finger-150x112By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: The Fourth Circuit recently affirmed a U.S. District Court’s denial of three post-verdict motions brought by an employer in an EEOC religious discrimination case alleging a failure to accommodate an employee’s Anti-Christ fears. The case is an interesting read for any employer involved in religious discrimination issues.

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Most religious accommodation lawsuits brought by the EEOC against employers concern mainstream religions. But when the EEOC successfully sues an employer for failing to accommodate an employee’s Anti-Christ fears, employers need to pay attention, especially when that cases involves a jury verdict awarding over $586,000 in total damages (as we blogged about here).

In EEOC v. Consol Energy, Inc., No. 16-1230, 2017 U.S. App. LEXIS 10385 (4th Cir. June 12, 2017), the EEOC alleged that the defendants (“Consol”) refused to provide an employee with a religious accommodation by subjecting him to a biometric hand scanner for purposes of clocking in and out of work.  The employee believed the hand scanner was used to identify and collect personal information that would be used by the Christian Anti-Christ, as described in the New Testament Book of Revelation, to identify followers with the “mark of the beast.”  Following a jury verdict in favor of the EEOC, the U.S. District Court for the Northern District of West Virginia denied Consol’s renewed motion for judgment as a matter of law under Rule 50(b), motion for a new trial under Rule 59, and motion to amend the Court’s findings and conclusions under Rule 59.  Following the employer’s appeal, the Fourth Circuit affirmed.

With the Fourth Circuit affirming the District Court’s ruling after an eyebrow-raising EEOC jury trial victory, it behooves the interests of employers to consider any and all religious accommodation requests.

Case Background

In the summer of 2012, Consol implemented a biometric hand-scanner system at the mine where the employee worked, in order to better monitor attendance and work hours. Id. at *4.  The scanner system required each employee checking in or out of a shift to scan his or her right hand; the shape of the right hand was then linked to the worker’s unique personnel number.  While Consol implemented the scanner to produce more efficient and accurate time reporting, the employee alleged it presented a threat to his core religious commitments.

As the employee consistently and unsuccessfully sought an accommodation that would preclude him from having to clock in with the scanner, Consol meanwhile allowed employees with injured hands to scan in using a different keypad system.  Id. at *7.  Eventually, the employee decided to retire in lieu of using the hand-scanner, and later found a lower paying job.  The EEOC thereafter brought an enforcement action against Consol on behalf of the employee, alleging a failure to accommodate religious beliefs and constructive discharge.  Id. at *9.  After the case ultimately proceeded to trial, the jury found Consol liable for failing to accommodate the employee’s religious beliefs.  The jury awarded $150,000 in compensatory damages and $436,860.74 in front and back pay and lost benefits.  Id. at *10-11.  Consol then filed a renewed motion for judgment as a matter of law under Rule 50(b), a motion for a new trial under Rule 59, and a motion to amend the Court’s findings and conclusions under Rule 59.  The District Court denied all three post-verdict motions, and Consol appealed.  Id. at *11.

The Fourth Circuit’s Decision

The Fourth Circuit affirmed the District Court’s denial of Consol’s three post-verdict motions.  First, Consol challenged the denial of its renewed motion for a judgment as a matter of law, arguing that the District Court erred in concluding that there was sufficient evidence to support the jury’s verdict against it.  Consol argued that it did not fail to reasonably accommodate the employee’s religious beliefs because there was in fact no conflict between his beliefs and its requirement that he use the hand scanner system.  The Fourth Circuit rejected this argument, noting that in both the employee’s request for an accommodation and his trial testimony, the employee carefully and clearly laid out his religious objection to use of the scanner system.  Id. at *13.

Next, regarding the District Court’s denial of its motion for a new trial under Rule 59, Consol raised a handful of objections that primarily related to the District Court’s exclusion of evidence and various issues related to jury instructions.  Id. at *20.  The Fourth Circuit noted that it would “ respect the [D]istrict [C]ourt’s decision absent an abuse of discretion, and will disturb that judgment only in the most exceptional circumstances.”  Id. (internal quotation marks and citation omitted).  Further, it opined that, “[w]hen, as here, a new trial is sought based on purported evidentiary errors by the district court, a verdict may be set aside only if an error is so grievous as to have rendered the entire trial unfair.”  Id.  Applying this standard, the Fourth Circuit found that the District Court did not abuse its discretion.  Regarding the jury instructions, the Fourth Circuit held that the District Court properly found that Consol failed to show any prejudice arising from any of the instructions at issue.  Id. at *26.

Finally, both parties cross-appealed the District Court’s rulings on lost wages and punitive damages.  The Fourth Circuit rejected Consol’s argument that the employee failed to adequately mitigate his damages by accepting a lower paying job, noting that whether a worker acted reasonably in accepting particular employment is preeminently a question of fact, and that it would not second-guess the District Court.  The Fourth Circuit also rejected the EEOC’s cross-appeal regarding punitive damages, holding that the district court did not err in concluding that the EEOC’s evidence fell short of allowing for a determination that Consol’s Title VII violation was the result of the kind of “reckless indifference” necessary to support an award of punitive damages.  Id. at *34.  Accordingly, the Fourth Circuit affirmed the District Court’s denial of Consol’s three post-verdict motions.

Implications For Employer

While it makes sense from a practical standpoint for employers to foster a work environment that is respectful of its employees’ religious beliefs, this ruling demonstrates that employers should also be tolerant of their employees’ religious accommodation requests for legal and financial reasons.  And although many employers will likely never encounter an employee requesting a religious accommodation to cope with his or her fear of the Anti-Christ, they nonetheless must seriously entertain any and all religious accommodation requests.  Equipped with an Appellate Court affirmation of its jury trial verdict, the EEOC may very well likely “smell blood” in the sea of religious discrimination charges in its backlog.  As such, the best practice for employers is to take a respectful and thoughtful approach to religious accommodation requests to avoid potential EEOC litigation and sometimes unforgiving juries.

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

 

magnifier-1714172__340By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis:  The Sixth Circuit recently affirmed a U.S. District Court’s decision granting the EEOC’s application to enforce a subpoena in a disability discrimination investigation, finding that company-wide information regarding the employer’s use and disclosure of medical information was relevant to the investigation of a single employee’s charge of discrimination. The ruling underscores the challenges faced by employers in objecting to EEOC subpoenas.

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As we discussed in recent blog posts (here, here, and here), the EEOC has been aggressive in issuing expansive subpoenas that seek company-wide information from employers, as opposed to limiting the subpoena to seek information about an individual charging party.  In the latest round of EEOC versus employer subpoena litigation, in EEOC v. United Parcel Service, Inc., No. 16-2132, 2017 U.S. App. LEXIS 10280 (6th Cir. June 9, 2017), the U.S. Court of Appeals for the Sixth Circuit affirmed a decision of the U.S. District Court for the Eastern District of Michigan granting the EEOC’s application to enforce a subpoena that sought company-wide information, even though investigation concerned a single employee’s charge of discrimination.

