEOC v. Kaplan Higher Educ. Corp., 748 F.3d 749 (6th Cir. 2014), remains to be seen. Stay tuned.

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

It’s So Nice, The EEOC Wants To Hear Your Input Twice: The EEOC Seeks Public Feedback On Its Regulations Again!

Posted in EEOC Litigation

thCAD0SFA4By William David and Laura Maechtlen 

In 2011, the U.S. Equal Employment Opportunity Commission (EEOC) invited the public to comment on how its significant regulations could be improved by modifying, streamlining, expanding, or repealing them.  Since opening its doors for public comments, the EEOC has received 93 comments.  The EEOC summarized and responded to these comments, which are publicly available on the EEOC website. The goal is to make the agency’s regulatory programs more effective in achieving its objectives and less burdensome to the public.  Consistent with its practices in 2011, the EEOC again published a notice asserting that it welcomes public comment on a variety of regulatory review topics within the EEOC’s jurisdiction.  Specifically, the EEOC seeks public comment on the following:

  • Which regulations and/or reporting requirements should the EEOC consider for review, modification, streamlining, expansion or elimination, and why?
  • Are any EEOC regulations and/or reporting requirements outdated, ineffective, insufficient, inconsistent, redundant, duplicative or excessively burdensome?
  • Are there alternative regulatory approaches for particular EEOC regulations and/or reporting requirements that would reduce the burden on regulated entities while maintaining the same level of protection for applicants, employees, employers, employment agencies, federal agencies, and unions?  If so, please describe.

How Can Employers Have Their Voices Heard By The EEOC?

Considering the level of public feedback when the EEOC opened its regulations for public commenting in 2011 and the EEOC’s response to that feedback, employers are encouraged to submit comments if they would like to weigh in on EEOC regulations. Between now through April 20, 2015, comments or suggestions may be submitted to  Remember, the EEOC may make comments public, so please do not submit comments that include information you don’t want to make public.

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

Federal Court Certifies Class Action Seeking Recovery For Former Co-Plaintiff’s Use Of Work Product Under Unjust Enrichment Theory

Posted in Class Action Litigation

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

In Downing v. Riceland Foods, Inc., Case No. 4:13-CV-321 (E.D. Mo. Mar. 19, 2015), Judge Catherine D. Perry of the U.S. District Court for the Eastern District of Missouri certified a class of former MDL plaintiffs and plaintiffs’ counsel who brought suit against one of their co-plaintiffs seeking compensation for MDL work product that the co-plaintiff had used in other litigation. While not a workplace class action, this case serves as a warning that, in certain circumstances, employers could be liable for the legal fees and costs of co-defendants or co-plaintiffs. It also provides employers with a potential tool to recover attorneys’ fees from co-defendants or co-plaintiffs if they use common work product in other litigation. 

Case Background

After Bayer introduced genetically modified rice into the United States rice supply, rice farmers and others involved in the rice business brought more than 200 suits against Bayer and other entities, including Riceland Foods, in state and federal courts. Id. at 2. Riceland Foods filed cross-claims against Bayer and filed two other suits – one in state court and one in federal court – against Bayer. Id. at 3.

The federal cases were consolidated in an MDL. Id. at 2. To make the MDL manageable, the MDL court appointed lead counsel and set up a trust from which attorneys’ fees and costs would be paid to all the MDL plaintiffs’ counsel in the event of a recovery against Bayer. Id. at 3. The order did not apply to recoveries in state court cases absent consent or an order by the state court. Id. Under the order, Riceland Foods was to pay 10% of any recovery against Bayer to the trust. Id.

Over the course of five years, the MDL plaintiffs’ counsel drafted a consolidated complaint, opposed Bayer’s dispositive motions, reviewed more than 2.8 million pages of documents, and took and defended a total of 167 depositions. Id. at 3-4. They then conducted three bellwether trials, all of which resulted in plaintiffs’ verdicts. Id. at 4.

In separate state court litigation, Riceland Foods received $92 million from Bayer in a settlement. Id. at 3. The Downing plaintiffs sued Riceland Foods to recover ten percent of that recovery on unjust enrichment and quantum meruit theories, claiming that Riceland Foods used the work performed by the MDL plaintiffs’ counsel to achieve that settlement. Id. at 3, 5. They sought to certify, as a class, all persons and entities that provided or paid for services in the MDL action. Id. at 5-6. 

