Workplace Class Action Litigation

By Kate Birenbaum and Chris Palamountain

Last week, in Equal Employment Opportunity Commission v. Houston Funding II, Ltd. et al., No. 12-20220, 2013 WL 2360114 (5th Cir. May 30, 2013), the U.S. Court of Appeals for the Fifth Circuit handed the EEOC a nominal victory by holding that employment decisions based on lactation or expressing breast milk can provide a basis for discrimination claims under Title VII and the Pregnancy Discrimination Act (“PDA”).

The Underlying Case

The EEOC brought the underlying suit on behalf of an employee who was allegedly terminated because she was lactating and wanted to express breast milk at work. The employee worked for the defendant as an account representative/collector from March 2006 until February 2009. While on a leave of absence following the birth of her child, she twice asked whether she would be able to use a breast pump at work once she returned.  The employer responded “no” the first time and informed the employee that her position had been filled when she raised the issue again. The employer issued a termination letter indicating that she had been terminated for job abandonment. The District Court granted summary judgment in favor of the employer, holding that, as a matter of law, discharging an employee because she is lactating does not constitute sex discrimination. The EEOC appealed.

The Fifth Circuit Ruling

The Fifth Circuit vacated and remanded the grant of summary judgment, holding that the EEOC had presented facts that, if true, constituted a cognizable claim under Title VII of the Civil Rights Act of 1964 and the Pregnancy Discrimination Act. Id. at *2-*3. In reaching this decision, the Fifth Circuit observed that ever since Title VII was amended to include the Pregnancy Discrimination Act (“PDA”), courts have interpreted Title VII to cover a far wider range of employment decisions involving female physiology. Id. at *2. The Fifth Circuit also noted that the PDA prohibits discrimination “on the basis of pregnancy, childbirth, or related medical conditions.” Id. Unlike the District Court, the Fifth Circuit was not persuaded that PDA protection could not exist post-pregnancy, so it had little difficulty determining that lactation is an aspect of female physiology that is affected by pregnancy, and that it therefore falls within the definition of “pregnancy, childbirth, or related medical condition.” Id. at *3.

In her pointed concurrence, Judge Edith Jones stated that the Fifth Circuit had previously held that the PDA “does not mandate special accommodations to women because of pregnancy or related conditions” and that “it follows that if [the employee] intended to request special facilities or down time during work to pump or ‘express’ breast milk, she would not have a claim under Title VII or the PDA as of the date of her lawsuit.” Id. at *4.

Implications For Employers

Given the  significant media coverage surrounding this case, this ruling is likely to embolden the EEOC and private plaintiffs to pursue employers over lactation policies or practices, particularly because the Patient Protection and Affordable Care Act, amended Section 7 of the Fair Labor Standards Act to require employers with 50 or more employees to provide reasonable break time and facilities for nursing mothers to express breast milk during the work day, for one year after the child’s birth. When evaluating those policies, employers will want to keep in mind that the FLSA amendment does not prohibit discrimination based on lactation or expressing milk, that other district courts have held that employment decisions based on lactation or expressing milk cannot support a claim of sex discrimination, and that Judge Edith Jones’ concurrence explains the limited scope of the Fifth Circuit’s ruling.

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

On May 17, 2013, the U.S. Court of Appeals for the Sixth Circuit rendered its opinion in EEOC v. Memphis Health Center, Inc., Nos. 11-6426/27 (6th Cir. May 17, 2013), and held that a prevailing ADEA defendant can recover its attorneys’ fees against the EEOC under the Equal Access to Justice Act (“EAJA”).

The EAJA allows qualifying corporations, generally including those with net worth of less than $7,000,000 and less than 500 employees at the time of filing, to collect attorneys’ fees incurred in government litigation absent a showing by the government that its position was substantially justified.  42 U.S.C  § 2412. 

In EEOC v. Memphis Health Center, the Sixth Circuit extended the EAJA to qualifying defendants who prevail in ADEA litigation, demonstrating that the EAJA provides a useful tool for employers to combat abuses of authority by the EEOC.   

Factual Background

Charging party Rita Smith worked for Memphis Health Center (“MHC”), a nonprofit hospital, as a dental assistant for 25 years. In August 2007, after Smith was laid off in a downsizing, Smith filed a grievance claiming that an MHC doctor favored an older, more recently hired worker. Memphis Health, at 2. During her severance period, Smith accepted a lower-paying position as a call center operator. Id. at 3. 

In January 2008, Smith and two outside candidates applied for a new dental assistant opening.  MHC called Smith in for interview on “casual Friday,” and she unintentionally wore jeans and tennis shoes and failed to bring a copy of her resume. Id. MHC hired another candidate, who was seven years younger than Smith, among other reasons, because she came prepared for the interview. Id. at 3-4.

After Smith filed a charge, the EEOC brought suit against MHC asserting claims for age discrimination and retaliation. Id. at 4. The district court granted summary judgment on both claims because the new hire was not “substantially younger” than Smith, and Smith did not engage in any protected activity. Id.

Following summary judgment, MHC filed a motion seeking attorneys’ fees and costs totaling $70,389.83 against the EEOC pursuant to the EAJA. The magistrate conducted a claim-by-claim analysis, found only the age discrimination claim substantially justified, and awarded 50% of the attorneys’ fees incurred by MHC. Id. at 5. The district court adopted the magistrate’s recommendation, and the EEOC appealed. Id. at 6.

The Sixth Circuit’s Opinion

As an initial matter, the Sixth Circuit noted that the EAJA waives sovereign immunity and expressly authorizes fee-shifting against the government to deter unreasonable exercises of governmental authority. Id. at 7. The EAJA requires the government to pay attorneys’ fees to a prevailing party, except as specifically prohibited by statute, “unless the court finds that the position of the United States was substantially justified” or special circumstances make an award unjust. Id. at 8.

The EEOC argued that, because the ADEA contains its own fee-shifting rule, the EAJA did not apply. The Sixth Circuit rejected the EEOC’s argument. It found that, because the ADEA is silent on the issue of fee awards to prevailing defendants -- that is, it does not specifically provide for or preclude such an award -- the EAJA “fills the void” in the ADEA and provides prevailing defendants with a statutory right to attorneys’ fees. Id. at 9-10. 

The Sixth Circuit determined that the district court, however, erred by conducting a claim-by-claim analysis that segmented the substantial justification determination. Id. at 13-14. The EAJA requires a “holistic determination” of the government’s case as a whole. Id. at 14. 

For these reasons, the Sixth Circuit remanded the case so that the district court could assess whether the EEOC’s position, as a whole, was substantially justified. It noted that, if the two claims are distinct, the district court should assess which claim was more prominent in driving the case or, if the claims are sufficiently intertwined, the district court may find that an insubstantial justification as to one renders the EEOC’s entire overall position unjustified. Id. at 14-15.

Implications For Employers

Addressing an issue of first impression in the Sixth Circuit, EEOC v. Memphis Health Center held that the EAJA applies to ADEA claims brought by the EEOC against private employers. If an employer meets the threshold requirements, the EAJA gives it substantial leverage to combat unjustified ADEA claims brought by the EEOC and other government agencies. Employers, accordingly, should keep the EAJA in their EEOC litigation toolkits.

By Christopher DeGroff, Reema Kapur, and Gerald L. Maatman, Jr.

We previously reported that the United States Equal Employment Opportunity Commission (EEOC) secured a verdict of $240 million in its lawsuit against Hill Country Farms last week. Read our previous blog post here.

The EEOC trumpeted the verdict in a post-trial press release, but did not reveal the fact that the verdict would be reduced due to the caps in the applicable law at issue in the case. We noted that the verdict would be reduced due to statutory damages caps applicable to claims brought under the Americans With Disabilities Act (ADA). On May 14, 2013, the Court did just that and entered an order reducing the jury award for all thirty two claimants to $1.6 million. The Court’s May 14 Order, in addition to its previous award of back wages in the amount of $1.3 million, drastically reduces the total recovery in this case to $2.9 million. In the same order, the Court set the case for a further hearing on June 10, 2013 to address the EEOC’s request for injunctive relief. 

The post-trial briefing in EEOC v. Hill Country Farms case is an example of the aggressive tactics and push-the-envelope arguments that employers facing EEOC-initiated litigation can encounter. 

Background

We discussed the background of this case in previous posts (here and here). 

On May 1, a jury awarded $240 million to thirty two intellectually disabled workers in connection with the EEOC’s claims that Hill Country Farms, their employer, discriminated against them and subjected them to a hostile work environment. Following the verdict, the Court invited briefing from defendant and the EEOC regarding the appropriate judgment award to be entered in the case.

Damages Caps Under The ADA

The ADA imposes a statutory cap -- a ceiling -- of $50,000 for each claimant in cases where an employer-defendant has more than 14 but fewer than 101 employees. The $50,000 limit is inclusive of compensatory and punitive damages. 

Here, given the size of Hill Country Farms’ workforce at the time of the alleged violations, the “maximum allowable” recovery with respect to each claimant was $50,000, for a total recovery of $1.6 million for all claimants, plus “applicable prejudgment interest.” The Court will determine the proper amount of prejudgment interest at the June 10 hearing.

EEOC’s Request For Injunctive Relief

The EEOC is also seeking injunctive relief. To prove that it is entitled to an injunction, it must show that there is a “threat of irreparable harm” in connection with further violations by Hill Country Farms. However, Hill Country Farms reportedly went out of business in February 2009. So the EEOC will need to convince the Court that injunctive relief is necessary to stop a defunct business that has not employed anyone since 2009 from engaging in future violations of employment laws. The President of Hill Country Farms allegedly admitted at trial that although the company is no longer in business, it remains a “corporation in good standing in the State of Texas.” In other words, while the corporation is no longer operating a business and has no workforce, it remains a legal entity. Thus, the EEOC is maneuvering around the company’s current defunct status by arguing that Hill Country Farms or a successor company could “potential[ly] return to full operations or re-initiat[e]…the business.” If (and when) it resumes operations, the EEOC wants an injunction in place.

Because the potential “threat” that the defendant may resume or re-incorporate a business may occur “any time in the future,” EEOC is requesting ongoing and permanent future injunctive relief. For instance, the EEOC has requested injunctive relief provisions requiring that the defendant must notify the EEOC in writing if (1) the company or its principals or owners “engage in business at any time in the future” of any type or (2) the company or a successor company resumes business activities “similar to those conducted by Hill Country Farms.”

Further, if the company ever resumes business, the EEOC is seeking an order imposing a variety of obligations -- including training, reporting, and hiring a mental health professional as a consultant -- for five years.

Implications For Employers

It will be interesting to see if the Court accepts the EEOC’s novel argument in favor of injunctive relief in this case, and how it treats the defendant’s arguments opposing the propriety and scope of the relief. Stay tuned.

By Gerald L. Maatman and Jennifer A. Riley

On April 12, 2013, Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska issued her summary judgment opinion in EEOC v. JBS USA, LLC, No. 10-CV-318 (D. Neb. Apr. 12, 2013). In a mixed decision, Judge Camp gave the EEOC the benefit of the doubt on its investigation and conciliation efforts, but granted summary judgment on its claims for unlawful termination and retaliation, finding that a single mass termination of 80 employees did not constitute a “pattern or practice.”

We previously have blogged about the EEOC’s companion case pending before Judge Phillip Brimmer in the U.S. District Court for the District of Colorado and its thorny procedural and administrative issues (read more here, here and here). The series of rulings provide a window into the EEOC’s regular practices for prosecuting systemic claims and they are a valuable read for any employer facing large-scale EEOC litigation.  

Factual Background

The EEOC filed two lawsuits alleging that JBS USA, LLC, which does business as meat packing company JBS Swift & Company, discriminated against a class of Somali Muslim employees at its facilities in Greeley, Colorado and Grand Island, Nebraska.

In the Nebraska suit, the EEOC alleged that JBS Swift engaged in a pattern or practice of religious discrimination when it failed to reasonably accommodate at least 153 Muslim employees by allowing them prayer breaks. The EEOC also alleged that the company retaliated against the employees and terminated their employment when they requested that the company move their evening breaks so that they could pray at sundown during the month of Ramadan.

JBS sought summary judgment on EEOC’s three pattern or practice claims, and the EEOC sought a ruling as a matter of law that JBS had engaged in a pattern or practice of denying reasonable accommodation. Id. at 3. 

The Court’s Opinion On Investigation

JBS argued that the court should grant summary judgment because the EEOC failed to satisfy certain conditions precedent to filing suit, including investigation. Id. at 19. 

JBS asserted that Section 707 authorizes only the EEOC to investigate charges of discrimination, and, therefore, the EEOC could not rely on the investigation performed by the Nebraska Equal Opportunity Commission (“NEOC”). The Court disagreed. The Court found that, because Section 707 incorporates the “procedures” set forth in Section 706, and Title VII supports worksharing between the EEOC and state and local agencies, it likewise permitted the EEOC to rely on investigation performed by NEOC. Id. at 21-24.

JBS also asserted that the EEOC failed to satisfy conditions precedent because the investigation was flawed and insufficient. Id. at 24. In rejecting JBS’s argument, the Court distinguished EEOC v. CRST Van Expedited, Inc. (read more here and here). Unlike EEOC v. CRST, JBS did not assert that the EEOC failed to identify or give it notice of the individual claims; rather, JBS asserted that the investigation was inadequate. The Court held that the EEOC enjoys “wide latitude” to investigate charges and, so long as an investigation occurred, the Court cannot review its sufficiency. Id. at 26. 

The Court’s Opinion On Pattern Or Practice Claims

JBS also moved for summary judgment on the EEOC’s pattern or practice claims. JBS contended that the EEOC’s religious accommodation claims were inappropriate for pattern or practice treatment because, to show that unlawful discrimination occurred, each alleged victim must demonstrate a sincerely held religious belief. Id. at 30. The Court rejected JBS’s argument, but noted that to the extent individual workers’ beliefs varied, JBS could present this evidence during Phase I to show that accommodation would cause undue hardship. Id. at 31. 

JBS also asserted that the EEOC could not make out a prima facie case because it could not show that discrimination was the company’s “standard operating procedure.” Id. at 32. The Court noted that the EEOC failed to produce statistical evidence showing disparities between protected and non-protected workers, but it nevertheless concluded that evidence of JBS’s purported company-wide policies regarding unscheduled prayer breaks created issues of fact for trial. Id. at 35. 