This ruling provides yet another example of courts setting the bar low when considering what is “relevant” for purposes of the scope of an EEOC subpoena.  As such, employers can and should expect the EEOC to continue to be aggressive in firing off far-reaching subpoenas as it investigates high-stakes systemic discrimination claims.

Case Background

A UPS operations manager filed an EEOC charge claiming that UPS discriminated and retaliated against him in violation of the Americans With Disabilities Act of 1990 (“ADA”).  Id. at *1-2.  In particular, he claimed that UPS published confidential medical information about him and other employees on its intranet page.  Id. at *2.  The EEOC began an investigation into the employee’s claims, which resulted in the Commission issuing a subpoena that requested information about how UPS stored and disclosed employee medical information.  UPS opposed the subpoena, claiming that the requested information was irrelevant to his charge.  The EEOC thereafter filed an application to enforce the subpoena.  The District Court granted the EEOC’s application, and UPS appealed to the Sixth Circuit.

The Sixth Circuit’s Decision

The Sixth Circuit affirmed the District Court’s grant of the EEOC’s application to enforce the subpoena.  First, the Sixth Circuit explained that a subpoena enforcement proceeding is a summary process designed to expeditiously decide whether a subpoena should be enforced, and that the purpose is not to decide the merits of the underlying claim.  Id. at *4 (citation omitted).  Citing the U.S. Supreme Court’s recent ruling in McLane v. EEOC, 137 S. Ct. 1159, 1170 (2017), which we blogged about previously here, the Sixth Circuit further instructed that it would review the District Court’s decision to enforce the subpoena under an abuse of discretion standard.  Id.

After noting that in the Title VII context the Sixth Circuit has held that the EEOC is entitled to evidence that focuses on the existence of patterns of racial discrimination in job classifications or hiring situations other than those that the EEOC’s charge specifically targeted, the Sixth Circuit opined that it saw “no reason to hold differently with respect to discrimination on the basis of disability.”  Id. at *5 (citations omitted).  Further, “so long as a charge alleges unlawful use of medical examinations and inquiries, evidence of patterns of such unlawful use is relevant to the charge under investigation.”  Id.  UPS argued that the EEOC was only entitled to information regarding similarly-situated employees.  The Sixth Circuit rejected this argument, noting that there was no such restriction under the ADA.   Id.

UPS further argued that the EEOC’s requested information was overbroad because the databases referenced in the EEOC’s subpoena contained information about employees from other regions in the United States and Canada, including one database where the Charging Party’s information never appeared.  The Sixth Circuit rejected this argument, noting that the breach of confidentiality that the employee described in his amended charge was not limited to himself since he alleged that “all other employees subject to Health and Safety incident action/reports have had their confidentiality breached in the same manner as me.”  Id. at *6.  The Sixth Circuit further determined that the EEOC was entitled to search for evidence that showed a pattern of discrimination other than the specific instance of discrimination described in the charge.  Id.

Turning to UPS’s argument that the amended charge was not valid because it “appears to have been amended for an illegitimate purpose — to obtain documents that the subpoena otherwise could not reach,” the Sixth Circuit held that UPS forfeited this argument since it did not raise it before the District Court.  Id.  Further, the Sixth Circuit rejected UPS’s argument that the EEOC’s subpoena was overbroad because it provided no temporal scope, noting that regardless of when UPS developed the criteria for posting content on its intranet site, this piece of evidence may provide insight into how UPS categorizes information as confidential.  Id. at *7.  Finally, the Sixth Circuit dismissed UPS’s argument that producing the requested information would be unduly burdensome, noting that UPS did not identify how producing the requested evidence would be difficult, especially considering that both parties acknowledged it could be produced electronically.  Accordingly, the Sixth Circuit held that the District Court did not abuse its discretion in ordering UPS to comply with the subpoena, and it affirmed the District Court’s decision.  Id. at *7-8.

Implications For Employers

Armed with yet another decision holding that an expansive EEOC subpoena was relevant to an investigation, the further emboldened EEOC likely will continue to seek far-reaching, company-wide information in its investigations, including those that stem from a single employee’s charge of discrimination.  Despite this recent trend of unfavorable rulings, employers should not let their guard down when confronted with broad EEOC subpoenas.  Rather, employers must carefully scrutinize each EEOC subpoena and aggressively attack its relevance when appropriate.

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

 

armor-158430__340By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis:  In a sexual harassment lawsuit brought by the EEOC, the Sixth Circuit affirmed a U.S. District Court’s grant of an employer’s motion for summary judgment after finding that the harassing employee was not a supervisor under Title VII, and therefore the company was not vicariously liable for his actions. It is a decidedly pro-employer ruling.

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In EEOC v. AutoZone, Inc., No. 16-6387 (6th Cir. June 9, 2017), the EEOC alleged that AutoZone was liable under Title VII for a store manager’s alleged sexual harassment of three female employees.  After the U.S. District Court for the Western District of Tennessee granted the employer’s motion for summary judgment, the EEOC appealed.  The Sixth Circuit affirmed the District Court’s grant of summary judgment, finding that because the store manager did not take any tangible employment action against his co-workers and had no authority to do so, he was not a supervisor under Title VII, and thus AutoZone was not vicariously liable for the conduct alleged.  The Sixth Circuit further held that even if the store manager was found to be a supervisor under Title VII, AutoZone established an affirmative defense to liability.

For employers facing EEOC lawsuits alleging that they are vicariously liable for sexual harassment claims brought against employees with managerial job titles, yet who have limited authority to take tangible employment actions, this ruling can be used as a blueprint to attack such claims in motions for summary judgment.

Case Background

In May 2012, AutoZone transferred a store manager to its Cordova, Tennessee location.  Id. at 2.  The store manager could hire new hourly employees and write up employees at the store for misbehaving, but could not fire, demote, promote, or transfer employees.  Authority over firing, promoting, and transferring rested with the district manager for the store.

After an employee claimed that the store manager made lewd comments to her, AutoZone internally investigated the allegations.  As part of AutoZone’s internal investigation, two other female employees who worked at the Cordova location confirmed that the store manager made lewd sexual comments.  Despite his denial of the allegations, AutoZone ultimately transferred and terminated the store manager.  Thereafter, the EEOC brought a lawsuit alleging that AutoZone subjected the three female employees to sexual harassment.  Following discovery, AutoZone moved for summary judgment.  The District Court granted AutoZone’s motion for summary judgment, finding that the store manager was not a supervisor under Title VII and therefore AutoZone was not vicariously liable for his actions.  The EEOC appealed the District Court’s grant of summary judgment to the Sixth Circuit.