The Court’s Ruling

The Court certified the proposed class action, stating that “[t]his action is uniquely suitable for class certification.” Id. at 2. The Court first found that the proposed class was numerous because it consisted of more than 30 law firms and more than 5,000 MDL plaintiffs. Id. at 7-8. 

The Court then found that the proposed class action satisfied the commonality requirement. Id. at 9. Specifically, the Court reasoned that the class’s claims would face the common legal question of whether an unjust enrichment and quantum meruit action could be “based upon the use of an attorney’s work product by a non-client.” Id. at *8-9. 

The Court found that typicality was established because “each of the proposed class members would have essentially the same grievances as the named plaintiffs – that Riceland had unjustly benefitted from work for which they had paid or provided.” Id. at *10. The Court also found that the class representatives and counsel were adequate. Id.

The Court then turned to deciding whether Rule 23(b)(3)’s requirements – that common questions predominate over individual questions and that class resolution is superior to other available resolution methods – were met. The Court held that common questions would predominate as to both the unjust enrichment and quantum meruit claims because the class members jointly incurred expenses that conferred benefits on Riceland Foods. Id. at 19. While agreeing that there would need to be “a great number of factual determinations related to [Riceland Foods’s] use of work product and value received,” the Court pointed out that those inquiries would “focus on what Riceland did and what benefit it received” which would be “issues that are common to the class.” Id. at 20.

The Court finally determined that class litigation was superior to other available methods for the fair and efficient adjudication of the controversy. Id. at 21. The Court concluded that the class members did not have an interest in individually pursuing separate actions and that “any difficulties in managing th[e] class action pale in comparison to the alternative.” Id.

Implications For Employers

While this case is not a workplace class action, it serves as both a warning and a notice of a potential opportunity for employers in multi-plaintiff or multi-defendant litigation. It serves as a warning that employers who are co-plaintiffs or co-defendants in cases could be on the hook for attorneys’ fees and expenses when they use work product from that litigation in related litigation. While this case involved a co-plaintiff who recovered money in another lawsuit, the theory of recovery in Downing could apply to the successful defense of a related lawsuit. It also provides notice of a potential opportunity for employers to recover fees and costs from co-defendants and co-plaintiffs when those co-defendants and co-plaintiffs use common work product in related litigation. It further can be used to show that the class action mechanism can be used in such suits if there are enough co-defendants or co-plaintiffs. 

Court Orders EEOC To Pay Defendants’ Attorney’s Fees For “Baseless, Unreasonable and Frivolous” Lawsuit

Posted in EEOC Litigation

00-money-bagBy Courtney Bohl, Christopher DeGroff, and Gerald L. Maatman, Jr.

On March 18, 2015, in EEOC v. Global Horizons, Inc., et al., Case No. 2:11-CV-03045, Judge Edward F. Shea of the U.S. District Court for the Eastern District of Washington ordered the EEOC to pay defendants Green Acre Farms, Inc. and Valley Fruit Orchards, LLC (collectively “Grower Defendants”) their reasonable attorney’s fees and costs incurred in defending against the EEOC’s meritless lawsuit. Judge Shea’s scathing opinion chastised the EEOC for: (1) failing to conduct an adequate investigation to ensure that Title VII claims could reasonably be brought against the Grower Defendants; (2) pursuing a frivolous theory of joint-employer liability; (3) seeking frivolous remedies; and (4) disregarding the need to have a factual basis to assert a plausible basis for relief under Title VII against the Grower Defendants.

This is a significant opinion for employers who are currently litigating against the EEOC, as it makes clear that the EEOC should be and will be held accountable for brining unfounded or baseless lawsuits against employers.

Factual Background

In 2004 and 2005, Global Horizons, Inc., a staffing company, brought workers from Thailand to the United States through the H-2A visa program to work on the Grower Defendants’ farms. Id. at 7. A number of these workers absconded from the farms to California where they filed charges of discrimination with the EEOC alleging that Global and the Grower Defendants discriminated and retaliated against them based on their national origin. Id.