Finally, JBS asserted that the EEOC could not establish a pattern or practice of unlawful termination or retaliation based on JBS’s isolated termination of 80 Somali Muslim employees. The Court agreed, noting that “multiple acts of discrimination are required to establish a pattern or practice.” Id. at 38. The EEOC did not allege that JBS adopted a discriminatory termination policy and, although it referred to 80 decisions, the mass termination was a single action in response to the events of a single day. Id. at 39. 

Implications

Although a mixed bag, EEOC v. JBS contains some bright spots for employers. Most notably, Judge Camp rejected the EEOC’s theory that a mass termination is a “pattern or practice” simply because it involves multiple employees. Further, the Court found that, because the EEOC brought separate actions in separate forums, it could not introduce evidence from its Colorado action to bolster its inadequate claims. The opinions in both EEOC v. JBS cases thus provide valuable insight for employers facing large-scale EEOC pattern or practice claims.

By Courtney Bohl and Laura J. Maechtlen

Recently, in EEOC v. Wedco, Inc., No. 3:12-CV-00523 (D. Nev. March 12, 1013), the U.S. District Court for the District of Nevada considered whether the EEOC met is Title VII conciliation obligations when it ended conciliation negotiations after an employer, Wedco, Inc., refused to make a counter-offer to the EEOC’s settlement demand. The Court held that the EEOC was not required to continue conciliation negotiations once Wedco refused to make a counter-offer. 

This ruling is somewhat troubling for employers, as the Court made this finding despite an express acknowledgement that Wedco did not make a counter-offer because the EEOC refused to provide Wedco with information to support the agency’s high monetary demand. The Court reasoned that — because Wedco refused to make a counter-offer — the employer was the one responsible for conciliation negotiations failing, and not the EEOC.

This case is unfortunate for employers faced with the EEOC’s “hide the ball” strategies during conciliation, and suggests that employers must make a counter-offer during negotiations despite the EEOC’s unreasonable or unsupported demands to succeed on a failure-to-conciliate defense in subsequent litigation.    

Background Of The Case

In EEOC v. Wedco, the EEOC initiated suit against Wedco based on a charge of discrimination filed by Larry Mitchell, a warehouse delivery driver, alleging racial harassment, discrimination and constructive discharge. Id. at 1. In his charge, Mitchell claimed  that he was subjected to racial comments and name-calling and was exposed to a noose hanging in a high traffic area of the company’s warehouse. Id. Mitchell also alleged he was required to ask for permission to use the restroom, which non-black employees were not required to do, and was denied breaks that non-black employees received. Id. Finally, Mitchell alleged he was forced to quit because of the harassment he endured at Wedco.

The Nevada Equal Rights Commission (“NERC”) investigated Mitchell’s charge, finding probable cause to believe Wedco subjected Mitchell to a racially hostile work environment and constructive discharge. Id. at 2. The NERC then issued a determination letter to Wedco outlining its factual findings and offering to begin conciliation, initially demanding $161,000. Id. at 2, 6. Although over a four month period Wedco repeatedly asked for additional information that supported the NERC’s high demand, the NERC refused. Id. Accordingly, Wedco declined to make a counter-offer, and, shortly thereafter, the NERC notified Wedco that conciliation had failed. Id. at 2.

The NERC then forwarded the charge to the EEOC. Id. at 2. The EEOC issued its own letter of determination and a conciliation letter, in which it solicited Wedco’s counter-offer. Id. at 2, 8. Wedco requested additional information from the EEOC on the charge, and the EEOC refused to respond. Id. at 8. Wedco, again, declined to make a counter-offer. Id.  

The EEOC subsequently filed a complaint against Wedco alleging harassment, constructive discharge, and disparate treatment. Id. at 2. Wedco moved to dismiss the EEOC’s complaint for lack of subject matter jurisdiction based on the EEOC’s failure to conciliate, or, in the alternative, for a stay to complete the conciliation process. Id. at 2.

The Court’s Ruling

The Court denied Wedco’s motion in its entirety. The Court held that Title VII’s conciliation requirement is not jurisdictional. Id. at 3. The Court reasoned that statutory prerequisites are only jurisdictional if Congress’ intent is clear, and Title VII is not “clothed in unmistakably jurisdictional language.” Id. at 4. 

Turning to whether the EEOC conciliated in good faith, the Court applied a deferential test, looking only to see if the EEOC made a “colorable attempt” at conciliation. Id. at 4. The Court found the EEOC did - both the NERC and the EEOC invited Wedco to negotiate and provided an initial offer. Id. at 6-7. The Court reasoned that it was Wedco’s  refusal to make a counter-offer that caused the EEOC to end conciliation negotiations. Id. at 7. The Court noted if “Wedco was unsatisfied with the EEOC’s offer based upon the evidence, it could have made a counter-offer of a token sum.” Id. If the EEOC had refused this counter-offer, then perhaps the Court would have grounds to find the EEOC failed to conciliate. Id. The Court also made clear that the EEOC is like any other civil litigant, and is able to begin with a settlement proposal that seems extreme to its adversary. Id. at 8. Thus, because of Wedco’s “continued refusal to make any counter-offer when repeatedly solicited for one,” the Court found it impossible to determine that the EEOC was not prepared to conciliate in good faith. Id.

Implications Of The Ruling

This ruling is disappointing in that it encourages the EEOC to make an initial opening settlement proposal that is untethered to the facts of the dispute. The ruling warns employers that they must make some offer during conciliation negotiations to preserve their ability to challenge the EEOC’s conciliation tactics in defending a subsequent lawsuit. Accordingly, to preserve their defenses, employers should, even when faced with an unreasonable and unsupported monetary demand, make a counter-offer, even if it is only for a “token” sum.

By Christopher DeGroff and Gerald L. Maatman, Jr.

In yet another case regarding discovery of social media content, Magistrate Judge Michael E. Hegarty of the U.S. District Court for the District of Colorado recently sanctioned the EEOC for its efforts to evade discovery of social media content in EEOC v. The Original Honeybaked Ham, No 11-CV-2560 (D. Colo. Feb. 27, 2013), a systemic sexual harassment and retaliation case. The Defendant argued that many of its employees utilized social media to communicate and therefore claimed that the employees’ online statements were discoverable. On several occasions, the EEOC made the Defendant’s discovery efforts “more time consuming, laborious, and adversarial than it should have been.” Id. at 2. Thus, the Defendant filed a motion for sanctions in a last-ditch effort to compel the EEOC to comply with its discovery requests. Siding with the Defendant, Magistrate Judge Hegarty granted in part and denied in part the Defendant’s request for sanctions.

Background Of The Case

In 2010, the EEOC investigated allegations that the Defendant’s regional manager subjected Wendy Cabrera, and other female employees to repeated and offensive sexual comments and physical touching. One year later, the EEOC initiated claims of sexual harassment, hostile environment, and retaliation, alleging that the Defendant subjected approximately 20 women employees to sexual harassment. Id. at 1. One of the charging parties, Cabrera, claimed that her supervisor solicited sex from her and other women employees. Cabrera also claimed that after she reported the harassment, the Defendant terminated in her in retaliation. The EEOC demanded the Defendant provide back pay and compensatory and punitive damages to the allegedly aggrieved individuals. The EEOC also requested that the Court require the Defendant to initiate anti-discrimination training for its managers and human resource personnel.

In efforts to build its defense, the Defendant requested discovery of the employees’ social media accounts, text messages, and emails. The Defendant argued that such information was relevant to the lawsuit because, for example, Cabrera posted on her Facebook page her hopes to recover $400,000 from the lawsuit; statements about several personal matters; “musings about her emotional state in having lost a beloved pet as well as having suffered a broken relationship; other writings addressing her positive outlook on how her life was post-termination; her self-described sexual aggressiveness; statements about actions she engaged in as a supervisor with Defendant; sexually amorous communications with other class members; [and,] her post-termination employment and income opportunities and financial condition[.]” EEOC v. The Original Honeybaked Ham, No 11-CV-02560, at 304 (D. Colo. Nov. 7, 2012).  In objecting to the Defendant’s discovery request, th

e EEOC asserted that the Defendant’s request was overly broad and intruded on the employees’ privacy.

In November 2012, the Court ruled on the parties’ discovery dispute and held that the information the employees posted on their Facebook profiles is relevant to the lawsuit and therefore discoverable. Noting that social media presents “thorny and novel issues,” the Court reasoned that the employees’ Facebook postings are discoverable because they may contain information that could lead to discovery of admissible evidence relating to the lawsuit. Id. at 2. The Court rejected the EEOC’s privacy objections and noted that the employees shared information in a public forum, knowing that it was accessible by other people. Nevertheless, the Court did not disregard the EEOC’s privacy concerns. Instead, the Court selected a forensic expert as a special master to review the requested documents – a process it defined as necessary to “gather only discoverable information.” Id. at 4-5.

Despite the Court’s order, the EEOC continued to refuse to provide requested discovery and failed to engage in its mandatory pre-suit conciliation efforts. Thus, in January 2013, HBH filed a motion to dismiss the EEOC’s claims for failure to satisfy its pre-suit requirements under Title VII.  On January 15, 2013, the Court joined with a litany of recent rulings (discussed here, here, and here) and held that the EEOC’s pre-litigation efforts were unacceptable under Title VII’s framework.  Thus, the Court barred the EEOC from asserting claims not specifically identified during pre-suit litigation and prohibited the EEOC from seeking relief on behalf of individuals who HBH could not reasonably identify from the information provided by the EEOC. 

Then, most recently, the Defendant filed a motion for sanctions against the EEOC for its continued endeavors to thwart the discovery of social media evidence. Magistrate Judge Hegarty’s recent ruling serves as warning to the EEOC that preventing discovery of relevant social media content may result in sanctions.

The Court’s Ruling

The Court found that the EEOC prolonged the discovery process and caused unnecessary expense and delay on several occasions. The Court found that “in certain respects, the EEOC has been negligent in its discovery obligations, dilatory in cooperating with defense counsel, and somewhat cavalier in its responsibility to the United States District Court. EEOC counsel has prematurely made promises about agreed-upon discovery methodology and procedure when they apparently had no authority to do so . . . .” Id. at 2. 

Despite the EEOC’s clear foul play, the Court noted that it faced a hurdle in granting the Defendant’s motion for sanctions because although the EEOC’s conduct was “inappropriate and obstreperous,” it did not rise to a level that is sanctionable under most rules governing the litigation process. Id. at 3. However, the Court found a remedy vis-à-vis Fed. R. Civ. P. 16(f)(1). The Court explained that Rule 16(f)(1) grants courts the inherent power to sanction parties for unnecessary burdens. Thus, the under Rule 16(f)(1), the Court held that it could sanction the EEOC for its actions that negatively affected the Court’s management of its docket and caused unnecessary burdens on the Defendant and delays in the Court’s efforts to proceed with the case. Id. at 6.

Implications For Employers

The EEOC’s tactics in EEOC v. The Original Honeybaked Ham ultimately resulted in a sanction fee against the Commission. The Court’s ruling warns the EEOC that using discovery as a tool to create ongoing and unnecessary burdens is unacceptable. 

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

By Rebecca Bromet, Christopher DeGroff, and Gerald L. Maatman, Jr.

The EEOC’s Quality Control Plan for investigations and conciliation emerges on the heels of the Commission’s Strategic Enforcement Plan for FY 2013-2016. As we previously reported, the EEOC’s Strategic Plan will function as the blueprint for the Commission’s enforcement activity for the next several years. Because of the Plan’s importance to employers, corporate counsel, and HR professionals, Seyfarth Shaw LLP offered its input on the Strategic Plan from the earliest stages of the EEOC’s drafting process (those submissions are available here, here, here, and here ). Seyfarth was pleased that the final Strategic Plan contemplated the implementation of a Quality Control Plan that will improve the EEOC’s coordination between investigation and legal enforcement functions. The EEOC has indicated that it is hopeful that the Quality Control Plan will increase the timeliness of its investigation administrative charges and the quality of its conciliation efforts.

On February 12, 2013, the EEOC asked the public for input on its new Quality Control Plan. The EEOC indicated that it was most interested in, among other things, recommendations for improving investigations, conciliations, and the quality of the Commission’s intake process.

Today Seyfarth Shaw submitted its recommendations to the Commission for ways in which the EEOC can better fulfill its investigation and conciliation functions, based on our years of close interaction with the agency in some of its largest and most complex matters. Seyfarth Shaw’s recommendations include:

Refining the pre-investigation process: We have seen an alarming trend of the EEOC abandoning its core tenant of seeking voluntary compliance with EEO laws through cooperating with employers to eliminate real and perceived problems. Seyfarth’s submission notes that, although there are large segments of the agency still committed to working with employers during its pre-suit investigations, there is at least a perception that this contingent is shrinking. In today’s submission, we provide a number of suggestions on how the Commission can reverse this trend.

True investigative neutrality: As we point out in our submission, the EEOC is first and foremost to be a neutral fact-finder at the investigative stage. All parties would benefit from increased employer involvement in all facets of the EEOC process. Seyfarth’s submission provides step-by-step suggestions of how the EEOC can keep employers in the loop through the investigation process.

Addressing opportunities for conciliation improvements: We have consistently observed that the Commission has lost some sense of its core mission when it shifted its emphasis to aggressively pursuing large-scale, high-impact and high-profile investigations and cases. With alarming and increasing frequency, the EEOC’s shift in focus has meant that the Commission drifted from its statutory mandate that it may pursue civil action against an employer only after it has satisfied its statutory duty to “eliminate the alleged unlawful employment practice through informal methods of conference, conciliation and persuasion” as a precondition to filing an action. In today’s submission, Seyfarth once again strongly urged the EEOC to consider a change in its current conciliation approach.

We hope that armed with this feedback, the EEOC will be better able to accomplish the goal of improving its investigation and conciliation process. It remains to be seen if the EEOC will listen to Seyfarth Shaw’s suggestions, as well as the many other submissions presented to the agency. We may have an answer to our question next month, when the Quality Control Plan is slated to be submitted to the EEOC’s Commissioners. On April 30, 2013, the EEOC will vote on the Quality Control Plan. We will provide readers with updates on these important dates. Stay tuned. 

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

In a unique case, the U.S. District Court for the Western District of Pennsylvania recently dismissed the EEOC’s allegations that the Defendant’s random drug and alcohol testing of probationary employees violated the ADA. The decision in EEOC v. United States Steel Corp., No. 10-CV-1283 (W.D. Pa. Feb. 20, 2013), is striking in its even-handedness while, at the same time, is a vital point of reference for employers accused of discriminating through the use of medical examinations. 