The Sixth Circuit’s Decision

The Sixth Circuit affirmed the District Court’s grant of AutoZone’s motion for summary judgment.  First, the Sixth Circuit instructed that under Title VII, if the harassing employee is the victim’s co-worker, the employer is liable only if it was negligent in controlling working conditions, or in other words, if the employer knew or should have known of the harassment yet failed to take prompt and appropriate corrective action.  Id. at 4 (internal quotation marks and citation omitted).  However, if the harasser is the victim’s supervisor, a non-negligent employer may become vicariously liable if the agency relationship aids the victim’s supervisor in his harassment.  Id.  The Sixth Circuit further explained that an employee is a “supervisor” for purposes of vicarious liability under Title VII if he or she is empowered by the employer to take tangible employment actions against the victim.  Id.

Applied here, the Sixth Circuit found that AutoZone did not empower the store manager to take any tangible employment action against his victims since he could not fire, demote, promote, or transfer any employees.  Id. at 5.  Further, the Sixth Circuit held that the store manager’s ability to direct the victims’ work at the store and his title as store manager did not make him the victims’ supervisor for purposes of Title VII.  The Sixth Circuit also noted that while the store manager could initiate the disciplinary process and recommend demotion or promotion, his recommendations were not binding, and his ability to influence the district manager did not suffice to turn him into his victims’ supervisor.  Id. at 5-7.  Finally, the Sixth Circuit held that the store manager’s ability to hire other hourly employees was irrelevant since he did not hire the employees he harassed.  Id. at 7.

After finding that the store manager was not a supervisor for purposes of Title VII, the Sixth Circuit further held that even if he was found to be a supervisor, AutoZone established an affirmative defense to liability.  The defense has two elements: (1) that the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior; and (2) that the harassed employees unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.  Id.  The Sixth Circuit held that AutoZone met the first element by utilizing an appropriate anti-harassment policy to prevent harassment, and by transferring and later terminating the store manager promptly after it investigated the allegations.  Regarding the second element, the Sixth Circuit held that AutoZone satisfied this prong since the victims failed to report the store manager’s behavior for several months.  The Sixth Circuit thus held that AutoZone established an affirmative defense to liability.  Accordingly, the Sixth Circuit affirmed the District Court’s grant of AutoZone’s motion for summary judgment.  Id. at 10.

Implications For Employers

Employers often utilize employees that may be “managers” in title, yet do not have the authority to take tangible employment actions.  When those employers are sued by the EEOC for the conduct of managers with limited authority, this ruling can be used to argue that such employees are not “supervisors” under Title VII, and therefore the employer is not vicariously liable for their actions.  Nonetheless, given the EEOC’s aggressiveness in attempting to use the theory of vicarious liability to hold “deep-pockets” large-scale employers liable for the conduct of employees, employers would be prudent to invest in harassment-prevention training to minimize the likelihood of such behavior occurring.  But in the event that such incidents of harassment arise and lead to EEOC lawsuits, employers can use this decision to tailor their arguments to focus on the authority of the harasser, as opposed to his or her job title.

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

EEOCBy Gerald L. Maatman, Jr.Christopher J. DeGroff, and Matthew J. Gagnon

Seyfarth Synopsis: Reviewing the EEOC’s case filings during the first half of the Commission’s fiscal year may already reveal some surprising trends, most notably a sharp uptick in the total number of case filings – up 75% from the same point last year – and a corresponding increase in systemic cases.

March 31 was the mid-point of the EEOC’s fiscal year. Given the significant changes brought to the federal government by the Trump Administration, we sharpened our pencils and examined the EEOC’s case filings during the first half of FY 2017 and compared those filings to the first half of FY 2016 to see what changes, if any, the new administration has wrought.

As the chart below reveals, the number of filings is up significantly from the same point in time in FY 2016. From October 1, 2016 through March 31, 2017, there were 35 new cases filed. During the same time period in the prior year, there were only 20. That means that filings are up a whopping 75% for the first half of the year.

Total EEOC Case Filings - 2017 Midyear Review

In addition to a larger number of total filings, we have also seen a rise in systemic cases. These cases – defined as having a significant impact on the development of the law or promoting compliance across a large organization, community, or industry – have long been a strategic priority for the agency. As we blogged about here, Acting Chair of the EEOC, Victoria Lipnic, reaffirmed the agency’s commitment to systemic cases when she spoke to Seyfarth Shaw and our invited guests in February of this year. However, systemic cases have garnered negative attention from Republican members of Congress, so it was not clear whether the EEOC would shift direction under the new Republican leadership.

Although we cannot know for certain which cases the EEOC considers “systemic,” based on our review of EEOC press releases and the substance of the EEOC filings, we have identified a significant uptick in systemic case filings in the first half of FY 2017 compared to the same period in FY 2016. Last year there were only four filings during this time period, compared with nine this year. If this trend holds through to the end of the year, then this could turn out to be a banner year for systemic case filings.

Systemic EEOC Case Filings - 2017 Midyear Review

Finally, we analyzed the particular discrimination theories and statutes that the EEOC is pursuing. That analysis can be seen in the chart below. Not surprisingly, Title VII and Americans with Disabilities Act cases lead the way, with 17 and 14 cases filed respectively. Year after year, those types of cases lead the pack. The number of ADEA cases is slightly higher than this time last year, but is still generally consistent with prior years and does not yet reflect a significant change in direction for the EEOC.

As Seyfarth’s Pay Equity Issues & Insights Blog noted here, Chairperson Lipnic has stated that she is very interested in pay equity issues. However, that level of interest is not yet translating into any increase in Equal Pay Act (“EPA”) cases on a year over year basis. The first half of FY 2017 saw only one EPA case filed, the same as during the same period last year.

EEOC Case Filings By Statute - 2017 Midyear Review

We will continue to monitor trends and developments in EEOC litigation throughout the year so that we can once again bring you our annual comprehensive end-of-year examination of trends affecting EEOC litigation (see here for last year’s version). As always, we look forward to bringing that analysis to you, our loyal readers!

100px-US-CourtOfAppeals-9thCircuit-Seal_svgBy Gerald L. Maatman, Jr., Christopher J. DeGroff and Alex W. Karasik

Seyfarth Synopsis: After the U.S. Supreme Court clarified in McLane Co. v. EEOC, No. 15-1248, 2017 U.S. LEXIS 2327 (U.S. 2017), that the scope of review for employers facing EEOC administrative subpoenas was the abuse-of-discretion standard, a relatively high bar of review, the Ninth Circuit applied that standard of review on remand and vacated the District Court’s original decision that denied the enforcement of an EEOC subpoena.