Between 2009 and 2010, the EEOC conducted a scant investigation of the charges. The EEOC interviewed some of the workers, but many of the workers indicated that the Grower Defendants never subjected them to unlawful or improper treatment.  The EEOC also received information from Grower Defendants, including position statements where the Grower Defendants argued that they were not the workers’ employer (Global was); that the charges were untimely; and that the allegations in the charges were too vague. Id. at 10. The Grower Defendants also made multiple requests for further information regarding the bases for the charges, but the EEOC never provided this information. Id.

In August and September 2010, the EEOC issued letters of determination, finding that the Grower Defendants discriminated against the charging parties and a class of similarly situated individuals on the basis of their national origin. Id. at 16. The EEOC sent the Grower Defendants a conciliation proposal demanding significant monetary relief and injunctive relief. Id. at 17. The Grower Defendants again requested information that supported the bases for the charges and the EEOC’s monetary demand, but the EEOC refused provide any further information. Id. In September 2010, the EEOC determined conciliation had failed, and, in April 2011 the EEOC filed suit. Id. at 18.

The Grower Defendants moved for summary judgment on the EEOC’s claims. In May 2014 the Court granted summary judgment in the Grower Defendants’ favor, finding that the EEOC failed to present evidence to establish a triable issue of fact that the Grower Defendants violated Title VII. Id. The Grower Defendants subsequently filed a motion for attorneys’ fees and costs.

The Court’s Ruling

In granting the Grower Defendants’ motion for attorneys’ fees and costs, the Court considered “the totality of the information possessed by the EEOC when it filed the lawsuit in order to determine if the filing was reasonable, frivolous, or without foundation.” Id. at 5.

The Court scrupulously analyzed the EEOC’s pre-suit investigation, finding multiple failures on the part of the EEOC. The Court determined that the EEOC failed to provide the Grower Defendants basic information regarding the Thai workers’ allegations, despite their numerous requests. The Court noted that the EEOC failed to consider or react to statements by some of the Thai workers that the Grower Defendants did not treat the Thai workers unfairly, and treated them the same as the Latino workers. Id. at 26. The Court highlighted the EEOC’s failure to interview any of the Grower Defendants’ managers, supervisors, or owners. The Court also found that the EEOC failed to take simple steps to identify and clarify which farm a worker experienced the claimed discriminatory treatment. Id. at 26. The Court noted that the EEOC was well aware of these deficiencies in its investigation, because counsel for the Grower Defendants repeatedly advised the EEOC of these issues. Id.

In addition, the Court found it troubling that the EEOC refused to examine Global’s invoices and other documents that the Grower Defendants had repeatedly offered to the EEOC, until after the start of litigation. Id. at 25. Equally as troubling to the Court was the EEOC’s failure to gather information to support a plausible finding that the Grower Defendants were joint employers with Global, including evidence that the Grower Defendants either (1) discriminated against a Thai worker or (2) knew or should have known that Global discriminated against a Thai worker and failed to take any remedial measures. Id. at 28. Finally, the Court noted that none of the information discovered by the EEOC in its investigation reasonably supported the high damages demands the EEOC made during conciliation. Id. at 27. The Court indicated that it was “unsurprising” that the Grower Defendants’ declined the EEOC’s conciliation proposal “in light of the vague and factually unexplained charges.” Id.

Based on its review of the EEOC’s investigation, the Court held that the information in possession of the EEOC “clearly did not justify the filing of Title VII claims against the Grower Defendants on specific Thai worker’s behalf.”  Id. In short, the Court found the lawsuit “baseless, unreasonable, and frivolous” and the award of attorneys’ fees appropriate. Id. at 24. The Court ordered defense counsel to submit their fee request per the ruling.

Implication For Employers

This ruling is extremely important for employers. Not only does it hold the EEOC accountable for its conduct during its pre-suit investigation, but also it serves as a reminder to all employers to make sure that they engage with the EEOC during the pre-lawsuit investigation and conciliation process, sufficiently documenting their efforts to obtain information and communicate with the EEOC.