In Seyfarth Shaw’s EEOC-Initiated Litigation book (discussed here), we noted that the proportion of ADA claims filed in 2012 more than doubled from claims filed in FY 2011. Considering the large number of ADA cases brought by the EEOC in 2012, we predicted that we will see a significant crop of federal court decisions addressing ADA issues in 2013. To that end, Judge Nora B. Fischer’s ruling in EEOC v. United States Steel Corporation kicks off 2013 and is a significant blow to the EEOC’s disability discrimination litigation agenda.

Facts Of The Case

The case began when the EEOC initiated an action on behalf of Abigail DeSimone against the Defendant under § 706 and § 707 of Title VII. The EEOC asserted that the Defendant required DeSimone to undergo random breath alcohol testing during her probationary period and allegedly fired her as a result of the test. Based on this fact, the EEOC claimed that the Defendant engaged in a pattern or practice of disability discrimination by maintaining a nationwide procedure of requiring probationary employees to undergo random alcohol tests. In support of its claim, the EEOC alleged that the Defendant did not have a reasonable basis for subjecting the employees to the random tests.

In July 2012, the Court granted the Defendant’s motion to dismiss claims of discrimination based on alcohol breath tests and or termination that occurred more than 300 days before the administrative charge was filed with the EEOC. We discussed that previous ruling here. The Court noted that “no clear trend has emerged in District Courts that have addressed the issue “of whether § 706’s 300-day limitations period is applicable to the EEOC’s pattern or practice allegations.” EEOC v. United States Steel Corp, et al., Case No. 10-CV-1284 (W.D. Pa. July 23, 2012). Citing to and siding with other federal courts that have recognized the 300-day procedural requirement, the Court applied the plain language of § 706 and reasoned that any claims of discrimination based on events that occurred 300 days before the charge that gave rise to the EEOC’s lawsuit are time-barred, and are therefore dismissed. The Court’s ruling on the 300-day limitation period was a significant win for all employers seeking to limit the number of claimants in EEOC litigation.

In the Defendant’s motion to dismiss, it also argued that the EEOC failed to “specifically plead that it . . . met its statutory pre-suit obligations to investigate, issue reasonable cause findings and conciliate its claims, or to name any of the presently unidentified aggrieved employees who make up the purported class.” Id. at 14-15. The Court determined that it was premature to determine whether the EEOC satisfied all of its statutory pre-suit obligations because it had not yet considered all of the evidence. Thus, the Court found that even though the EEOC’s claims were subjected to Title VII’s 300-day statute of limitations, the Commission could proceed with the remaining allegations.

We predicted in our blog posting that the Court’s July 2012 ruling left the door open for the Defendant to re-assert its arguments at the summary judgment stage. Sure enough, soon thereafter, the Defendant filed a motion for summary judgment and incorporated its past arguments by asserting, among other things, that: “(1) the EEOC failed to complete the multistep enforcement procedure prior to bringing the lawsuit; [and] (2) the practice of randomly testing probationary employees is job-related and consistent with business necessity.” EEOC v. United States Steel Corp., Case No 10-CV-01284, at 1 (W.D. Pa. Feb. 20, 2013).

The Court’s Ruling

       I.            Pre-Suit Investigation And Conciliation Efforts

The Court began its ruling by discussing the EEOC’s investigation and conciliation requirements under Title VII. Relying on EEOC v. CRST Van Expedited, Inc. (discussed here, here, here, and here), the Court noted that the EEOC’s failure to comply with pre-suit investigation and its good faith conciliation obligations warrants dismissal of charges. In a seemingly employer friendly pronouncement of the related law, the Court noted that “[t]he EEOC may not use discovery in the resulting lawsuit as a fishing expedition to uncover more violations.” Id. at 16. Applying the facts of this case, the Court explained that the record shows that the EEOC undertook minimal investigation before filing the lawsuit; the EEOC did little to investigate DeSimone’s charge; and the EEOC failed to obtain information as to whether employees at any of the Defendant’s other plants were subject to the alcohol testing policy. Id. at 18. 

Despite the EEOC’s inadequate pre-suit investigation, the Defendant’s own tactics precluded the Court from disposing of the case on this basis. Evidently, the parties engaged in conciliation efforts and upon the Defendant’s request, the related discussions and motions were all deemed confidential. Thus, the only knowledge that the Court obtained regarding the conciliation attempts was that the parties made an unsuccessful effort to resolve the allegations prior to litigation. Aside from that, the “exact details of the conciliation attempt remain unknown to the Court.” Id. at 8. Thus, without any documentary evidence as to the substance of the conciliation process, the Court held that it could not dismiss the case for the EEOC’s failure to engage in good faith conciliation. Sending a message to the Defendant, the Court stated that the Defendant could not withhold crucial documents relating to the conciliation and then attempt to benefit from ensuing the evidentiary void.  In other words, the Court ruled that the Defendant “cannot have its cake and eat it, too.” Id. at 20.

    II.            Random Breath Alcohol Testing Is A Business Necessity

Next, the Court considered whether the Defendant’s policy of randomly breath testing probationary employees was a job-related business necessity (an exception built into the ADA’s broad ban on medical testing). In a significant win for employers, the Court held that the Defendant’s policy was a business necessity and therefore the Defendant could lawfully administer alcohol breath tests to probationary employees. The Court reasoned that because the probationary employees perform dangerous and safety-sensitive duties, the employees must be alert at all times and therefore no level of intoxication is acceptable on the job. Additionally, the Court noted that the tests were practical and fair because protective gear worn at the plant makes it nearly impossible to otherwise determine if an employee is intoxicated while working. Finally, the Court reasoned that the Defendant’s policy of randomly testing its employees for drug and alcohol abuse functioned to deter employees in safety-sensitive positions from working under the influence. Thus, the Court held that the random alcohol tests are a reasonable safety precaution, and it therefore dismissed the EEOC’s remaining allegations.

Implications For Employers

The Court explained in no uncertain terms that the “EEOC’s vision of the ADA [in this case] would defy common sense by prohibiting random alcohol testing on new employees under the counterintuitive and unsupported premises that they are not more likely to engage in risky behavior like abusing alcohol at work.” Id. at 32-33. This decision should provide a measure of relief to employers engaging with the EEOC in allegations that alcohol and drug testing violates the ADA. 

The Court’s discussion of the EEOC’s pre-suit investigation and conciliation tactics deserves just as much attention. In the last two years, a series of rulings across the nation have cut against the EEOC for its failure to investigate and engage in good faith conciliation efforts. However, the recent ruling in EEOC v. U.S. Steel Corp. provides the EEOC with ammunition that employers must be on the look-out for. Employers beware:  you may hit a brick wall in attempting to dismiss the EEOC’s actions for failure to satisfy Title VII’s pre-investigation and conciliation requirements if you do not turn over related documents to the Court.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

We have been keeping our readers posted on the rapidly evolving developments concerning the EEOC’s agenda in 2013 and beyond. As we noted in past postings, the EEOC promised in its Strategic Enforcement Plan (“SEP”) that it would increasingly focus on preventing and, when necessary, litigating retaliation claims. The EEOC sharpened its focus on retaliation after obtaining written comments and a full-day public meeting seeking input on its SEP. At the meeting, several advocacy groups urged the EEOC to rededicate its enforcement efforts on preventing discriminatory retaliation. The EEOC’s final SEP integrated the concepts into its national playbook, included retaliation as one of the “big six” global EEOC priorities. 

The EEOC’s warning in its SEP was no bluff. The EEOC recently announced three significant settlements with employers concerning claims of retaliation: $130,000 in a case relating to disability discrimination retaliation, $85,000 in a sex harassment retaliation case; and $77,500 to settle another disability harassment retaliation lawsuit. The EEOC closed out January 2013 with a $500,000 consent decree against Cognis Corporation relating to yet another claim of retaliation.

A Salvo Of Retaliation Actions

EEOC v. D.O.E. Technologies, Inc. et al., Case No. 11-CV-00861 (D. Del. Jan. 24, 2013). We start with a case in the U.S. District Court for the District of Delaware. Christopher Vely, a sales representative, allegedly notified his employer of his hearing disability and requested an accommodation. When those talks went sour, he complained. The EEOC claimed that after Vely complained, he was fired. The EEOC filed a retaliation complaint in federal court in Delaware, and on January 24, the EEOC finalized a $130,00 consent decree that provides monetary relief to Vely and enjoins the Defendant from engaging in adverse employment actions or retaliation in violation of the ADA.

EEOC v. D.O.E. Technologies, Inc. is also significant because it the EEOC’s SEP also makes clear that the EEOC is going to “gear up” the investigation and subsequent litigation of ADA matters.  For further discussion on this topic, check out the Executive Summary in our EEOC-Initiated Litigation book.

EEOC v. Cappo Management XX, Inc., Case No. 12-CV-0239 (M.D. Tenn. Jan. 25, 2013). Next we turn to the EEOC’s allegations that Cappo Management fired several salespersons because they complained about sexual harassment. The EEOC asserted that three employees were fired just a week after they complained. Eleven months after filing suit in Tennessee, the parties negotiated a consent decree for $85,000 in monetary damages and a variety of other non-monetary provisions. Cautioning employers that the EEOC will continue its focus on retaliation discrimination, Faye Williams, regional attorney of the EEOC’s Memphis District Office, publicly stated that “Title VII and Supreme Court precedent provide that employees have a right to complain about practices they believe are unlawful without repercussions, and the EEOC will continue to act forcefully to protect this right.” 

EEOC v. Kintetsu International Express (USA), Inc., Case No. 10-CV-00560 (D. Haw. Jan. 29, 2013). The consent decree in EEOC v. Kintetsu International Express (USA), Inc. resolved the Commission’s claims that the Defendant harassed and retaliated against, Yuko Lesher, tour coordinator who was purportedly forced to resign in retaliation for her reporting her disability harassment. The parties entered into a $77,500 consent decree and a three-year agreement requiring the Defendant to create new policies and train employees about disability discrimination. 

EEOC v. Cognis Corp., Case No. 10-CV-2191 (C.D. Ill. Jan. 25, 2013). In June 2012, we reported that Judge Michael P. McCuskey of the U.S. District Court for the Central District of Illinois granted a rare summary judgment motion for the EEOC, ruling that the Defendant unlawfully retaliated against its employee Steven Whitlow. The Court found that Whitlow engaged in protected activity when he revoked a “last-change” agreement, and Cognis retaliated against him in violation of Title VII when it terminated his employment. At the same time, the Court denied the EEOC’s second motion for summary judgment regarding a similar charge on behalf of a class of Cognis employees. Just days ago, Judge McCuskey entered a consent decree resolving the lawsuit for $500,000. At the close of the litigation, the EEOC’s Chicago District Director, John Roe, publicly stated that “Cognis presented the victims in this case with a terrible, illegal choice:  lose your job or lose your civil rights. Under the law, no worker has to make that kind of choice. Employers would be better served by working to ensure that their employees are free from discrimination, rather than threatening their workers with termination in an effort to make sure that employees don’t complain.”

Implications For Employers

The EEOC has communicated that it intends to vigorously pursue its stated “big six” agenda items enunciated in its Strategic Enforcement Plan. The cases reviewed in this post suggest it is doing just that. The government’s message is clear: the EEOC has been and will continue to scrutinize employers’ actions for any hint of retaliation. In each of these cases, the employers denied any wrongdoing, but the best winning move is not to be on the EEOC’s target list from the start. Employers should train management and human resource officials to effectively deal with retaliation complaints. Suffice it to say, this is a “white hot” area for the EEOC, and administrative enforcement and full-scale litigation will continue to focus on retaliatory practices. 

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

Calling all loyal readers of our blog – our annual EEOC litigation study is here: the launch of our book entitled EEOC-Initiated Litigation: Case Law Developments In 2012 And Trends To Watch For In 2013.

This publication is what we hope you will agree is a definitive source of information that focuses exclusively on EEOC-related litigation. To order a copy, please click here. This year for the first time, we are also offering this publication for immediate download as an eBook. To download the eBook, please click here.  This year’s book covers more decisions than ever before and provides readers with a detailed Executive Summary on the unique challenges of litigating against the EEOC.

This publication is what we hope you will agree is a definitive source of information that focuses exclusively on EEOC-related litigation.  This year’s book covers more decisions than ever before and provides readers with a detailed Executive Summary on the unique challenges of litigating against the EEOC. 

In November, we blogged that the EEOC’s Performance and Accountability Report (“PAR”) reported a striking drop in the number of lawsuits the EEOC filed in FY 2012.  The PAR noted that the EEOC only filed 122 lawsuits in FY 2012, down from 261 merits lawsuits in FY 2011. This precipitous drop in the total cases filed, however, did not affect the EEOC’s bottom-line of systemic discrimination lawsuits. In furtherance of its strategic objectives, the EEOC continued its ever-increasing focus on pursuing large-scale, high-impact, and high-profile cases with the hope that this brand of high-stakes litigation will channel employers’ behavior. To that end, the EEOC reported that by the end of FY 2012, systemic suits accounted for 20% of all of the EEOC’s active merits suits, the largest proportion on the EEOC’s active docket since it began tracking in FY 2006. 

Our EEOC-Initiated Litigation book also includes a discussion of five substantive trends in the EEOC’s 2012 litigation: (1) A rush on ADA cases; (2) subpoena enforcement actions; (3) a focus on workplace harassment cases; (4) attacking novel theories - expanding coverage of existing laws, and (5) rulings that apply § 706’s limitation period to EEOC pattern or practice allegations brought under § 707 of Title VII. With this retrospective in mind, each year we select a short list of what we consider the five most intriguing EEOC-related decisions handed down this past.

So what are the 5 most intriguing decisions? Here are our pick for 2012.

1.  EEOC v. Interstate Distributor Co., Case No. 12-CV-02591 (D. Col. Nov. 8, 2012). We start with a focus on the ADA. The EEOC’s Strategic Enforcement Plan released just last month makes clear that the EEOC is going to “gear up” the investigation and subsequent litigation in this area. In FY 2012, the EEOC built significant momentum toward achieving this goal, and made sure that its focus on ADA claims would not go unnoticed by employers. Among these significant settlements included approval of a $4.85 million consent decree in EEOC v. Interstate Distributor Co. Judge Brooke Jackson of the U.S. District Court for the District of Colorado put an end to the litigation just one month after the EEOC filed its disability discrimination lawsuit. The parties negotiated a consent decree, and Judge Jackson approved the monetary payment to the class of alleged victims that provided them with back pay and compensatory damages. In terms of equitable relief, the consent decree includes injunctions prohibiting the Defendant from further discrimination or retaliation based on disability. For the next three years, the Defendant must provide periodic training on the ADA to its employees in efforts to prevent such discrimination. Additionally, every six months the Defendant must provide the EEOC with information relating to terminations of employees, FMLA extensions, employees’ requests for accommodations, and disability complaints. 