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An often contentious issue in EEOC investigations involves the scope of administrative subpoenas, which can be burdensome for employers when the subpoenas seek a broad range of company-wide information.  When analyzing the standard of review for decisions relating to the enforcement of EEOC subpoenas, in McLane Co. v. EEOC, No. 15-1248, 2017 U.S. LEXIS 2327 (U.S. Apr. 3, 2017), the U.S. Supreme Court held that such decisions were examined under an abuse-of-discretion standard.  The abuse-of-discretion standard sets a relatively high bar for review, as we blogged about here.  Following the U.S. Supreme Court’s remand to the Ninth Circuit in McLane, the Ninth Circuit vacated the District Court’s denial of enforcement of the subpoena and sent the matter back to the District Court for further proceedings.  EEOC v. McLane Co., No. 13-15126, 2017 U.S. App. LEXIS 9027 (9th Cir. May 24, 2017).

For employers, this is an important case to follow as it provides clarification as to the standard of review used when Appellate Courts address district court subpoena enforcement decisions.

Background

The EEOC issued an administrative subpoena as part of its investigation into a charge of discrimination filed by a former employee of a McLane subsidiary.  Id. at *3.  The employee alleged that McLane discriminated against her on the basis of sex when it fired her after she failed to pass a physical capability strength test.  Relevant here, the subpoena requested “pedigree information” (name, Social Security number, last known address, and telephone number) for employees or prospective employees who took the test.  Following the Court’s precedent at the time, the Ninth Circuit applied a de novo review to the District Court’s ruling that the pedigree information was not relevant to the EEOC’s investigation.  Id. at *3-4.  The U.S. Supreme Court vacated the Ninth Circuit’s judgment after holding that a district court’s decision whether to enforce an EEOC subpoena should be reviewed for abuse of discretion.  The U.S. Supreme Court remanded the case to the Ninth Circuit so that the Ninth Circuit could re-evaluate the District Court’s ruling under the proper standard of review.

 The Ninth Circuit’s Decision On Remand

After reviewing the District Court’s decision under the abuse-of-discretion standard, the Ninth Circuit still held that the District Court abused its discretion by denying enforcement of the subpoena.  Id. at *4.  The District Court found that the pedigree information was not relevant “at this stage” of the EEOC’s investigation because the evidence McLane had already produced would “enable the [EEOC] to determine whether the [strength test] systematically discriminates on the basis of gender.”  Id.  The Ninth Circuit rejected this approach, noting that the District Court’s ruling was based on the wrong standard for relevance.  The Ninth Circuit stated that under Title VII, the EEOC may obtain evidence if it relates to unlawful employment practices and is relevant to the charge under investigation.  Quoting EEOC v. Shell Oil Co., 466 U.S. 54, 68-69 (1984), the Ninth Circuit opined that the relevance standard encompasses “virtually any material that might cast light on the allegations against the employer.”  Id. at *5.

Applying Shell Oil, the Ninth Circuit found that the pedigree information was relevant to the EEOC’s investigation since conversations with other McLane employees and applicants who have taken the strength test “might cast light” on the allegations against McLane.  Id.  McLane argued that, given all of the other information it had produced, the EEOC could not show that the production of nationwide pedigree information was relevant to the Charge or its investigation under either a disparate treatment or disparate impact theory.  Id. at *6. The Ninth Circuit construed the District Court’s application of relevance to be a heightened “necessity” standard, and noted that the governing standard was “relevance,” not “necessity.”  Id.

The Ninth Circuit then found that the District Court erred when it held that pedigree information was irrelevant “at this stage” of the investigation.  Id.  Rejecting the District Court’s conclusion that the EEOC did not need pedigree information to make a preliminary determination as to whether use of the strength test resulted in systemic discrimination, the Ninth Circuit held that the EEOC’s need for the evidence—or lack thereof—did not factor into the relevance determination.  Id. at *6-7. While McLane had argued that the pedigree information was not relevant because the charge alleged only a “neutrally applied” strength test, which by definition cannot give rise to disparate treatment, systemic or otherwise, the Ninth Circuit rejected this approach, holding “[t]he very purpose of the EEOC’s investigation is to determine whether the test is being neutrally applied; the EEOC does not have to take McLane’s word for it on that score.”  Id. at *7.  Accordingly, the Ninth Circuit held that because the District Court based its ruling on an incorrect view of relevance, it necessarily abused its discretion when it held that the pedigree information was not relevant to the EEOC’s investigation.

The Ninth Circuit concluded by noting that on remand, McLane was free to renew its argument that the EEOC’s request for pedigree information was unduly burdensome.  Id. at *8. Further, explaining that it did not reach the issue in its original decision, the Ninth Circuit instructed that “[o]n remand, the district court should also resolve whether producing a second category of evidence — the reasons test takers were terminated — would be unduly burdensome to McLane.”  Id.  Accordingly, the Ninth Circuit vacated the District Court’s judgment and remanded for further proceedings.

Implications For Employers

As employers who are confronted with EEOC subpoenas may ultimately find themselves in a subpoena enforcement action, the McLane case is a must-follow in terms of what standard of review will be applied if those district court decisions are later reviewed.  The U.S. Supreme Court’s adoption of the more “hands off” abuse-of-discretion standard means that greater weight will be given to district court decisions.  Nonetheless, the Ninth Circuit’s ruling here illustrates that appellate courts may still be willing to overturn district court decisions to enforce or quash EEOC subpoenas depending on the circumstances.  The decision will also, no doubt, be cited by an emboldened EEOC as authority for its position that expansive pedigree information is relevant in a broad swath of cases.  Understanding these trends will provide useful guidance for employers when deciding if and how to challenge what often can be burdensome demands for information from the EEOC.

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

Magnifying_Glass_PhotoBy Gerald L. Maatman, Jr., Andrew Scroggins and Christopher DeGroff

Seyfarth Synopsis: An in-depth analysis by Seyfarth Shaw sheds new light on how quickly the EEOC moves matters from letter of determination, through conciliation, to litigation.  For charges that result in litigation, the EEOC spends, on average, just over two months in conciliation.  After declaring that conciliation has failed, the EEOC takes, on average, about three months to file suit.  However, there are notable differences in speed among the EEOC’s district offices.

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Employers on the wrong side of an EEOC enforcement action know all too well that there is little rhyme or reason to the timeline from investigation to litigation.  The EEOC issues Performance and Accountability Reports for each fiscal year.  Those reports can yield useful insights into the EEOC’s strategic priorities, as well as the volume of charges and litigation matters it brings.  However, the EEOC has never reported information that shows how long a charge typically is in the pipeline before it reaches litigation.