The decision is also another significant sanction award against the EEOC. Critics of the Commission are apt to point to the decision as yet another example of the problems with the EEOC’s litigation enforcement program.

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



Ninth Circuit Opinion Suggests Potential Tool To Oppose Certification Of Successive Class Or Collective Actions

Posted in Class Certification

9th-circuitBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In Baker v. Microsoft Corp., No. 12-35946, 2015 U.S. App. LEXIS 4317 (9th Cir. Mar. 18, 2015), the U.S. Court of Appeals for the Ninth Circuit considered whether to adopt a rule creating a principle of comity between different federal district courts under which denial of class certification in one district court would create a rebuttable presumption in other district courts that denial of class certification was the correct result.  While the Ninth Circuit did not decide the issue explicitly in this non-workplace class action, employers nonetheless can use this proposed principle when attempting to defeat class or collective action certification bids in federal court where similar class or collective actions brought in other federal district courts have been denied certification.

Case Background

The plaintiffs brought a putative class action against Microsoft, claiming that Microsoft’s Xbox had a design defect.  Id. at 3-4.  Microsoft moved to dismiss the class allegations, and the district court granted that motion.  Id. at 3.

The district court found that a putative class action had been filed against Microsoft in another district court with claims similar to those in the Baker action.  Id.  The district court then decided to apply the principle of comity between federal district courts as adopted by the American Law Institute in 2010.  Id. at 10.  Under this principle of comity, “a prior denial of class certification on the same subject matter by a different district court judge [is] given a rebuttable presumption of correctness.”  Id.  Finding that the Baker plaintiffs had not overcome this rebuttable presumption of correctness, the district court dismissed the class allegations.  Id. Plaintiffs subsequently appealed.

Ninth Circuit’s Opinion

The Ninth Circuit did not decide whether the principle of comity should apply to class actions filed in different federal courts.  Rather, the Ninth Circuit found that the prior putative class action on which the district court relied used a legal standard that had been overruled by the Ninth Circuit.  Id. at *20-21.  It thus found that the district court’s decision was erroneous regardless of whether the comity principle were valid.  Id. at 21.

In a concurring opinion, Judge Carlos T. Bea persuasively argued that the Ninth Circuit should adopt the principle of comity rather than leaving the question for another day.  Id. at 22.  Judge Bea reasoned that “whether or not the class is certified is usually the most important ruling in such a case; once a class is certified, plaintiffs who brought claims of even dubious validity can extract an ‘in terrorem’ settlement from innocent defendants who fear the massive losses they face upon an adverse jury verdict.”  Id. at 31 (citing AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1752 (2011)).  He pointed out that “[i]n light of the minimal costs of filing a class complaint, an obvious strategy suggests itself: keep filing the class action complaint with different named plaintiffs until some judge, somewhere, grants the motion to certify.  So long as such a decision is reached while the plaintiffs who have not yet filed are numerous enough to justify class treatment, the plaintiffs will have a certified class that they can use to extract an in terrorem settlement.”  Id. at 32.

Balancing this concern against Smith v. Bayer Corp., 131 S.Ct. 2368 (2011), in which the Supreme Court held that individuals who are not before a district court cannot be bound by its judgment, Judge Bea asserted that there was a need to create a rule that would provide district courts “a way to clear their dockets of questionable successive class certification requests, while ensuring that putative class members who have unearthed new evidence or new law in favor of certification, or clear error in the earlier ruling, not be foreclosed by the failed efforts of their predecessors.”  Id. at 34.  He therefore proposed adopting a rule whereby there would be “a presumption of correctness to earlier denials of certification that can be rebutted by a showing of changed factual or legal circumstances, or earlier clear error.”  Id.  Judge Bea then applied this rule and held that the district court erred in dismissing the class claims in Baker because there had been a change in the law after the case the district court in Baker relied upon was decided.  Id. at 36.

Implications For Employers

While not a workplace class action, this ruling provides employers with a potential argument to combat successive class or collective actions.  Even though the principle of comity between different federal district courts has not yet been adopted – or rejected – by the federal circuits, it has been adopted by the American Law Institute and endorsed by Judge Bea of the Ninth Circuit.  In addition, Judge Bea’s excellent analysis of why comity should be adopted should prove helpful for employers crafting their own arguments encouraging courts apply the principle.  With this argument now available, we expect the issue to be decided in one of the federal courts of appeal in the near future.  Stay tuned.