The EEOC’s $4.85 million consent decree is nothing to sneeze at. This is a big settlement for the EEOC and a reminder to employers to review their ADA-realted policies and consider whether they are over restrictive. This case also provides insight on settlements that seek quick relief. While it can take years to obtain a final resolution through settlement or trial, the parties disposed of the EEOC’s claims in record time – one month.

2.  EEOC v. McLane Company, Inc., 2012 U.S. Dist. LEXIS 164920 (D. Ariz. Nov. 19, 2012). Next, we turn to subpoena enforcement. Increasingly, the EEOC resorts to its subpoena power to launch broad-scale discovery in its investigations. In 2012, even though the total number of EEOC cases shrunk by half, the number of subpoena actions stayed roughly the same as last year. In 2012, the EEOC reported that it filed 33 subpoena/“other” actions. Courts gave the EEOC continued to give considerable latitude with respect to the breadth of the information the agency could obtain, even with respect to seemingly focused charges of discrimination. On the bright side for employers, a handful of courts issued rulings that limited or denied EEOC subpoenas. 

Employers should tuck EEOC v. McLane Company, Inc. away for future use in confronting aggressive EEOC subpoenas. In EEOC v. McLane Company, Inc., the U.S. District Court for the District of Arizona denied the EEOC’s application to enforce portions of an administrative subpoena on the grounds that:  (i) the EEOC did not have jurisdiction to investigate a generalized charge of discrimination that is not tied to a specific aggrieved party; and (ii) some of the EEOC’s information requests were overbroad and irrelevant to the underlying charge. The Court reasoned “[t]o ignore the plain language of the statute and to allow the EEOC to investigate a generalized charge of discrimination that is untethered to any aggrieved person would invite the oft-cited ‘fishing expedition’ to become a full-blown harvest operation.” Id. at *10.

The ruling in EEOC v. McLane Company, Inc. confirms that the EEOC’s investigative powers are not unlimited and the EEOC does not have unbridled reign to seek any and all information from an employer merely because a charge of discrimination was filed against it.  This case is a rare gem and can be used as ammunition for employers facing broad information requests in investigation of pattern or practice claims.

 3.  EEOC v. Yellow Transportation, Inc. and YRC, Inc., Case No. 09-CV-7693 (N.D. Ill. June 28, 2012). In the EEOC’s first draft of its SEP, the Commission telegraphed that it was increasingly focused on preventing, and when necessary, litigating workplace harassment allegations.  The EEOC’s warning was no bluff:  the EEOC filed a series of race and sex harassment lawsuits in 2012. Indeed, we saw a notable case concerning race harassment in EEOC v. Yellow Transportation, Inc. and YRC, Inc. In this somewhat complicated case from the U.S. District Court for the Northern District of Illinois, the EEOC secured approval of $11 million consent decree in its largest settlement of 2012. The EEOC alleged a pattern or practice lawsuit involving allegations of systemic race discrimination. The consent decree resolved two lawsuits (including a private plaintiff class action brought by 14 workers who also intervened in the EEOC’s lawsuit) that had been consolidated for purposes of settlement negotiations. The EEOC and a class of African-American workers employed by Yellow Transportation, Inc. and YRC, Inc. alleged that the companies discriminated against workers at their Chicago Ridge facility and subjected them to multiple incidents of hangman’s nooses and racist graffiti, comments, and cartoons. The EEOC also claimed that Yellow Transportation and YRC subjected African-American employees to harsher discipline and scrutiny than their white counterparts and gave them more difficult and time-consuming work assignments. 

Two years ago, the EEOC secured a $10 million consent decree with YRC and Roadway Express stemming from the EEOC’s claims that African-American employees at the companies’ Chicago Heights and Elk Grove Village, Illinois facilities were subjected to a racially hostile working environment and race discrimination. The consent decree, however, did not end the litigation in store for YRC.  Although it resolved the EEOC’s discrimination charges at the Chicago Heights and Elk Grove facilities, the settlement did not address pending charges against the company’s Chicago Ridge facility. To that end Magistrate Judge Cox entered a joint motion for preliminary approval of the $11 million consent decree, which provides significant monetary relief to the class of allegedly aggrieved victims, and payment of $1.1 million in attorneys’ fees and costs to private class counsel. 

The EEOC’s $11 million settlement - or looking at it in context, the $21 million settlement with the defendants involving its three Illinois facilities - underscores the Commission’s goals for prosecuting large-scale systemic harassment litigation. The defendants’ pay out of $21 million in the last two years reminds employers not to tread lightly on the EEOC’s goals to attack race and sex harassment involving groups that it has called “underserved” - young, uneducated, and/or non-English speaking employees.

4.  EEOC v. Houston Funding II, Ltd., 2012 U.S. Dist. LEXIS 13644 (S.D. Tex. Feb. 2, 2012). Next we turn to an issue of first impression. The ruling in EEOC v. Houston Funding II, Ltd., et al. is believed to be the first decision on the issue of whether lactation is a form of sex discrimination covered by Title VII. In this unusual case, the EEOC alleged that an employer unlawfully discriminated against a worker on the basis of her sex because she wanted to express breast-milk while at work.  In a terse, three-page decision, the Court rejected the EEOC’s claim out of hand. The Court reasoned that even assuming that the “real reason” the worker was fired was because she wanted to pump breast-milk at work, “firing someone because of lactation or breast-pumping is not sex discrimination” because “lactation is not pregnancy, childbirth, or a related medical condition.” Id. at *2. 

EEOC v. Houston showcases another of the EEOC’s stated goals from its SEP, namely addressing emerging and developing legal issues. The Court’s decision makes clear that expressing breast-milk is not protected under federal anti-discrimination laws and is yet another example of overreaching by the EEOC. The Commission, not apt to “give up” on this front , hosted a meeting on February 15, 2012 at its headquarters on a range of issues relative to pregnancy discrimination. Clearly, these issues remain front and center on the EEOC’s radar.

5.  EEOC v. Global Horizons, Inc., et al., 2012 U.S. Dist. LEXIS 105993 (E.D. Wash. July 27, 2012). We close with a case that manifests an issue that the EEOC feverishly battled over in 2012. Since the inception of its systemic litigation program in 2006, the EEOC has maintained that it is unencumbered by the 300-day statute of limitations in § 706 of Title VII that applies to private litigants (which frames any Title VII lawsuit as limited to events occurring within 300 days preceding the filing on an EEOC charge with the EEOC). Typically, the EEOC argues that it can sue an employer for alleged violations going back to the start of the allegedly illegal pattern or practice (e.g., a discriminatory practice of denying promotions to female employees) irrespective of the date when a charging party filed his or her EEOC administrative charge.

In our Top 5 picks from 2011, we included EEOC v. Freeman, 2011 U.S. Dist. LEXIS 8718 (D. Md. Jan. 31, 2011), and noted that in 2011 the EEOC had a mixed track record of success in convincing federal courts to adopt its view of the statute of limitations issue. By the year-end of 2012, however, a wave of similar decisions make clear that a clear trend in federal courts emerged that finds § 706’s 300-day limitations period is applicable to the EEOC’s pattern or practice allegations. We pick EEOC v. Global Horizons, Inc., as one of the top 5 most intriguing case in 2012 because this employer-friendly decision struck at the heart of the EEOC’s attempt to litigate its case unrestrained by any statute of limitations. In this case, the EEOC alleged that Global Horizons, with the help of the agricultural companies and farms with it contracted, engaged in a litany of unlawful and potentially criminal acts , including human trafficking, confiscation of passports, the provision of substandard housing, and wage and hour violations. The U.S. District Court for the Eastern District of Washington imposed § 706’s 300-day limitations period on the EEOC’s pattern or practice claims and barred the EEOC from seeking relief for employment practices occurring more than 300 days before the filing of the underlying administrative charge. 

This ruling punctuates a trend of judicial intolerance for the EEOC’s attempts to litigate broad pattern or practice claims without adherence to any statute of limitations. Only two years ago, federal courts were split on the issue of whether the charge-filing period of § 706 applies to pattern or practice cases brought by the EEOC under § 707. The decided tide of decisions addressing this issue now flow in favor of employers. Employers can confidently argue that Title VII’s language implicates and requires that Title VII’s language implicates and requires that § 707 allegations comply with § 706’s 300-day limitations period. Finally, EEOC v. Global Horizons, Inc. is particularly interesting because it illuminates the EEOC’s foray into human trafficking issues. 

We hope you find this retrospective on FY 2012 and the EEOC-Initiated Litigation helpful.  Looking ahead, on Tuesday, March 12th, we will host our annual webinar that will guide attendees through an analysis of these and many other EEOC rulings and trends, and provide an opportunity to participate in a virtual dialogue with the authors. We will follow up with more details on our EEOC webinar in the next couple of weeks, so please stay tuned. 

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

By Courtney Bohl and Laura J. Maechtlen

In yet another case regarding the sufficiency of the EEOC’s pre-litigation conciliation efforts, Judge Marcia Kriger of the U.S. District Court for the District of Colorado recently cautioned the EEOC about “hiding the ball” during conciliation negotiations. In EEOC v. The Original Honeybaked Ham, No. 11-CV-02560 (D. Colo. Jan. 15, 2013), the Court found the EEOC’s pre-suit conciliation efforts unsatisfactory and limited the EEOC’s claims to only those identified during its conciliation negotiations. The Court also limited the number of individuals for whom the EEOC could seek relief to those sufficiently identified during conciliation, whether they were identified directly by name or identified as part of a group of which the EEOC specifically defined. This decision represents another helpful precedent for employers facing a recalcitrant EEOC during conciliation.

Background Of The Case

In EEOC v. The Original Honeybaked Ham, the EEOC filed suit on behalf of a class of female workers alleging sex discrimination and retaliation. The lawsuit stemmed from a charge of discrimination filed by Wendy Cabrera, a female who alleged she was harassed by a Manager, James Jackman, and terminated after complaining to District 8 Manager Donna Wagner-Rego and Human Resources Representative Michael Costello. 

The EEOC investigated Caberea’s charge by interviewing three employees at the Highland Ranch store, and obtaining statements from two employees stating that Jackman had harassed them and other female employees. After the investigation, the EEOC issued a letter of determination and invited HBH to engage in conciliation. 

The EEOC’s initial conciliation offer demanded monetary relief for Cabrera and eight other female employees who were subjected to Jackman’s allegedly harassing conduct. The EEOC also advised HBH that it would likely discover more victims if the case proceeded to litigation, but refused to identify any additional class members or provide any information about the scope of this unnamed class. Because the EEOC provided only nebulous information during conciliation, HBH was unable to assess its liability and declined to make a counter-offer. 

After filing its initial complaint and despite only engaging in conciliation with respect to female employees subjected to Jackman’s conduct, the EEOC amended its complaint, broadening the scope of its claims to individuals subjected to Jackman’s conduct and/or the conduct of other supervisors and managers within District 8 under Human Resource Representative Costello’s oversight. 

The parties subsequently reentered negotiations on the broadened claims. Predictably, the EEOC again refused to provide specific names of aggrieved parties or the scope of the potential class. As a result, HBH was unable to make a meaningful counter-offer and notified the EEOC that it wished to proceed with litigation. 

In response to the EEOC’s amended complaint, HBH filed a motion to dismiss, seeking to: (1) limit the scope of the EEOC’s claims to claims arising from Jackman’s unlawful conduct and not of any other supervisor or manager; and (2) limit the available remedies to injuries suffered by Cabrera and the eight aggrieved individuals identified in the pre-litigation conciliation.

The Court’s Ruling

The Court agreed with HBH’s first argument and limited the EEOC’s claims of sex discrimination and retaliation to conduct by Jackman. Id. at 11. In doing so, the Court acknowledged that the EEOC is authorized to pursue claims of illegal conduct beyond what was alleged in the initial charge, so long as the additional conduct is discovered during the course of the charge’s investigation. Id. at 9. However, if the EEOC discovers additional wrongdoing, it must give notice of this wrongdoing to the employer and provide the employer an opportunity to conciliate on all charges before a lawsuit is filed. Id. The Court found that the EEOC failed to do so, focusing its negotiations on the unlawful conduct of Jackman. Id. at 10. Moreover, the Court flatly rejected the EEOC’s argument that it gave HBH informal notice by alleging retaliation by Wagner-Rego and Castello. Id.  at 11. 

The Court also held that while the EEOC could pursue a remedy for those aggrieved individuals impacted by the conduct of Jackman, it could not do so for individuals affected by the conduct of other supervisors or managers. Id. at 15. HBH cited the Eighth Circuit’s decision in EEOC v. CRST (that we previously blogged about here) in arguing that relief could only be sought by the EEOC for aggrieved persons whose identities were disclosed in pre-litigation negotiations. Id. at 13. The Court rejected this categorical interpretation of EEOC v. CRST, finding that the amount of information required on the identities of potential class members should be viewed on more of a “sliding-scale.” Id. at 13-14. Thus, the greater specificity the EEOC gives in describing the alleged unlawful conduct, the less important it becomes for the EEOC to identify each aggrieved individual by name. Id. The Court reasoned that, if the employer is given information on the “extent, location, time period, and persons involved in the alleged unlawful conduct,” the employer would be able to reasonably estimate the number of individuals impacted. Id. at 14. Because the EEOC disclosed information about Jackman’s conduct at a specific retail store, HBH had sufficient notice of all individuals affected by Jackman’s conduct, but not individuals subjected to conduct engaged in by other supervisors. Id. at 15.

Implications For Employers

The U.S. District Court for the District of Colorado’s ruling joins a litany of recent rulings (here, here and here) that have similarly found the EEOC’s pre-litigation efforts unacceptable under Title VII’s framework. The ruling bars the EEOC from asserting claims not specifically identified during pre-suit litigation and prohibits the EEOC from seeking relief on behalf of individuals who the employer could not reasonably identify from the information provided by the EEOC. Although the Court refused to require the EEOC to identify all aggrieved individuals in its pre-suit negotiations, the Court did make clear that if the EEOC declines to name each individual, it must, at the very least, sufficiently identify an outline or definition of the class so the employer is on notice as to the extent of its liability. This case should be added to every employer’s “tool-box” of cases to use when faced with an EEOC investigation and lawsuit.