Based on our own in-depth analysis of EEOC complaints, we now have insight to how long it takes the EEOC to move a charge from determination to a declaration that conciliation has failed, and how long again from that point until a complaint is filed in federal court.

In addition to finally providing some insight to the timeline on charges that the EEOC takes to litigation, this analysis sets an important benchmark.  On January 25, 2017, President Trump appointed Victoria Lipnic as acting chair of the EEOC.  Speaking at an event sponsored by Seyfarth Shaw, Ms. Lipnic stated her intention to focus on more targeted litigation that can still have an impact on a larger scale.  Monitoring the pace at which the EEOC moves charges to litigation will be one way to measure the changes in the agency’s enforcement approach.

Background And Methodology

In April 2015, the Supreme Court issued its decision in Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015), holding that the EEOC must demonstrate that it has satisfied its statutory duty of “conference, conciliation, and persuasion” before filing suit.  (We have written extensively on the decision in prior blog posts.)  In an apparent effort to meet the Supreme Court’s directive, the EEOC began later that year to routinely include additional information in its complaints, such as when it had issued determinations in connection with the underlying charges and when it had declared conciliation efforts to have failed.

We analyzed and collected this and other information from nearly 150 complaints filed around the country by the EEOC from 2015 through January 2017.  From that data, we could roughly calculate how long it takes for the EEOC to move from step to step, as well as the relative pace of the EEOC district offices.

How Long Is Conciliation Likely To Last?

If you are an employer that has responded to a charge and just received a letter of determination, how long can you expect the EEOC to engage in conciliation?

According to our analysis, the median time spent in conciliation is 72 days.  For most employers, the EEOC will declare that conciliation has failed in three months or less.  In some instances, however, conciliation has lasted for years.

Employers are more likely to spend longer in conciliation when dealing with the EEOC’s district offices in Birmingham, Memphis, Phoenix, Houston, or Miami.  Conciliation moves faster in the EEOC’s district offices in Baltimore, Little Rock, Detroit, and Washington DC.

Additional details are summarized in the infographic.

If Conciliation Fails, How Long Until A Complaint Is Filed?

The common assumption among employers is that it is a race to the courthouse once the EEOC deems conciliation failed, but our analysis suggests otherwise.

Although about 19% of complaints are filed within the first month, the median time from the notice of conciliation failure to filing of a complaint is almost three times that:  91 days.

The quickest to file are the EEOC district offices in Kansas City, Little Rock, Oklahoma City, and Los Angeles.  The EEOC moves most slowly in its district offices in Phoenix, Dallas, St. Louis, Chicago, Indianapolis, Birmingham, and Memphis.

See the infographic for additional details.

A Determination Was Just Issued In An Intractable Case – How Long Until Court Proceedings Commence?

Taking both of these together, how much time can an employer expect to pass from determination to the start of litigation?

Our analysis found that employers have at least two months before the complaint is filed, and that short timeline is uncommon.  The median time from determination to complaint is 196 days.

Charges move most quickly to court in the EEOC’s district offices in Kansas City, Little Rock, and Baltimore.  The EEOC moves most slowly in its district offices in Phoenix, Memphis, Birmingham.

The infographic provides additional details.

 We will continue to analyze the EEOC’s complaints and monitor for results that may suggest some change in approach in response to new leadership at the agency.

EEOCBy David J. Rowland and Andrew L. Scroggins

Seyfarth Synopsis:  In a case filed May 8 in federal court in New Jersey, the EEOC sued an IT staffing firm for age discrimination on behalf of a candidate seeking placement into an position with one of the firm’s clients.  If the startling allegations are true, the case may be a lay-up for the EEOC, but even if the allegations are inaccurate, staffing firms and companies that utilize staffing resources should view this as a reminder about the process by which they evaluate candidates, and what NOT to do with potentially unlawful instructions from clients.

In EEOC v. Diverse Lynx, Inc., 3:17-CV-03220 (D.N.J), the EEOC alleges that Kadami Vijaisimh posted his resume on the website Diverse Lynx (DL) maintains for job applicants.  The EEOC alleges that at around the same time Vijaisimh posted his resume, DL was sourcing candidates for an IT project management opportunity available at one of its clients.

According to the complaint, Vijaisimh had substantial IT project management experience and was contacted by DL regarding the position. After several discussions with Vijaisimh regarding the details of the position at issue, DL allegedly wrote Vijaisimh this e-mail:

Thanks for your reply. I check the details of [sic] you. And you [sic] born in 1945. So I discussed with the client side. Age will matter. That why I can’t [sic] be able to submit your profile to client side.

Predictably, DL did not refer Vijaisimh to its client for the IT project management spot and the EEOC alleges it did not do so because of his age.

Taking these facts as true, it is hard to imagine a better case for the EEOC, and it is easy to see why the agency brought it.  But, putting that aside, the alleged actions of the staffing firm in this case serve as a stark reminder of the obligations of staffing firms to comply with employment laws as they work with their clients and candidates to fill open positions.

Here are the top takeaways from the case and some suggested strategies:

Takeaway 1:  In evaluating a candidate, a staffing firm’s recruiters cannot use candidates’ profiles for the purposes of excluding candidates based upon protected statuses.  It is not clear from the complaint what information led DL’s recruiter to conclude that Vijaisimh was born in 1945.  One reasonable presumption is that it was the result of a search of social media sources, such as Facebook, LinkedIn, or Twitter, all of which harbor dangers as a screening tool.  Another reasonable presumption is that it was the result of online searches of publicly available information, which can often be unreliable.

Takeaway 2:  Beware about making assumptions about a client’s wishes.  In this case, if the DL recruiter initiated a conversation with the client about whether age would “matter” for this IT project management job, the staffing firm has not only placed itself in potential trouble, it has also set its client up for a possible legal disaster. It is not clear in this case whether the client actually cared about age, or if that was simply the recruiter’s intuition, but either way, the candidate’s age (specifically or in general) should never have been raised or discussed with the client.

Takeaway 3: A client’s wish is not a staffing firm’s command.  Sometimes a client may make an up-front request for candidates who fit a particular paradigm without considering how the EEOC or plaintiff’s lawyers might construe the language.  Requests like “seeking recent college grads”, “need someone who fits in with our youthful culture”, “inexperienced candidates have been the most successful”, or “fresh blood is needed to replace our aging workforce” are not necessarily intended to be age-based – a recent college grad could be over 40, for example – but they are the sort of quotes that raise the eyebrow of enforcement agencies and may not play well with a jury.

Remedy 1: Publish a written policy.

Staffing firms should memorialize their policies prohibiting employment discrimination against those placed to work with clients, and make the policy available to applicants, employees, and clients.

Remedy 2: Train, train, and train.