Tenth Circuit Clarifies ADA Direct-Threat Defense For EEOC Litigation

Posted in EEOC Litigation

250px-US-CourtOfAppeals-10thCircuit-SealBy Gerald L. Maatman, Jr., and Alexis P. Robertson

On March 16, 2015, in EEOC v. Beverage Distributors Co., LLC, No. 14-1012 (10th Cir. 2014), the U.S. Court of Appeal for the Tenth Circuit held that the U.S. District Court for the District of Colorado erred by providing improper jury instructions on the direct-threat defense under the Americans With Disabilities Act (“ADA”). In rendering its decision, the Tenth Circuit clarified the direct-threat standard in a manner favorable to employers. The ruling is instructive for all employers involved in ADA litigation with the EEOC.

Case Background

A former employee of Beverage Distributors Corporation filed a charge of discrimination with the EEOC after he was unable to secure employment in a new position with the company. The employee was legally blind. After his original position with Beverage Distributors was eliminated, he was able to secure a new job with the company. However, his new employment was conditioned upon passing a physical examination. Although he passed the physical exam, the examining doctor stated that the employee would require workplace accommodations to mitigate the risks from his impaired vision. Beverage Distributors concluded that it could not reasonably accommodate his conditions and rescinded the job offer. The employee subsequently filed a charge of discrimination with the EEOC against Beverage Distributors. The EEOC then sued Beverage Distributors, on the employee’s behalf, under ADA.

At trial, amongst other things, Beverage Distributors asserted that the employee’s impaired vision created a significant risk of harm to him and others and no reasonable accommodation could reduce or eliminate that risk. The jury found that Beverage Distributors was liable for discrimination and that the employee’s condition did not pose a direct threat.  Beverage Distributors appealed to the Tenth Circuit, arguing that the direct-threat jury instruction constituted reversible error.

The Decision Of The Tenth Circuit

The Tenth Circuit ruled that the direct-threat jury instruction constituted reversible error because the district court inaccurately conveyed the direct-threat standard to the jury. Under the ADA, an employer may assert as an affirmative defense to a claim of discrimination, that it declined to hire an individual because the individual posed a “direct threat to the health or safety of themselves or others.” Id. a 4. “A direct threat involves a significant risk of substantial harm to the health or safety of the person or others that cannot be eliminated or reduced by reasonable accommodation.” Id.

The Tenth Circuit reasoned that direct-threat instruction, as delivered by the district court, did not accurately convey the direct-threat standard because it failed to communicate that proof of an actual threat was unnecessary.  The Tenth Circuit reasoned that Beverage Distributors should have avoided liability “if it had reasonably believed the job would entail a direct threat.” Id. at 6.  It should not have been required to prove that the employee posed an actual direct threat.  The jury instruction overstated Beverage Distributors’ burden. Further, the second portion of the jury instruction – which stated that the jury was to consider the reasonableness of Beverage Distributors’ belief regarding the existence of a direct threat – did not cure the error because the jury was never told why it was to consider the reasonableness of what Beverage Distributors thought. Therefore, the Tenth Circuit concluded that the error was not cured by the instruction regarding the reasonableness of the company’s subjective belief. The Tenth Circuit held that it had to reverse the jury’s verdict, because the jury could have been misled by the erroneous instruction.

Implications For Employers

This is a significant case in that it clarifies the direct-threat standard in a manner that is favorable for employers. As illustrated above, the key inquiry for the defense is the reasonableness of the employer’s belief regarding the direct-threat, and not whether there was in fact a direct threat posed. Employers and defense lawyers should take notice of this ruling and add it to their tool box when litigating cases under the ADA cases.