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

By Christopher DeGroff, Gerald L. Maatman, Jr. and Julie G. Yap

After much anticipation, heated debate, and numerous invitations for public comment, today the EEOC announced that it approved its Strategic Enforcement Plan for FY 2013-2016. As we previously reported, the EEOC’s SEP will function as the blueprint for the Commission’s enforcement activity for the next several years. Because of the Plan’s importance to employers, corporate counsel, and HR professionals, Seyfarth Shaw LLP offered its input on the SEP from the earliest stages of the EEOC’s drafting process. On June 19, 2012, Seyfarth Shaw LLP submitted a series of extensive recommendations to the EEOC, suggesting concrete examples of challenges faced by employers working with the EEOC, and ways the agency could address these challenges while still achieving its goals. 

Following up on those written submissions, the EEOC held a full-day public meeting on July 18, 2012, attended by Seyfarth Shaw, seeking additional input on its Plan. In September, the EEOC released a “revamped” Draft Plan. Finally, on December 18, 2012, the EEOC approved the final, operative SEP by a 3-1 vote. The SEP is a dense read, but contains a number of interesting take-aways that give insight into the sometimes baffling inner-workings of this government agency. Borrowing from spaghetti westerns, the SEP could be said to contain “The Good, The Bad and The Ugly.”

The Good

One of the most pressing concerns voiced by Seyfarth Shaw in both its June 2012 and September 2012 comments was the need for greater transparency in the EEOC’s goals and procedures. The final SEP begins by expressly listing six national enforcement priorities, including: (1) eliminating barriers in recruitment and hiring; (2) protecting immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach. These stated priorities, while extremely broad, provide employers at least some insight into the EEOC’s goals and key concerns. These goals have remained consistent throughout the EEOC’s drafting process, and should be seen for what they are: the “hot topics” for the EEOC for the foreseeable future. 

Seyfarth Shaw’s earlier comments also stressed the need for greater consistency among the EEOC’s district offices. We were heartened to see that throughout the final SEP, the EEOC has placed a consistent emphasis on the concept of integration. Specifically, the EEOC acknowledged the need for national priorities, standards, and oversight, and asserted that the SEP “seeks to establish clear expectations for those charged with implementing this plan and to provide for regular and meaningful communication amongst the Commission, General Counsel, agency leadership, and agency staff.” The SEP puts in place the EEOC’s oversight on implementation and an annual reporting requirement in furtherance of these ends. The SEP also mandates the formation of “Strategic Enforcement Teams” to promote uniformity and efficiency in achieving its enforcement priorities. A robust integration program could be highly beneficial to employers by stopping the EEOC’s current practice of filing multiple, identical lawsuits across the nation.

Despite such laudable goals, it is unclear whether the SEP’s focus on integration will actually result in marked improvements. Although the SEP highlights its integration plans, it also expressly provides for a continuing system of delegated authority to District Directors, the General Counsel, and the Office of Federal Operations. The final SEP also calls for the development of local priorities to address particular issues prevalent in a geographic location, which could very likely result in less transparency and clarity at the actual investigation and litigation level. As Seyfarth Shaw suggested in its comments though, the SEP calls for more coordination between investigative and legal enforcement staff and mandated that districts be held responsible for ensuring that such coordination is achieved.

Accordingly, although the SEP at least acknowledges the concerns raised by Seyfarth Shaw in its numerous comments and contributions, it remains to be seen whether the very real concerns raised will ultimately be addressed by this plan.

The Bad

As has been previously reported, the SEP further emphasizes the EEOC’s increased emphasis on systemic litigation suits, which can have a devastating impact on employers caught in the crosshairs of the EEOC’s wide-reaching investigation and aggressive litigation. Specifically, the SEP notes that, at both the national and local level, “meritorious systemic charges and cases that raise SEP or district priority issues [will] be given precedence over individual priority matters and over all non-priority matters, whether individual or systemic.” As such, employers should be mindful that an EEOC investigation into one of the six national priorities or yet to be determined local priorities could turn into “example setting” litigation. 

An even more troubling element of the SEP has survived the final cut in the drafting process. Earlier versions of the SEP decried the EEOC’s lack of resources as a barrier to pursuing what it felt was meritorious claims. One answer to the EEOC’s dilemma was to shuttle those cases to private attorneys who (for their cut of the recovery) will pursue the cases instead of the government. In an alarming statement, the EEOC suggest that the private bar “play[s] a vital role in enforcing laws prohibiting employment discrimination. The SEP goes so far to say that the EEOC will “support private enforcement of the federal anti-discrimination laws” through referrals to local and state bar associations. Many employers may find this delegation of governmental responsibilities to perform even-handed and unbiased investigations into (critically) alleged violations troubling, perhaps even reckless. As many employers know from experience, the agenda of the EEOC and the plaintiff’s employment bar are often divergent, and certainly Congress did not view the plaintiff’s bar as a deputized arm of the government’s enforcement mechanism when the EEOC was first formed.

How these more troubling aspects of the final SEP play out remains yet to be seen.

The Ugly

Finally, there are portions of the SEP that, even upon close examination, are vague and downright confusing – and perhaps “bad” as compared to the good and the ugly. For example, Section V. D. of the final SEP discusses an “integrated” approach to research, data, and employment. This section calls for “relevant research on a timely basis for cases in litigation, and have the ability to research broad issues of employment discrimination that are not connected to pending cases.” Even agency scholars have a tough time cracking the code of what this actually means, although apparently the SEP calls for a vote on a plan to integrate certain “priority areas” sometime in the summer of 2013. Unfortunately, this cryptic language only enforces employer skepticism that there will truly be any change in the EEOC’s methodology.

In this vein, one of the themes throughout the SEP is the EEOC’s implied lack of resources. The SEP sets forth that its goals and procedures are limited by their resources - a clear message to Congress and the administration that more money will translate into better results. Again, employers may take a cynical read of the SEP that suggests that the EEOC’s goals and mandates will shift based on its funding. Many employers will see such a grab for funding in the climate of a “fiscal cliff” as Washington business as usual.

Implications For Employers

Ultimately, employers will benefit from the EEOC adopting the SEP. The most common criticism in dealing with the EEOC is its lack of transparency and consistency. The SEP arms employers with at least some idea (no matter how opaque at times) of the EEOC’s goals and agenda. This will allow employers to prioritize compliance functions and order their affairs accordingly, but perhaps more importantly, will give them concrete authority when an element of this highly decentralized agency strays from its own core tenants.

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

By Courtney Bohl and Laura J. Maechtlen

On November 19, 2012, in EEOC v. McLane Company, Inc., No. 12-CV-02469 (D. Ariz. Nov. 19, 2012), Judge G. Murray Snow of the U.S. District Court for the District of Arizona held that the EEOC’s authority to investigate charges of discrimination is not unlimited. Judge Snow denied the EEOC’s application to enforce portions of an administrative subpoena on the grounds that: (1) the EEOC did not have jurisdiction to investigate a generalized charge of discrimination that is not tied to a specific aggrieved party; and (2) some of the EEOC’s information requests were overbroad and irrelevant to the underlying charge. This ruling is a must read for any employer facing overbroad EEOC investigations and requests for information.

Background Facts

A McLane Company, Inc. (“McLane”) employee, Damiana Ochoa, filed a charge of discrimination with the EEOC based on sex and disability. Id. at 1. Ochoa’s first claim alleged that she failed McLane’s Industrial Physical Capacity Services Physical Capacity Exam (“IPCS PCE” or “test”) three times after returning to work from maternity leave and consequently believed that she was discriminated against because of her sex in violation of Title VII. Id. at 2. The second claim alleged that the IPCS PCE is given to all employees returning to work from a medical leave and she believed that this practice violated the Americans With Disabilities Act of 1990 as amended. Id. Based Ochoa’s charge, the EEOC requested a variety of information from McLane in relation to the administration of the IPCS PCE including pedigree information for every person who took the IPCS PCE (name, address, social security number, etc.), the reason the person took the test, the person’s score on the test, any adverse action that McLane took based on the person’s performance on the IPCS PCE, and medical and disability information. Id.

McLane objected to the EEOC’s request on the grounds that it was overly broad, unduly burdensome, and sought information irrelevant to the underlying charge. Id. at 3. The EEOC responded by issuing a subpoena to McLane demanding the information contained in its initial request. Id. McLane petitioned to revoke the subpoena. Id.

After McLane submitted its petition to revoke, McLane agreed to produce a limited database to the EEOC that contained information on individuals who took the IPCS PCE. Id. The database included information on employees who took the IPCS PCE, including the individuals’ location, gender, job class, test date and other details relating to their test scores, but did not include the individuals’ names, addresses, telephone numbers and social security numbers and medical and disability information. Id. The EEOC subsequently filed an application in the U.S. District Court for the District of Arizona to enforce its subpoena. Id.

The Court’s Ruling

In ruling on the validity of the EEOC’s administrative subpoena, the Court noted that it must conduct a three-part inquiry, asking: “(1) whether Congress has granted the authority to investigate; (2) whether procedural requirements have been followed; and (3) whether the evidence is relevant and material to the investigation.” Id. at 4. The burden is on the agency to demonstrate that these three prongs are met. Id. If the agency meets all three prongs, the burden shifts to McLane who must show that the subpoena is overbroad or unduly burdensome. Id.

McLane argued that the EEOC failed to meet the first and third prong of the validity inquiry. As to the McLane’s first argument regarding the EEOC’s authority to investigate, the Court noted that the EEOC’s investigative powers arise from a charge of discrimination, whether the charge is filed by or on behalf of a person claiming to be aggrieved, or by a member of the Commission.  Id. Because the EEOC’s authority to investigate arises only from the charge, “courts must be careful not to construe the charge and relevance requirements so broadly as to confer ‘unconstrained investigative authority’ upon the EEOC.” Id. at 5. The Court made clear that the charge referenced in the subpoena defines the scope of the EEOC’s investigatory power. Id.

The Court found that Ochoa’s claim alleging that she suffered gender discrimination because of the administration of the IPCS PCE was within the EEOC’s investigation power. Id. However, Ochoa’s second claim – that she believed the IPCS PCE discriminates on the basis of disability – was not tied to a specific aggrieved party, and thus the EEOC lacked jurisdiction to investigate this claim. Id. The Court reasoned “[t]o ignore the plain language of the statue and to allow the EEOC to investigate a generalized charge of discrimination that is untethered to any aggrieved person would invite the oft-cited ‘fishing expedition’ to become a full-blow harvest operation.” Id. at 6. 

Because Ochoa’s charge was the sole charge listed on the subpoena and Ochoa’s disability discrimination claim was not linked to any aggrieved person, the EEOC only had jurisdiction to investigate Ochoa’s gender discrimination claim. Id. at 7. Thus, the EEOC’s application to enforce the portions of the subpoena that required production of information relating to disability was denied. Id.

Further, the Court considered McLane’s argument that the EEOC’s request for pedigree information for each individual was not relevant to the gender discrimination claim. Id. at 8. The Court agreed with McLane, finding that the EEOC’s request for pedigree information was only relevant to Ochoa’s disability claim. Id. The Court reasoned that the names, contact information and social security numbers of individual employees are not relevant to the gender discrimination claim because “an individuals’ name, or even an interview he or she could provide if contacted, simply could not ‘shed light on’ whether the IPCS PCE represents a tool of gender discrimination in the aggregate.” Id. Accordingly, the Court denied the EEOC’s application to enforce the subpoena’s directive to provide pedigree information. Id. at 9.

Implications For Employers

The ruling in EEOC v. McLane Company, Inc., confirms that the EEOC’s investigative powers are not unlimited and the EEOC does not have unbridled reign to seek any and all information from an employer merely because a charge of discrimination was filed against it. 

Employers that receive requests for information or administrative subpoenas by the EEOC should ensure the requests are not overbroad and that the EEOC is only seeking information relevant to the underlying charge.

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

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

On November 20, 2012, the Seventh Circuit issued its opinion in EEOC v. Thrivent Financial for Lutherans, No. 11-2848 (7th Cir. 2012), affirming a district court order granting summary judgment against the EEOC.

In a welcome relief for employers, the Seventh Circuit rejected the EEOC’s attempt to extend the scope of the confidentiality requirements of the Americans With Disabilities Act (“ADA”). The Seventh Circuit held that the ADA’s confidentiality provisions do not extend to medical information volunteered by employees or received in response to job-related inquiries.    

Factual Background

Charging Party Gary Messier worked for Thrivent as a temporary programmer. After nearly four months without incident, Messier failed to report to work, and his supervisor sent Messier an email stating that “we need to know what is going on.” Id. at 3. Hours later, Messier replied stating that he had a severe migraine and that he had been suffering from a migraine condition since a major car accident in 1984. Id. at 3-4. 

A month later, Messier quit his job at Thrivent and began looking for other employment. Id. at 5. After three prospective employers lost interest in him after conducting reference checks, Messier hired an online reference check agency. Id. The agency telephoned Thrivent pretending to be a prospective employer, and Thrivent disclosed that Messier “has medical conditions where he gets migraines” and “would not call us [to let us know].” Id. 

Messier subsequently filed a charge with the EEOC alleging disability discrimination under the ADA. The EEOC thereafter filed suit claiming that Thrivent violated the confidentiality provisions contained in 42 U.S.C. § 12112(d) by revealing “confidential medical information” about Messier. Id. at 6. The district court granted summary judgment in favor of Thrivent, and the Seventh Circuit affirmed.

The Seventh Circuit’s Opinion

The Seventh Circuit recognized that, before it could decide whether Thrivent violated the confidentiality provisions of the ADA, it had to decide whether the statute applied to Messier’s situation. Id. at 8. The relevant portion of the statute – entitled “Medical examinations and inquiries” – requires an employer to treat “information obtained regarding the medical condition or history of the applicant” as a “confidential medical record.” Id. at 6 (quoting 42 U.S.C. § 12112(d)). 