Training employees on how and whether to use social media or other online searches is essential for every employer and staffing firm.  Too much can be learned (and put to bad use), and too much of what is learned may be inaccurate.

Staffing firm employees would benefit from training to recognize the types of job “requirements” and messages that could be perceived – rightly or wrongly – as potential problems.

In addition to training to identify potential pitfalls in requests, staffing firm employees would benefit from training on the tools to correct an issue before it becomes a problem.  At a minimum, staffing firm employees should be trained to eliminate questionable phrasing from any job posting or search materials and to fill the position with the most qualified candidate.  Even better, train and empower employees to appropriately counsel (and, where needed, correct) the client who presents a job requisition in less-than-ideal fashion.

Remedy 3: Management support.

Front line staffing employees will be better able to fulfill their duties with management support.  Staffing firm managers should remind their employees to take the extra time to look at how job requirements have been documented to ensure compliance with the letter and spirit of EEO laws.  Staffing firm managers also should lead by example,

Remedy 4:  Staffing agency / client partnership.

In addition to having and sharing a written policy, staffing firms should consider making an explicit statement about the important of equal employment opportunity in its contractual arrangements with clients, ensuring that jobs are filled by the best candidates, without regard to protected characteristics. Periodic reminders to clients will help reinforce this message.

Finally, staffing firms should approach equal employment opportunity matters as an area where their expertise can serve their own and their clients’ interests.  Avoiding potentially problematic requests, and addressing them with clients when questions arise, set up all concerned for future success when staffing.

bassBy Gerald L. Maatman, Jr., Christopher J. DeGroff, and Alex W. Karasik

Seyfarth Synopsis: After a Fifth Circuit decision affirming a ruling by a U.S. District Court in Texas allowed the EEOC to seek compensatory and punitive damages in its high-profile Title VII pattern or practice race discrimination lawsuit against Bass Pro, a deadlocked Fifth Circuit denied Bass Pro’s petition for a rehearing en banc.  The highly contentious dissenting opinion, which prompted a response from the panel in favor of denying the rehearing, is a must-read for employers regarding judicial views on the damages the EEOC can seek in Title VII pattern or practice of discrimination litigation.

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One of the EEOC’s largest pending nationwide lawsuits, a Title VII pattern or practice race discrimination case concerning retailer Bass Pro’s hiring practices, has resurfaced in an appeal.  In EEOC v. Bass Pro Outdoor World LLC, No. 15-20078, 2017 U.S. App. LEXIS 7628 (5th Cir. Apr. 28, 2017), the U.S. Court of Appeals for the Fifth Circuit was tasked with deciding whether to grant Bass Pro’s petition for a rehearing en banc after it previously affirmed a decision of the U.S. District Court for the Southern District of Texas allowing the EEOC to seek compensatory and punitive damages by bringing claims under § 706 and 707 of Title VII.  Evident in a pair of pull-no-punches opinions, the Fifth Circuit panel of judges was deadlocked in a 7-7 split on whether to grant the rehearing, thus resulting in Bass Pro’s petition being denied.

As employers continue to challenge the EEOC’s willingness to stretch the bounds of pattern or practice Title VII litigation, the highly contentious dissenting opinion (“Dissent”), and equally provocative response from the panel in favor of denying the rehearing (“Panel”), are must-reads for employers.

Case Background

As we have discussed in previous blog posts (here, here and here), the EEOC brought a lawsuit alleging discriminatory hiring practices in violation of Title VII on behalf of a group of individuals allegedly discriminated against on the basis of their gender or race, both as a representative action (under § 706) and based on a pattern or practice theory (under § 707).  The Dissent noted that the 50,000 allegedly aggrieved individuals, Black and Hispanic applicants, was a number “asserted [by the EEOC] in shotgun fashion, with no development or refinement of who or where the individuals are.”  Id. at *4.  Further, the Dissent explained that “[t]he EEOC, after a three-year investigation, could identify zero discriminatees or even potential discriminatees. Upon being pressed by the [D]istrict [C]ourt, the EEOC identified about 100, and later, about 200, of the 50,000 mass.”  Ultimately, the District Court allowed the EEOC to pursue pattern or practice claims on behalf of the 50,000 claimants under § 706, seeking individualized compensatory and punitive damages.  On June 17, 2016, the Fifth Circuit affirmed the District Court’s decision.  Bass Pro thereafter filed an interlocutory appeal.  Id. at *5.

The Fifth Circuit’s Decision

As a result of a 7-7 split between the circuit judges, the Fifth Circuit denied Bass Pro’s petition for a rehearing en banc.  The Dissent initially summarized its argument by matter-of-factly noting “this ‘pattern or practice’ case cannot be brought under § 706 or § 707 as to provide individualized compensatory and punitive damages for a mass of 50,000 persons.”  Id. at *6.  In support of this assertion, the Dissent argued that the plain language and legislative history of the Title VII forbids § 706 “pattern or practice” suits, and the Panel’s contrary holding rendered § 707 of the Act a meaningless appendage to Title VII and hence superfluous.  Second, the Dissent argued that allowing pattern or practice suits for individualized compensatory and punitive damages poses insurmountable manageability concerns, which the Supreme Court has addressed before and rejected such suits.  Finally, the Dissent opined that allowing pattern or practice suits for individualized compensatory and punitive damages for the 50,000 allegedly aggrieved individuals necessarily ran afoul of the Seventh Amendment.

After the Dissent pointedly advocated this array of arguments, the Panel countered with a 16 page response, asserting that Bass Pro ignored “the independent role of the EEOC when it sues on behalf of the United States government . . . [and] asks us to hold as a matter of law that damages authorized by the 1991 amendments to the Civil Rights Act can only be recovered in individual suits.”  Id. at *20-21.  After clarifying the role of the EEOC in light of the 1991 amendments of the Civil Right Act of 1964, the Panel opined that, “Bass Pro’s argument rests upon a fundamental premise: that the EEOC’s enforcement authority and choice of remedies is tethered to the individuals for whose benefit it seeks relief. That premise is false.”  Id. at *23.  The Panel then argued that because the EEOC brought suit under both § 706 and 707, Bass Pro’s argument that the Commission was not entitled to punitive damages failed because it “would be truly perverse to withhold the remedy of punitive damages from the EEOC when it targets discrimination in its most virulent and damaging form: polices intentionally calculated to exclude protected minorities and perpetrated on a large scale.”  Id. at *35.