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

Solicitor General Opposes Supreme Court Review Of Whether A Plaintiff Has Standing Where There Is No Injury In Fact, But Only A Statutory Violation

Posted in Class Action Litigation

imagesBy Pam Devata, John Drury, and Robert Szyba

On March 13, 2015, the Solicitor General of the United States filed an amicus brief opposing the petition for writ of certiorari filed in Spokeo, Inc. v. Robins, No. 13-1339 (U.S.). The Spokeo petition poses a question with a significant impact on the future scope of consumer and workplace-related class actions: whether Congress can confer standing on a plaintiff who suffers no concrete harm, but who instead alleges only a statutory violation? To date, ten different amicus briefs have been filed urging the Supreme Court to grant review.

Case Background

In July 2010, Plaintiff Thomas Robins filed a purported class action under the Fair Credit Reporting Act (“FCRA”) against Spokeo, Inc., a search engine that compiles publicly available information on individuals into a searchable database. Robins alleged that the search results associated with his name included inaccurate information about him, in violation of the FCRA. Robins did not allege that he suffered actual damages, but only that he was entitled to statutory damages because the FCRA created a private right of action where inaccurate consumer information is reported. The district court dismissed Robins’ complaint, finding that a mere violation of the FCRA does not confer standing “where no injury in fact is properly pled.” 2011 WL 11562151, at *1. In February 2014, the U.S. Court of Appeals for the Ninth Circuit reversed, holding that the “violation of a statutory right is usually a sufficient injury in fact to confer standing” and that “a plaintiff can suffer a violation of the statutory right without suffering actual damages.”  742 F.3d 409, 413.

In May 2014, Spokeo filed its petition for writ of certiorari to the U.S. Supreme Court. Spokeo posed this question: “Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.”  Spokeo’s petition identified a circuit split. The Fifth and Sixth Circuits agree with the Ninth Circuit’s Spokeo decision and permit plaintiffs to maintain lawsuits without “injury-in-fact” and based solely on an alleged statutory violation. The Seventh Circuit also has signaled that it agrees with this position. In contrast, the Second, Third and Fourth Circuits have held that Congress cannot create standing by statute alone, and the mere deprivation of a statutory right is insufficient to confer standing.

The Solicitor General Opposes The Grant Of Certiorari

In October 2014, the Supreme Court invited the Solicitor General to file an amicus brief on behalf of the United States. The Supreme Court frequently follows the Solicitor General’s recommendation to grant or deny certiorari. In its opposition to certiorari, the Government essentially recommends that the Supreme Court avoid the broader question of Congressional power to create statutory standing and instead focus on the specifically alleged injury in Spokeo – the public dissemination of inaccurate personal information – and the specific statute at issue – the FCRA. The Government’s position is that a concrete harm exists where a defendant unlawfully disseminates inaccurate personal information. Although the Second, Third and Fourth Circuits have rejected the concept of “statutory standing,” they each did so under other federal statutes.

Implications for Employers

Given the Solicitor General’s recommendation, the Supreme Court may deny certiorari and maintain the uncertain status quo. As a consequence, in some circuits, plaintiffs will be allowed to maintain private causes of action for alleged violations of federal statutes — even where the plaintiffs themselves suffered no actual injury.

If certiorari is granted, the Supreme Court’s ultimate decision will have a significant impact on the future of consumer, workplace, and other class actions. Its impact may reach other federal statutes that authorize private rights of action or statutory damages, such as the Truth in Lending Act, the Fair Debt Collection Practices Act, the Employee Retirement Income Security Act, and the Americans With Disabilities Act. If Spokeo is reversed, plaintiffs would be required to plead and establish actual injury, and not just a violation of the underlying statute. Such a result would undoubtedly limit the number of viable class actions under the FCRA and other federal statutes.

The resolution of the Spokeo petition and appeal stands to dramatically affect employers, consumer reporting agencies, and other corporate defendants. Although the United States’ opposition makes a grant of certiorari less likely, it speaks volumes that ten separate amicus briefs have been filed on behalf of seventeen different companies, trade associations, and other organizations (including the National Association of Professional Background Screeners, Chamber of Commerce of the United States, eBay, Facebook, Google, Yahoo, and leading consumer reporting agencies). Their support for resolution of the Spokeo question — whether Congress can confer standing through statute alone — may tip the scales in favor of the grant of certiorari. For the time being, employers will have to wait and see whether the Supreme Court will ultimately entertain this important question.