The Seventh Circuit held that 42 U.S.C § 12112(d) has a “plain meaning.” Id. at 11. The use of the conjunction “and” in the title “suggests that the examinations and inquiries referred to in the title of section (d) are within the same class or type:  they are both medical.” Id. Further, the subject matter discussed in the body of section (d) confirms that the word “inquiries” does not refer to all generalized inquiries, but instead refers only to medical inquiries. Id. at 12. The Seventh Circuit found no evidence of a “medical inquiry” in this case. Id. at 16. It noted that, at minimum, an employer already must know that something is wrong with an employee before initiating the interaction in order for the interaction to constitute an inquiry for purposes of the statute. Thrivent did not have any such knowledge. Indeed, the Seventh Circuit reasoned that “Messier’s absence was just as likely due to a non-medical condition was it was due to a medical condition.” Id. at 16. 

Implications

The Seventh Circuit’s holding provides a welcome clarification for employers. It rejected the EEOC’s argument that the term “inquiries” as used in 42 U.S.C. § 12112(d)(4)(B) refers to all job-related questions and, thereby, rejected the EEOC’s efforts to expand the confidentiality protections of the ADA to medical information received in response to non-medical inquiries. As a result, the Seventh Circuit limited employers’ obligations under the statute. Under Thrivent, employers who receive unsolicited medical information need not treat such information as a confidential medical record under the ADA, and they do not violate the requirements of the ADA by revealing the information to others.  

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

Social media has become an integral part of modern society. Legal issues involving social media and discovery are complex, and evolving. On social media websites, people share information and pictures with friends, family, and even the unknown. Often, employees will communicate with other co-workers on an online forum and discuss their jobs. In EEOC v. The Original Honeybaked Ham Co. of Georgia, Inc., No. 11-CV-02560 (D. Colo. Nov. 7, 2012), a systemic sexual harassment and retaliation case, the Defendant argued that many of its employees utilized social media to communicate and therefore claimed that the employees’ online statements were discoverable. The EEOC categorized the Defendant’s demands as a “proverbial fishing expedition” and claimed that its discovery requests were too vague. Id. at 4. Siding with the Defendant, Judge Michael E. Hegarty ruled that the employees’ social media content should be produced because it was “perfectly relevant” to the EEOC’s sexual harassment allegations. Id. at 4. In an important caveat, however, Judge Hegarty set up a creative screening process – requiring a special master to examine the EEOC’s production in camera, to ensure that the Judge Hegarty only reviews discoverable information. 

Background Of The Case

In 2010, the EEOC investigated allegations that the Defendant’s regional manager subjected Wendy Cabrera, and other female employees to repeat and offensive sexual comments and physical touching. One year later, the EEOC initiated claims of sexual harassment, hostile environment, and retaliation, alleging that the Defendant subjected approximately 20 women employees to sexual harassment. Id. at 1. One of the charging parties, Cabrera, claimed that her supervisor solicited sex from her and other women employees. Cabrera also claimed that after she reported the harassment, the Defendant terminated in her in retaliation. The EEOC demanded the Defendant provide back pay and compensatory and punitive damages to the allegedly aggrieved individuals. The EEOC also requested that the Court require the Defendant to initiate anti-discrimination training for its managers and human resource personnel.

In efforts to build its defense, the Defendant requested discovery of the employees’ social media accounts, text messages, and emails. The Defendant argued that such information was relevant to the lawsuit because, for example, Cabrera posted on her Facebook page her hopes to recover $400,000 from the lawsuit; statements about several personal matters; “musings about her emotional state in having lost a beloved pet as well as having suffered a broken relationship; other writings addressing her positive outlook on how her life was post-termination; her self-described sexual aggressiveness; statements about actions she engaged in as a supervisor with Defendant; sexually amorous communications with other class members; [and,] her post-termination employment and income opportunities and financial condition[.]” Id. at 3-4. In objecting to the Defendant’s discovery request, the EEOC asserted that the Defendant’s request was overly broad and intruded on the employees’ privacy.

The Court’s Ruling

The Court ruled on the parties’ discovery dispute and held that the information the employees posted on their Facebook profiles is relevant to the lawsuit and therefore discoverable. Noting that social media presents “thorny and novel issues,” the Court reasoned that the employees’ Facebook postings are discoverable because they may contain information that could lead to discovery of admissible evidence relating to the lawsuit. Id. at 2.

The Court rejected the EEOC’s privacy objections and noted that the employees shared information in a public forum, knowing that it was accessible by other people. Nevertheless, the Court did not disregard the EEOC’s privacy concerns. Instead, the Court selected a forensic expert as a special master to review the requested documents – a process it defined as necessary to “gather only discoverable information.” Id. at 4-5. Following the special master’s review of the social media content and determination of what information is relevant, Judge Hegarty will conduct an in camera review. After Judge Hegarty’s review, he will require the EEOC to produce documents that he finds relevant to the lawsuit. Id. at 5-6. At that point, the EEOC will have an opportunity to conduct a privilege review, and then provide the non-privileged material to the defense counsel along with a privilege log containing any withheld information. Id. at 6.

Implications For Employers

This ruling sheds light on the emerging issue of how to deal with discovery of employees’ social media content. Judge Hegarty tested the waters and implemented a system that appears to be relatively low-cost and efficient. Most importantly, using a special master as a “screener” satisfies the EEOC’s presumed concerns that the employees’ social media content could create a bias in favor of the employer. The ruling in EEOC v. The Original Honeybaked Ham Co. foreshadows discovery battles that relate to social media ― so stay tuned.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

It is a common occurrence when litigating against the EEOC to face controversies concerning the scope of discovery in administrative investigations. After all, discovery can help the EEOC put together the building blocks of its case. Increasingly, the Commission resorts to its subpoena power to launch broad-scale discovery in its administrative investigations. That is why defense counsel in EEOC v. Farmer’s Pride, Inc., 12-MC-148 (E.D. Pa. Oct 31, 2012), vehemently opposed the EEOC’s broad discovery requests and challenged the reach of the agency’s subpoena power. 

In EEOC v. Farmer’s Pride, the EEOC’s subpoena sought two broad categories of documents from the Defendant. In a subsequent subpoena enforcement hearing, Judge R. Barclay Surrick, Jr. issued a mixed ruling that upheld the EEOC’s efforts to subpoena an array of information relating to formal or informal complaints of sexual harassment at the Defendant’s facility. As to the employee contact information that the EEOC requested, Judge Surrick issued a confidentiality order that protected the privacy interests of the Defendant’s employees and in no way interfered with the EEOC’s investigation. Judge Surrick also denied the EEOC’s request to put the cost of litigating the subpoena on the Defendant. 

Although this decision is a mixed bag for employers, it provides some ammunition for employers to contain overboard EEOC demands, which is particularly important given the EEOC’s trend to greatly expand the scope of its investigations as part of its Systemic Initiative.

Background Facts

The EEOC’s investigation arose from a charge of discrimination filed by Christian Ramierez on June 20, 2011. Ramierez alleged that the Defendant discriminated against him on the basis of sex and retaliated against him in violation of Title VII. Specifically, he claimed that his female supervisor harassed him and that she also made comments of a sexual nature to other employees. Id. at 2. Ramierez also alleged that two male supervisors acted “inappropriately” towards women employees. Id. 

During its investigation of Ramierez’s charge, the EEOC requested personnel information for all employees supervised by the alleged harassers. The EEOC also requested “[d]ocuments relating to any and all complaints of sexual harassment, whether made formally or informally, since January 2009.” Id. After the Defendant objected to the EEOC’s overbroad requests, the EEOC issued the Defendant a subpoena to produce the requested documents. Although the Defendant complied with some of the EEOC’s requests, the Commission filed an application that sought to enforce all aspects of its subpoena. The Defendant filed an answer to the application and three days later, both parties attended a hearing on the matter. Efforts to resolve the information request failed and the EEOC asked the Court to enter an order directing the Defendant to comply with the subpoena and grant the EEOC costs for enforcing the subpoena. Id. at 5.

The Court’s Ruling

The Court entered an order directing the Defendant to comply with the EEOC’s subpoena. Despite the Defendant’s contention that the EEOC’s request for documents relating to sexual harassment complaints filed at its facility were overbroad, the Court held that it would not limit the EEOC’s subpoena. The Court relied on the decision in EEOC v. Kronos, Inc., 620 F.3d 287 (3d Cir. 2010) (discussed here) for the proposition that the “EEOC’s investigatory power is broad[]. . . and it need not cabin its investigation to a literal reading of the allegations in the charge.” Id. at 8. Additionally, because the Court found that there had been more than one isolated incident of alleged harassment in the Defendant’s facility, it held that documents relating to such claims were “not unreasonable, and not overly broad” even if they were from departments outside of the area where the alleged harassment occurred. Id. at 10-11.

On the bright side for the Defendant, the Court approved its confidentiality order relating to the employee contact information that the EEOC requested. Specifically, the Court prohibited the EEOC from disclosing to Ramierez or his attorney, “the private contact information, namely addresses and phone numbers of all employees” supervised by one of the alleged harasses during his tenure at the Defendant’s company. Id. at 13-14. The Court reasoned that the Defendant met its burden of establishing good cause that disclosure of the employee contact information would create a serious injury. Because the Defendant submitted evidence that Ramierez’s attorney works for an organization that used employee contact information for union organizing, improper solicitation, and bullying tactics in a separate lawsuit, the Court stated that it “understood [the Defendant’s] concern that the personal contact information of its employees could be used for improper purposes.” Id. at 15. Judge Surrick explained that his “concerns were heightened” at the hearing on the EEOC’s application because the hearing in no way lessened “concerns that the personal contact information of [the Defendant’s] employees — most, if not all, of whom have nothing to do with Ramirez’s sexual harassment claim — could be used improperly.” Id. Thus, the Court granted the Defendant’s order to safeguard its interest in maintaining the confidentiality of the Defendant’s employee data.

Implications For Employers  

EEOC v. Farmer’s Pride reaffirms the EEOC’s broad subpoena power. This is of significant importance because as the EEOC continues to initiate systemic investigations, it increasingly issues requests to employers for nationwide data concerning their personnel and employment practices. Judge Surrick’s decision follows EEOC v. Kronos, 620 F.3d 287 (3d Cir. 2010), and limits available arguments against the EEOC’s subpoena power as a means of forcing employers to turn over their data. On the bright side for employers, however, Judge Surrick granted the Defendant’s confidentiality order – which employers are wise to consider when battling EEOC subpoenas.

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

By Courtney Bohl, Gerald L. Maatman, Jr., and Laura J. Maechtlen

In EEOC v. Princeton Healthcare System, No. 3:10-CV-04126-PGS-DEA, 2012 U.S. Dist. LEXIS 150267 (D.N.J. Oct. 18, 2012), Judge Peter G. Sheridan of the U.S. District Court for the District of New Jersey recently held that the EEOC must adhere to the 300-day limitations period as set forth by Section 706 of Title VII of the Civil Rights Act of 1984 when asserting a pattern or practice of unlawful employment action under Section 707 of Title VII. It is a significant case for employers, and adds to the growing body of case law rejecting the notion advanced by the Commission that it is unrestrained by any statute of limitations in pursuing its claims.

In the Princeton case, the EEOC filed a pattern or practice suit based on Section 706 and Section 707 of Title VII of the Civil Rights Act of 1984 against the employer, Princeton Healthcare System (“PHCS”), alleging violations the Americans With Disabilities Act and the Civil Rights Act of 1991. Id. at *1. The EEOC’s suit rose from its investigation of two charges, one filed by Suzanne F. Nydick on July 31, 2007 alleging discrimination based on sex, and the other by Scott Satow on December 1, 2008 alleging that PHCS failed to offer reasonable accommodation. Id. at *2-3. The EEOC subsequently combined the investigation of Nydick’s and Satow’s charges and filed suit on behalf of Satow and a class of employees and former employees of PHCS based on Satow’s disability claims. Id. at *3.

During the litigation, the EEOC identified Susan Gilli, a former PHCS employee who was terminated in 2006, as a claimant in the action. Id. at *4. PHCS moved for partial summary judgment on all claims related to PHCS’s leave policy that alleged an adverse employment action occurring more than 300-days before the filing of the Satow Charge, including the claim by Gilli. Id. The EEOC argued in opposition to PHCS’s motion for summary judgment that the time for filing charges set forth in Section 706(e)(1) does not apply to lawsuits filed by the agency. Id. at *8. 

Recognizing “divergent rulings” on this issue, the Court found that it was “unable to accept the EEOC’s assertion that the statute of limitations found in Section 706(e)(1) does not apply to claims brought by the EEOC.” Id. at *9. Instead, Judge Sheridan reasoned that “Section 707 commands that parties adhere to the limitations set out in Section 706(e)(1), which clearly bar claims for failure to timely file charges.” Id. The Court then flatly rejected the EEOC’s oft-cited argument on this issue, stating: “[s]imply because the EEOC has a unique role compared to individual plaintiffs alleging unlawful employment practices does not exempt it from the rules plainly laid out in the controlling statutes. There is no sound reason to read exceptions into the statute which do not exist on its face.” Id. at *9-10.

 The EEOC also argued that the continuing violation doctrine should be utilized to render actionable incidents that predate the 300-day charging period.  Id. at *10. Recognizing a split in case law authority, the Court rejected the EEOC’s argument, citing National RR Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002).  Id. In Morgan, the Supreme Court limited the applicability of the continuing violation doctrine, holding that “discrete discriminatory acts are not actionable if time barred, even when they are related to acts alleged in timely filed charges” because each discrete act starts a new clock running for filing a charge. Id. at *10-11. Accordingly, Judge Sheridan ruled that even in a pattern or practice case, “discrete decisions to terminate employment cannot be linked together to create a continuing violation, as a termination occurs on an identifiable date.” Id. at *12. The Court explained, “[t]he fact that this Section 707 action alleges a sort of serial violation involving discrete acts does not convert ‘related discrete acts into a single unlawful practice for purposes of timely filing.’” Id. Hence, the Court determined that “each employment termination by [PHCS], if unlawful, constitutes a distinct violation, and therefore the continuing violation doctrine does not apply.” Id. at *13.

EEOC v. Princeton Healthcare System is another decision that correctly rules that the EEOC is not exempt from the statute of limitations period set forth in 706(e)(1), and requires the EEOC to adhere to that 300-day limitations period in litigating pattern or practice lawsuits. In that respect, it should be tucked away for future use by corporate counsel and all employers facing EEOC litigation claims. The EEOC routinely attempts to litigate time-barred claims in cases across the country, and this ruling joins a growing body of case law that finds the limitations period applies to the EEOC and private plaintiffs alike.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

As we blogged about here, the EEOC stated in its Draft Strategic Enforcement Plan that it is increasingly focused on preventing and, when necessary, litigating workplace harassment allegations. This week the EEOC’s caution came to fruition when the Commission filed a motion for partial summary judgment on allegations of racial harassment in EEOC v. Holmes & Holmes Industrial, Inc., No. 10-CV-955 (DAK) (D. Utah Oct. 10, 2012). The EEOC’s motion is the Commissions first pulse of the fiscal year relating to its regenerated focus on harassment litigation. 