Finally, the Panel addressed Bass Pro’s argument that even if Congress did grant the EEOC the authority to seek compensatory and punitive damages via the pattern-or-practice model, this grant of authority was unconstitutional.  Noting that Bass Pro’s argument appeared to implicate due process concerns under the Seventh Amendment, the Panel held that Bass Pro’s reliance on Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), was misplaced as that case involved Rule 23 class actions, which  have “no force” in EEOC litigation.  Id. at *36.  After providing a hypothetical analysis as to how a jury may award various types of damages, the Panel concluded by finding Bass Pro’s manageability concerns to be unfounded, and its “claim that this suit cannot be tried is not a statement of fact but an advocate’s prayer.  Seeking to limit its exposure to liability, Bass Pro asks us to shut down this lawsuit before it even gets off the ground.”  Id. at *41-42.

Not to be outdone, the Dissent threw the final punch in a two paragraph dissent to the Panel’s response.  In an effort to clarify the procedural uniqueness of the Panel’s response to the dissenting opinion, the Dissent noted “[l]est there be any mistake, the [P]anel’s ‘response’ must not be confused with a binding opinion on the denial of an en banc petition, because no authority authorizes any such opinion.”  Id. at *42.  As such, the Dissent concluded by instructing that in no way should the Panel’s response be treated as precedential.

Implications For Employers

The Fifth Circuit’s ruling is certainly unfavorable for employers, as this gives the EEOC ammunition to seek a broad range of damages under § 706 and 707, and essentially pick and choose which section’s procedures it wants to follow at various stages of the litigation.  But when reading the tea leaves within the tenaciously written opinions by the divided panel, employers can find encouragement in that many judges – both in the Fifth Circuit and throughout the country – support the Dissent’s belief that the EEOC conflated its rights under § 706 and 707.  As such, employers should continue to follow this case and similar large-scale EEOC pattern or practice cases, which will likely continue to percolate following this government-friendly ruling.

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

gavel on white backgroundBy Gerald L. Maatman, Jr., Christopher J. DeGroff, and Alex W. Karasik

Seyfarth Synopsis:  A federal district court in Illinois recently granted the EEOC’s motion for partial summary judgment in EEOC v. Dolgencorp, LLC, No. 13-CV-4307 (N.D. Ill. Apr. 10, 2017), relative to two defenses advanced by an employer, including: (1) the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation; and (2) the EEOC failed to satisfy its Title VII pre-suit duty to conciliate with the employer. The ruling should be required reading for any employer facing or engaged in litigation with the Commission.

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An increasingly common issue in EEOC litigation against employers involves the scope of the Commission’s lawsuits as related to the charges of discrimination, as well as the EEOC’s conciliation efforts, or lack thereof.  In EEOC v. Dolgencorp, LLC, No. 13-CV-4307 (N.D. Ill. Apr. 10, 2017), the EEOC moved for partial summary judgment regarding two defenses enumerated by the defendant, Dolgencorp, LLC (“Dollar General”): (1) the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation; and (2) the EEOC failed to satisfy its Title VII pre-suit duty to conciliate with the employer.  On April 10, 2017, Judge Andrea R. Wood of the U.S. District Court for the Northern District of Illinois granted the EEOC’s motion for partial summary judgment as to these defenses asserted by Dollar General.

As Judge Wood acknowledged, many courts across the country have embraced defenses asserted by employers relating to the sufficiency of the EEOC’s investigation.  However, this ruling demonstrates that not all courts may be as receptive to those arguments.

Case Background

Two former Dollar General employees filed charges of discrimination with the EEOC regarding Dollar General’s allegedly discriminatory use of criminal background checks in hiring and firing determinations.  Id. at 1.  The EEOC investigated and determined that there was reasonable cause to believe that Dollar General had engaged in employment discrimination on the basis of race. The parties then engaged in written and oral communications regarding the alleged discrimination, which did not result in a conciliation agreement acceptable to the EEOC.  Id. at 2.  Thereafter, the EEOC brought a lawsuit against Dollar General under Title VII.

Amongst its enumerated defenses, Dollar General asserted that the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation (its 7th enumerated defense), and that the EEOC failed to satisfy the statutory precondition for bringing suit when it failed to conciliate with Dollar General (its 8th enumerated defense). The EEOC moved for partial summary judgment as to Dollar General’s two enumerated defenses.  Id. at 3. The EEOC contended that, on the undisputed facts, these two defenses failed as a matter of law.

The Court’s Decision

The Court granted the EEOC’s motion for partial summary judgment regarding Dollar General’s two enumerated defenses.  Dollar General’s seventh enumerated defense relied upon two separate propositions: first, the EEOC’s claims were barred because they went beyond the claims delineated in the charges of discrimination that generated the EEOC’s lawsuit; and second, the EEOC’s claims were barred because the EEOC failed to investigate those claims adequately prior to bringing suit.  Id. at 4.  The Court rejected the first proposition, holding that when the EEOC files suit, it is not confined to claims typified by those of the charging party, and further, that any violations that the EEOC ascertains in the course of a reasonable investigation of the charging party’s complaint are actionable.  Id.  As to the second proposition, the Court similarly opined that the Seventh Circuit has held that if courts may not limit a suit by the EEOC to claims made in the administrative charge, they likewise cannot limit the suit to claims that are found to be supported by the evidence obtained in the Commission’s investigation.  Id.  Accordingly, the Court rejected Dollar General’s defenses insofar as it sought to dismiss the EEOC’s claims because they went beyond the charges of discrimination or because they were not subject to an adequate pre-suit investigation.  Id. at 4-5.

In addition, the Court addressed Dollar General’s eighth enumerated defense, which contended that the suit could not go forward because the EEOC did not satisfy its pre-suit statutory obligation to conciliate.  The EEOC sent two Letters of Determination to Dollar General that stated that the EEOC found reasonable cause to believe that Dollar General engaged in discrimination in violation of Title VII because, through application of its background check policy, a class of African-American applicants and employees were not hired, not considered for employment, or discharged.  Dollar General argued that this notice of the charge was not specific enough because it failed to identify the persons allegedly harmed and to identify the allegedly discriminatory practice.

Rejecting Dollar General’s argument regarding the specificity of notice, the Court held that the EEOC’s letters clearly set forth that there were African-American applicants and employees who were harmed by the allegedly discriminatory practice.  Id. at 6.  Further, the Court opined that as the Seventh Circuit has explained, the sufficiency of the EEOC’s investigation was not a matter for the judiciary to second-guess.  Dollar General also argued that the EEOC failed to specifically describe the allegedly discriminatory practice, and that merely pointing to the background check policy was not sufficient.  The Court rejected this argument, holding that the EEOC’s notice was sufficient since it identified the two complainants and further put Dollar General on notice that the EEOC’s allegations related to African-American applicants and employees that were not hired, not considered for employment, or discharged due to failing a background check.  Id. at 8-9.

Finally, Dollar General contended that the EEOC’s conciliation discussions were inadequate because the EEOC did not provide Dollar General with an opportunity to remedy the allegedly discriminatory practice.  Id. at 9.  Citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1655-56 (2015) (which we analyzed here), the Court refused to examine the sufficiency of the EEOC’s investigation, noting it was beyond the scope of its review.  Id.  The Court thus rejected Dollar General’s argument that the EEOC did not adequately engage the employer in conciliation discussions.

Accordingly, the Court granted the EEOC motion for partial summary judgment on Dollar General’s seventh and eighth enumerated defenses.

Implications For Employers

While the Court did not find in the employer’s favor, other courts have routinely held the EEOC accountable in instances where it did not fulfill its pre-suit obligations.  With rulings such as this one, it can be expected that the EEOC will continue to test courts’ willingness to force the Commission to abide by its statutory duties under Title VII.  As such, employers should continue to be aggressive in attacking instances where the EEOC improperly expands its lawsuits beyond charges or fails to conciliate.

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

supreme court sealSeyfarth Synopsis: Yesterday the U.S. Supreme Court handed down its long-awaited decision in McLane Co. v. EEOC, No. 15-1248, 2017 U.S. LEXIS 2327 (U.S. 2017), a decision that clarifies the scope of review for employers facing EEOC administrative subpoenas. The Supreme Court held that such decisions are reviewable under the abuse-of-discretion standard, which is a relatively high bar of review. At the same time, the Supreme Court’s ruling clarifies that EEOC subpoenas are subject to a searching, fact-intensive review that does not lend itself to a “one size fits all” approach.

Background

This case arose out of a Title VII charge brought by a woman who worked as a “cigarette selector,” a physically demanding job, requiring employees to lift, pack, and move large bins of products. After the charging party returned from three months of maternity leave, she was required to undergo a physical capabilities evaluation that was required for all new employees and employees returning from leave or otherwise away from the physically demanding aspects of their job for more than 30 days, regardless of reason. The charging party was allowed three times to meet the level required for her position, but failed each time.  McLane then terminated her employment.

The charging party claimed that her termination was because of her gender, and further alleged disability discrimination. During the investigation of her EEOC charge, the Commission requested, among other things, a list of employees who were requested to take the physical evaluation. Although McLane provided a list that included each employee’s gender, role at the company, evaluation score, and the reason each employee had been asked to take the evaluation, the company refused to provide “pedigree information,” relative to names, social security numbers, last known addresses, and telephone numbers of employees on that list. In the process of negotiating the scope of information that would be provided, the EEOC learned that McLane used its physical evaluation on a nationwide basis. The EEOC therefore expanded the scope of its investigation to be nationwide in scope, and also filed its own charge alleging age discrimination.

The District Court refused to order the production of pedigree information, holding that it was not “relevant” to the charge at issue because that information (or even interviews of the employees on the list provided by McLane) could not shed light on whether an evaluation represented a tool of discrimination. EEOC v. McLane Company, Inc., No. 12-CV-02469 (D. Ariz. Nov. 19, 2012) (See our blog post of the District Court’s decision here.)

On October 27, 2015, the U.S. Court of Appeal for the Ninth Circuit reviewed the District Court’s decision de novo and held that the District Court had erred in finding the pedigree information irrelevant to the EEOC’s investigation. EEOC v. McLane Company, Inc., Case No. 13-15126, 2015 U.S. App. LEXIS 187702 (9th Cir. Oct. 27, 2015). (See our blog post of the Ninth Circuit’s decision here.)

The Supreme Court granted certiorari to resolve the disagreement among the courts of appeals regarding the appropriate scope of review on appeal. The posture of the appeal was somewhat unusual because, after the grant of certiorari, the EEOC and McLane both agreed that the District Court’s decision should be reviewed for abuse of discretion, although the EEOC argued that the Ninth Circuit’s decision should stand as a matter of law. The Supreme Court therefore appointed an amicus curiae to defend the Ninth Circuit’s use of de novo review.

The Supreme Court’s Decision

The Supreme Court began its analysis by noting that in the absence of explicit statutory command, the proper scope of appellate review is based on two factors: (1) the history of appellate practice; and (2) whether one judicial actor is better positioned than another to decide the issue in question.

Regarding the first factor, the Supreme Court noted that abuse-of-discretion review was the longstanding practice of the courts of appeals when reviewing a decision to enforce or quash an administrative subpoena. In particular, the Supreme Court noted that Title VII had conferred on the EEOC the same subpoena authority that the National Labor Relations Act had conferred on the National Labor Relations Board (“NLRB”), and decisions of district court to enforce or quash an NLRB subpoena were reviewed for abuse of discretion.

Regarding the second factor, the Supreme Court held that the decision to enforce or quash an EEOC subpoena is case-specific, and one that does not depend on a neat set of legal rules. Rather, a district court addressing such issues must apply broad standards to “multifarious, fleeting, special, narrow facts that utterly resist generalization.” McLane Co. v. EEOC, 2017 U.S. LEXIS 2327, at *14 (U.S. 2017) (quoting Pierce v. Underwood, 487 U. S. 552, 561-62 (1988)). In particular, in order to determine whether evidence is relevant, the district court has to evaluate the relationship between the particular materials sought and the particular matter under investigation. These types of fact-intensive considerations are more appropriately done by the district courts rather than the courts of appeals.

The Amicus argued that the district court’s primary role is to test the legal sufficiency of the subpoena, which does not require the exercise of discretion. The Supreme Court held that this view of the abuse-of-discretion standard was too narrow. The abuse-of-discretion standard is not only applicable where a decision-maker has a broad range of choices as to what to decide, but also extends to situations where it is appropriate to give a district court’s decision an unusual amount of insulation from appellate revision for functional reasons. Those functional considerations weighed in favor of the abuse-of-discretion standard rather than a de novo standard of review. Because the Ninth Circuit did not apply that standard on appeal, the Supreme Court remanded the case to the Ninth Circuit for further proceedings.

Implications For Employers

The McLane case is important for employers because it clarifies the standard of review that is applied to the review of district court decisions enforcing or quashing EEOC subpoenas. Although the Supreme Court adopted the more “hands off” abuse-of-discretion standard, thus giving even more weight to the district court’s judgment, it did so because it identified the fact-intensive nature of these judgment calls, including important decisions about how difficult it would be for the employer to produce the requested information weighed against the need for that information, and the relationship between the particular materials sought and the particular matter under investigation.

At the very least, this language shows that the EEOC does not get to automatically presume relevance of its administrative subpoenas at the outset, as the EEOC sometimes likes to argue. Rather, employers should be able to cite to language in the Supreme Court’s opinion to reinforce the fact that the district court must give serious consideration to issues of relevancy and burden (also whether the subpoena is “too indefinite” or for an “illegitimate purpose”) when deciding whether to enforce an EEOC subpoena.

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