In EEOC v. Holmes & Holmes, the Commission alleges that the Defendant subjected its African-American employees to a hostile work environment. In a lengthy opinion addressing the EEOC’s motion, Judge Dale A. Kimball devoted over 11 pages to the facts surrounding the EEOC’s allegations that the Plaintiffs endured near-constant racial harassment. Despite a manager’s repeated use of the word “nigger” in reference to African-American employees, the Defendant argued that the EEOC’s motion for summary judgment should be denied because the EEOC did not prove the essential elements to prevail on a hostile work environment claim. Judge Kimball agreed with the Defendant and denied the EEOC’s motion. Judge Kimball’s order, however, did not resolve the entire case — if the parties do not settle the lawsuit, the Defendant will face trial on the EEOC’s race-based allegations.

Background Facts

The EEOC alleged that a group of African-American employees - James Buie, Antonio Bratcher, and Joby Bratcher - were subjected to racial harassment nearly every work-day for over two years. Id. at 3. Specifically, the EEOC alleged that the Bratchers and Buies’ manager repeatedly made racial “jokes” and used racial epithets. Id. at 7. Their manager addressed the Bratchers and Buie with the word “nigger” almost daily. Id. at 14. Evidence also established that in addition to verbal harassment, the portable toilets at the Defendant’s company were covered in racist graffiti. Id. at 7. One supervisory staff member described the graffiti as referring to “anyone of any race” and including “everything you can imagine and probably things you can’t imagine.” Id. 

In 2006, Antonio Bratcher handed his supervisor a written complaint about the continual racial harassment. Id. at 5. The Defendant did not investigate Bratcher’s report or take any disciplinary action.  Id. One year later, Joby Bratcher complained to his boss, Ron Holmes, about the job assignments that he received and the way his manager treated him. Id. at 8. Holmes allegedly told the manager to stop the conduct and to apologize to Bratcher. Id. at 24. The alleged hostile work environment continued, and the Bratchers also complained to their co-workers about the racial harassment on numerous occasions. Id.  at 8-9. In 2008, the Bratchers again reported the harassment to Ron and Mike Holmes. Id. at 9. That same day, the Defendant terminated the Bratchers. Id. On behalf of the Bratchers and Buie, and similarly aggrieved employees, the EEOC filed a lawsuit in the U.S. District Court for the District of Utah. The EEOC’s Complaint asserted that the Defendant’s created and condoned a racially hostile work environment and then fired its employees in retaliation for complaining about the racial harassment. Subsequently, the EEOC moved for partial summary judgment on the issue of whether the Defendant subjected Buie and the Bratchers to a hostile work environment. Id. at 12. 

The Court’s Ruling

To prevail on a hostile work environment claim, the EEOC must prove that the work environment was both objectively and subjectively hostile. The Court considered the two prongs in turn. As to the objective element, the Court held that no reasonable jury could conclude that the Bratchers’ and Buie’s work environment “was not permeated with discriminatory intimidation, ridicule, and insult, that [was] sufficiently severe or pervasive to alter the conditions of [their] employment and create an abusive working environment.” Id. at 17 (internal citations omitted). Thus, the EEOC passed the hurdle of establishing that the discrimination was objectively hostile. The EEOC’s motion therefore hinged on its ability to prove that the Bratchers and Buie subjectively perceived their work environment as hostile or abusive. Id. at 18. To that end, the Defendant argued that the Bratchers and Buie were not bothered by their manager’s racist conduct because they were “all friends[.]” Id. at 21. The Court noted that a few witnesses testified that they did not believe that the Bratchers and Buie were offended by the racist conduct. Despite the “significant evidence that the Bratchers and Buie were offended by [their manager’s] conduct,” the Court stated that “there [was] also some limited evidence that they were not.” Id. at 21-22. As all it takes to defeat a motion for summary judgment is a material question of fact, and because a question remained as to whether the Bratchers and Buie were offended by their manager’s conduct, the Court denied the EEOC’s motion for summary judgment.

The Defendant’s Liability

In attempt to reach the Defendant’s “deep pockets,” the EEOC set forth two avenues to hold the Defendant liable for the alleged racially hostile work environment. First, the EEOC argued that the Defendant is liable for “negligence in tolerating and/or condoning a racially hostile environment because the Bratchers and Buie complained at least eleven different times and no appropriate action was ever taken.” Id. at 22. To hold the Defendant liable under a negligence theory, the EEOC needed to prove that the Defendant knew or should have known about its employees’ conduct and failed to respond in an appropriate manner. Id. The Court reasoned that the numerous times the employees complained about the harassment was clearly enough evidence to “demonstrate actual or constructive notice of the racially hostile environment.” Id.  The Court concluded that whether the Defendants responded in a reasonable manner, however, remained a question of fact for the jury to determine. Thus, the Defendant escaped liability – for now – under the EEOC’s negligence theory.

The EEOC covered all of its bases and also argued that it could hold the Defendant responsible for the alleged hostile work environment under a vicarious liability theory. Under vicarious liability, an employer may be held liable for an actionable hostile environment created by a supervisor with immediate authority over the employee. The Court considered whether the Defendant could establish the two elements necessary to prevail in asserting an affirmative defense – that it exercised reasonable care to prevent and correct promptly any racially harassing behavior, and that the employees unreasonably failed to take advantage of any preventative or corrective opportunities. Id. The Court held that the Defendant did not exercise reasonable care to prevent harassment because its policy on harassment merely stated that someone who feels that they are harassed should “immediately notify his/her supervisor.” Id. at 26-27. The Court reasoned that the defect in the Defendant’s policy was that it did not provide an avenue for employees to make a complaint about a harassing supervisor. Furthermore, because the Bratchers and Buie complained about the race harassment on numerous occasions, the Defendant could not establish that they failed to take advantage of corrective opportunities. Therefore, the Court held that the EEOC could hold the Defendant vicariously liable for the alleged hostile work environment.

Implications For Employers

Although the Defendant in EEOC v. Holmes & Holmes escaped the EEOC’s motion for partial summary judgment, the EEOC emerged from the Court’s ruling with leverage over the Defendant because if a jury finds that there was a hostile work environment, the EEOC can hold the Defendant liable. Thus, even though majority of the ruling in this case focused on the EEOC’s hostile work environment allegations, the existence of such claims would have had little impact on the Defendant if the EEOC could not establish that the Defendant was negligent or vicariously liable for its employee’s actions. 

This case should be a reminder to employers that when employees complain about workplace harassment, the employer is well-served if it takes prompt action. Implementing a policy that requires an investigation of reported workplace harassment or discrimination can aid in avoiding employer liability, and also work toward the goal of discrimination-free workplaces. Additionally, the Defendant may have avoided vicarious liability for its employees actions if it put in place a clear, comprehensive policy that listed numerous people to which its employees could report alleged harassment. 

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

Since the inception of the EEOC’s Systemic Initiative in 2005-2006, the EEOC has traditionally launched large salvos of federal court complaints across the country in the waning weeks of its fiscal year (which closes on September 30 of each year). Last year, the EEOC’s filings ran the gamut of legal theories ranging from protected classes to targeted employment practices. As we reported here, the EEOC revved its engine in the last eight weeks of its 2011 fiscal year filing an astonishing 175 lawsuits in this compressed time period. 

Fiscal Year 2012, however, was different.

The EEOC’s FY 2012 Filings

The Commission’s frenetic FY 2011 year appeared to prompt a different approach to litigation in 2012. The EEOC’s already strained budget was further tested by pursuing an unprecedented number of federal court filings and systemic investigations. FY 2012 called for a more thoughtful approach to its litigation strategy. The EEOC commented publically that it planned to file fewer large scale cases and develop a more coordinated national approach to the cases is did file. The EEOC’s goals left employers wondering if the last few weeks of FY 2012 would be another dash to the finish line.

On September 30, 2012, the EEOC’s fiscal year ended, and the tallies are now in. We understand that the total number of cases filed in FY 2012 is approximately 122. That means that the during FY 2012, the EEOC filed less half of the cases it filed in FY 2011. Although the EEOC did once again significantly ramp up its year-end filing machine, the year-end sprint started much later in the year - indeed, in August and September of 2012 alone, the EEOC filed 67 of its 122 lawsuits. This was a far cry from the 175 suits filed in the EEOC’s 2011 year-end filing period.

As we have discussed here, the driving force to the EEOC’s future litigation strategy is its Strategic Enforcement Plan. Looking at the EEOC’s FY 2012 filing statistics next to its Draft Strategic Plan provides insight into where the EEOC is headed. For instance, the types of EEOC claims filed in FY 2012 are notable. The EEOC has committed to focus on ADA and pregnancy issues, just to name a couple. A quick review of the EEOC’s FY 2012 filings suggests it has already been ramping up to make good on those committments:                               

What does this mean? This fiscal year, the EEOC plans to push for quality over quantity, with a more sniper-like focus on those cases it has already brought. We have already seen an EEOC that is learning how to litigate complex cases smarter and more efficiently. With fewer cases to litigate, and thus more resources to allocate to those matters, we expect the government will be an even more formidable litigation opponent.

What To Expect During FY 2013

The filing arising out of FY 2012 matters may not be over. The EEOC has publically stated that, while it may not have the same year-end push in FY 2012, the agency intended to charge out of the gates in FY 2013. We have seen the EEOC’s warning come to fruition. While the first week of October is usually an almost silent week for the agency, there have already been several fillings in the first week after the close of FY 2012. The EEOC’s path to filing cases during the remainder of FY 2013, however, remains turbulent in light of the upcoming presidential election. Although filing a federal court complaint is relatively inexpensive, staffing and litigating the EEOC’s 122 cases comes at a high price. To that end, President Obama recently signed into law a stop-gap budget to fund the EEOC $360 million - a modest increase over FY 2012 - from October 1st to March 27, 2013, apparently designed to cover the rest of any potential lame-duck presidency. A new administration may spell big changes for the EEOC. Even  post-election priorities of the incumbent administration may still result in budget cuts, or possibly a resource windfall. The EEOC is waiting like the rest of us to see what happens next.

There are more lessons to learn from FY 2012. The EEOC will publish its official filing and charge statistics either this month or early November. Check back in with the Workplace Class Action Blog, as we will provide a more fulsome discussion upon receipt of the EEOC’s numbers. We are also keeping tabs on the EEOC as we wait for its third iteration of the Draft Strategic Plan, which will function as the blueprint for the Commission’s enforcement activity for the next several years. We have blogged about the Draft Plan numerous times (here, here, here, and here) and submitted two letters to the EEOC providing recommendations for ways in which it can better achieve its goals (available here and here). The Commission will likely publish the third draft of the Strategic Plan sometime this month. The significant revisions from first draft to second promises even more surprises in the third sequel to this important strategic plan. Stay tuned.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

The explosive ruling in EEOC v. CRST Van Expedited, Inc., 670 F.3d 897 (8th Cir. 2012), in which the Eighth Circuit reversed and remanded the U.S. District Court for the Northern District of Iowa’s order that sanctioned the EEOC a whopping $4.5 million, is easily a contender for our “Top 5 Most Intriguing Decisions In EEOC Cases Of 2012.” (Click here for a discussion of our 2011 choices). 

In EEOC v. CRST, the Commission filed suit on behalf of a charging party and a class of approximately 270 similarly-situated female employees who the EEOC alleged had suffered sexual harassment in violation of Title VII. The charging party later intervened in the lawsuit, as did two other individual plaintiffs. CRST moved for summary judgment on a number of grounds, including that the alleged victims were not subject to conduct rising to the level of harassment and had not availed themselves of the company’s complaint mechanisms. CRST also argued that certain class members and the EEOC were precluded from pursuing the claim because of a failure to disclose the claims in earlier bankruptcy proceedings. Importantly, CRST also sought dismissal of all claims based on the EEOC’s failure to identify, investigate, and conciliate on behalf of dozens of its purported “class” members. The U.S. District Court for the Northern District of Iowa ruled in CRST’s favor and dismissed the entire action. It subsequently entered a whopper of fee sanction award - of nearly $4.5 million against the EEOC - in EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 (N.D. Iowa 2010). 

We have blogged about EEOC v. CRST on numerous occasions, beginning with the Eighth Circuit’s opinion and judgment on February 22, 2012 in which it affirmed the District Court’s holding that the EEOC had failed to adequately investigate and conciliate before filing suit. The Eighth Circuit's decision admonished that the EEOC cannot use discovery as a way to find its class members, but instead the EEOC must identify its class members during its investigation and then must conciliate those claims before filing suit. On the other hand, the Eighth Circuit reversed the District Court’s grant of summary judgment on the EEOC’s claims as to the charging party who had failed to disclose her claims in bankruptcy proceedings, holding that the EEOC sued in its own capacity, and was not bound to a judicial estoppel theory applicable to the claimant/intervener. The District Court therefore held that CRST was not a “prevailing party” in the case at large. As a result, the Eighth Circuit reversed the award of $4.5 million in fees and expenses. 

Following the three-judge panel’s decision, the EEOC petitioned for reconsideration of the ruling and requested review by the Eighth Circuit’s full panel of eleven judges. On May 8, 2012, the Eighth Circuit granted the EEOC’s petition and vacated its well-known February 22, 2012 opinion and judgment - containing the same resounding criticism of the EEOC’s “sue first, ask questions later.” We discussed the implications of the Eighth Circuit’s May 8 decision and how the ruling in EEOC v. CRST is a significant defeat for the Commission’s tactical approach to systemic litigation. 

On the heels of the EEOC’s resounding loss and at the hands of the Eighth Circuit panel, the EEOC renewed its petition for rehearing - again requesting the full Eighth Circuit panel’s opinion and judgment - just one day after its loss. We blogged about the implications of the EEOC’s renewed petition, and how the EEOC demonstrated that it would not go down without a fight.  In June of 2012, the Eighth Circuit put the issue to rest and rejected the EEOC’s bid for rehearing en banc.

Recent Developments In EEOC v. CRST

The EEOC’s focus on large-scale, high-impact and high-profile investigations and cases led many to assume that the EEOC would exhaust every available avenue to undermine the Eighth Circuit’s decision in EEOC v. CRST. To that end, we have rather surprising news of the Commission’s about face. Recently, the EEOC opted not to file a petition for certiorari to the U.S. Supreme Court to review the Eighth Circuit’s ruling, and the Eighth Circuit issued its mandate.

The recent developments in EEOC v. CRST have significant implications for CRST because the Eighth Circuit’s ruling that dismissed almost all of the claims against CRST is left in place. As for a broader impact, employers can continue to rely on EEOC v. CRST for the proposition that the EEOC must identify every potential “class” member before filing suit. This is good news for employers, as the decision is a powerful broad-side to attack the EEOC’s systemic litigation tactics.

For more discussion regarding the EEOC’s investigation and litigation tactics, check out our recent submission to the EEOC that provides recommendations to the EEOC for ways in which it can better achieve the goal of discrimination-free workplaces while not disregarding employer interests and involvement in the process.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

On September 13, 2012, Judge Ed Kinkeade of the U.S. District Court for the Northern District of Texas granted the Defendant’s motion for summary judgment in EEOC v. Exxon Mobil Corp., No. 06-CV-1732 (N.D. Tex. Sept. 13, 2012), on the EEOC’s allegations of age discrimination in violation of the ADEA. Judge Kinkeade considered a plethora of motions, including motions to strike expert witnesses, a motion to extend a deadline, and summary judgment motions from both the EEOC and the Defendant. Perhaps most significant to readers of the Workplace Class Action Blog, however, is Judge Kinkade’s reasoning in rejecting the EEOC’s allegations of age discrimination.

Factual Background

The Defendant employs 27 pilots who fly all over the world with job responsibilities similar to those of commercial pilots. Id. at 14. The pilots fly nine different types of jets, including Bombardier Global express jets and Bombardier Challenger jets.  The Defendant’s company wide-policy requires pilots to involuntarily retire when they reach their 60th birthday. Id. at 2-3. Based on this policy, the EEOC filed a complaint against the Defendant alleging that it discriminated against its employees in violation of the ADEA. Id. at 13. The Defendant contested the EEOC’s charges, and relied on a FAA rule that prohibits a pilot from flying after they reach a particular age. The Defendant argued that the FAA rule is sufficient evidence that its policy was a bona fide occupational qualification (“BFOQ”) reasonably necessary for the normal operation of its business. Although it sounds a bit like alphabet soup, under the ADEA, if a Defendant can establish that its policy (which has a discriminatory effect) is also a BFOQ, then the Defendant is released from liability under the ADEA. Relying on this exception, the Defendant asserted that it was not unlawful for it to require pilots to retire when they reached the age of 60.

On August 31, 2007, the Defendant filed a motion for summary judgment. The District of Texas granted the Defendant’s motion and dismissed the case with prejudice. Id. at 3. The EEOC appealed the case to the U.S. Court of Appeals for the Fifth Circuit, which vacated the District Court’s judgment and remanded the case on the grounds that the District Court did not allow sufficient discovery on the issue of BFOQ’s. Id. at 3-4. 

The Court’s Ruling

On remand, the District Court considered whether the Defendant could conclusively establish a continuing validity of the rationale supporting its policy that required employees to retire at the age of 60. Judge Kinkade noted that to “conclusively establish continuing validity, [the Defendant] must set forth evidence that shows that no testing existed to predict when or if an over-age-60 pilot might experience a medical event that could jeopardize aviation safety.” Id. at 15. Based on the fact that “the risk of sudden incapacitating evens increases with age and no test can identify if or when that event may occur, and because the EEOC has failed to set forth any evidence to the contrary,” the Court reasoned that the Defendant presented sufficient evidence to establish that its age-based rule is continually valid. Id.

The Court opined that the burden then rested with the EEOC to present evidence to raise a question of fact regarding the continuing validity of the Defendant’s policy. The Court found that the EEOC failed to do so because it did not present “any evidence that medical testing exists that could identify those individuals over a specified age that are at risk of sudden incapacitation.” Id. at 17. Thus, because the “weight of the evidence” supported the Defendant’s age-based rule, the Court granted the Defendant’s motion for summary judgment and dismissed the EEOC’s lawsuit. Id. at 20.

Implications For Employers

The Defendant in EEOC v. Exxon Mobil Corp. won the case based on the evidence it entered to the record. The EEOC was unable to rebut or challenge the BFOQ defense. Persistence pays off, as the defense ultimately a hard fought battle against the Commission.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

While we usually post about “hot off the press” federal decisions in employment-related class action litigation, today we highlight litigation that is still simmering in the pleadings stage. In EEOC v. United Parcel Service Inc., No. 09-CV-05291 (N.D. Ill. Sept. 28, 2011), Judge Robert M. Dow Jr. of the U.S. District Court for the Northern District of Illinois partially dismissed the EEOC’s claim that the Defendant, UPS, systematically discriminated against disabled employees in violation of the Americans With Disabilities Act (“ADA”). The EEOC’s case is hanging by a thread, but the Commission is still holding on. In a last resort effort, yesterday the EEOC field a motion seeking permission for an interlocutory appeal on a key issue underlying EEOC pattern or practice litigation that Judge Dow decided adversely to the Commission - the extent to which the EEOC may pursue claims on behalf of unknown claimants (often called “class members” by judges and litigants, even though EEOC pattern or practice cases are not governed by Rule 23 and are not class actions) allegedly injured by an employer’s policy.

In most cases, an appeal is not made until a final ruling on all of the issues - i.e., after the judge grants a motion to dismiss kicking the case out entirely or grants a motion for summary judgment. But, in rare circumstances, a judge may grant permission for a party to seek an interlocutory appeal, allowing the litigant to ask the court of appeals to review the narrow issue at hand. Courts grant interlocutory appeals sparingly ― only in extraordinary circumstances that would prevent the case from being properly decided if the appeal was not heard. In fact, in 2000, Judge Posner of Seventh Circuit noted: “Since the beginning of 1999, this court has received 31 petitions for interlocutory appeal under . . . § 1292(b) and has granted only six of them.” See Ahrenholz v. Board of Trustees of University of Illinois, 219 F.3d 674, 675 (7th Cir. 2000). So the EEOC’s motion is the proverbial “Hail Mary” pass.

Background Of The Case

In August, 2009, the EEOC brought suit against UPS alleging that it unlawfully terminated its employees after they spent a year on disability leave, in violation of the ADA. The EEOC only named two employees that UPS allegedly discriminated against - Trudi Momsen and Mavis Luvert. Yet, the EEOC also alleged that UPS systemically discriminated against “hundreds” of employees nationwide. In its Complaint, and subsequent legal papers, however, the “hundreds of employees” remained unnamed. UPS moved to dismiss the EEOC’s claims for the unnamed claimants and Judge Dow granted in part and denied in part UPS’ motion to dismiss. Specifically, Judge Dow dismissed the EEOC’s claims asserted on behalf of the unidentified class members, holding that the EEOC lacked sufficient facts to plead a case for such employees, and only permitted the case to proceed on behalf of Plaintiffs Momsen and Luvert. 

The EEOC’s Interlocutory Appeal

The EEOC sought leave to appeal Judge Dow’s ruling and this week, it submitted a motion requesting that the Court certify its request for review by the Seventh Circuit. The EEOC grounded its interlocutory request on the fact that “whether the EEOC can challenge the application of a common policy under the ADA without identifying all of the victims in its Complaint is a controlling legal question of first impression[.]” Id. at 1. The EEOC noted that “there are relatively few ADA cases that discuss the pleading standard post-Twombly and Iqbal, and there are no post-Twombly/Iqbal cases that require an ADA plaintiff alleging a common violation to state a prima facie case for each class member in order to survive a motion to dismiss.” Id. at 3 (emphasis in original). The EEOC also claimed that if the Court rejected the appeal, “the implications of this decision are so significant that . . . EEOC will be forced to take this case to trial in order to be able to appeal it. In this way, the parties are precluded from the possibility of settlement - the most common and effective method for resolving litigation short of trial.” Id. at 4-5. 

Implications For Employers

Will Judge Dow permit the EEOC’s interlocutory appeal? Either way, Judge Dow’s decision is important because it will impact the few decisions post Bell Atlantic Corp. v. Twombly, 550 U.S. 662 (2009) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), that discuss the impact of heightened pleading standards on ADA-related cases. We will continue to monitor the proceedings in this significant case, so stay tuned.

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

By Christopher DeGroff and Gerald L. Maatman, Jr.

This past week the Tenth Circuit affirmed another fee sanction against the EEOC, and struck down the EEOC’s attempt to litigate questionable (at best) issues under the Americans With Disabilities Act in EEOC v. TriCore Reference Laboratories, No. 11-CV-2096 (10th Cir. 2012). The Tenth Circuit affirmed the U.S. District Court for the District of New Mexico’s grant of summary judgment to the employer, TriCore, and dismissed the EEOC’s lawsuit. The three-judge panel also affirmed the District Court’s grant of $140,571.62 in attorneys’ fees against the Commission. Perhaps most significant, the Tenth Circuit ordered the EEOC to pay additional attorneys’ fees for the Commission’s unfounded appeal.

The Tenth Circuit’s decision joins a substantial and growing line of case law authority reflecting judicial intolerance for hardline litigation tactics by the EEOC. Just a month earlier, the Tenth Circuit dismissed a similar lawsuit where the EEOC asserted that the defendant discriminated against its employee in violation of the ADA. See EEOC v. The Picture People, Inc., No. 11-CV-1306 (10th Cir. 2012), discussed here and here.

Background Of The Case

In EEOC v. TriCore, an employee, Wagoner-Alison, has surgery on her foot and ankle and took leave under the FMLA to recover. Id. at 3. Wagoner-Alison exhausted her FMLA leave, and TriCore granted her additional time off to comply with her doctor’s orders. Id. at 4. Her doctor indicated that once Wagoner-Alison returned to work, she would have certain restrictions – including keeping her foot elevated. Id. at 4. Upon Wagoner-Alison’s return to work, she could not perform the essential functions of her job. Although not required by under the ADA, TriCore assigned Wagoner-Alison a new set of duties – essentially creating a job for her. Id. During Wagoner-Alison’s thirty-day trial period, she made “many errors that threatened patient safety[.]” TriCore coached her about the errors and after she did not improve, it placed Wagoner-Alison on unpaid leave for three weeks. At that point, TriCore encouraged Wagoner-Alison to apply for other internal positions with the company. Id. However, she did not do so. Rather, Wagoner-Alison applied – and received – Social Security disability benefits. TriCore later fired Wagoner-Alison.

The EEOC sued and claimed that TriCore failed to reasonably accommodate Wagoner-Alison’s disability and ultimately terminated her based on her disability in violation of the ADA. TriCore moved for summary judgment, arguing that Wagoner-Alison could not perform the essential functions of her job, with or without accommodation. Id. at 5. The District Court granted TriCore’s motion, finding the EEOC offered nothing to refute TriCore’s evidence demonstrating it provided reasonable accommodations to the employee and that her poor performance was a legitimate, nondiscriminatory reason for her termination.

TriCore filed a motion for an “Order Deeming the EEOC’s Claims as Frivolous, Unreasonable, or Without Foundation.” Faulting the EEOC’s continued litigation, despite having received notice and evidence from TriCore that the Commission’s claims were meritless, the District Court granted TriCore’s motion. Subsequently, TriCore filed a Motion for Attorneys Fees totalling $140,571.62, which the District Court granted – and about which we previously blogged about here.

On appeal, the EEOC argued that the District Court abused its discretion in granting attorneys’ fees to TriCore because neither the EEOC’s “termination claim nor its accommodation claim were frivolous at any point in the proceedings.” Id. at 11.

Basis Of The Tenth Circuit’s Ruling

Noting that the EEOC continued to litigate its claims “after it became clear that there were no grounds upon which to proceed[,]” the Tenth Circuit affirmed the District Court’s award of attorneys’ fees to TriCore. The Tenth Circuit reasoned that the EEOC ignored clear signs that it should have stopped pursuing its ADA claims. The Tenth Circuit explained that through discovery, Wagoner-Alison and the EEOC admitted that she could not stand or walk – both of which are essential functions of her job. TriCore even sent a letter to the EEOC explaining why its claims were factually insufficient and notifying the EEOC that it “would file a motion for summary judgment and would ask for attorney’s fees if the EEOC did not dismiss the lawsuit.” Id. at 12-13. Based on those key facts, the Tenth Circuit affirmed the District Court’s award of $140,571.62 in fees and costs.

The Tenth Circuit also held that under Fed. R. App. P. 38, the Court “may award damages and costs if an appeal is frivolous.” Id. at 13. The Tenth Circuit hung its hat on TriCore’s argument that the EEOC’s appeal was frivolous because it did “not even argue that the district court erred in determining the EEOC failed to establish a prima facie case of ADA discrimination.” Id. at 13. Agreeing with TriCore, the Tenth Circuit remanded the case to the District Court for a determination of additional attorneys’ fees.

Implications For Employers

The ruling in EEOC v. TriCore joins a growing number of cases that suggest a growing intolerance for the EEOC’s unfounded litigation tactics. On our blog, we have tracked awards of defense fees in litigation with the EEOC. For example, in EEOC v. Peoplemark, Inc., No. 08-CV-907 (W.D. Mich. Mar. 31, 2011), the Court awarded the employer $219,350.17 in attorneys’ fees for the EEOC’s questionable litigation tactics (discussed here). More recently, in EEOC o/b/o Serrano, et al. v. Cintas Corp., No. 04-CV-40132, 2012 U.S. Dist. LEXIS 86228 (E.D. Mich. Aug. 4, 2011), the Court ordered the EEOC to pay over $2.6 million in fees and costs (discussed here). The Court relied on the ruling in EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 (N.D. Iowa 2012), rev’d and remanded, 679 F.3d (8th Cir. 2012), where the court entertained motions for $4.5 million in attorneys’ fees (discussed here, here, and here). Employers should add EEOC v. TriCore to the list of decisions that hold the Commission liable for what at least this Court called “frivolous” and “unfounded” litigation tactics.

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

By Rebecca Bjork, Courtney Bohl, and Laura J. Maechtlen

On August 7, 2012, Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina “knocked out” the EEOC’s lawsuit against Propak Logistics, Inc. (“Propak”) - in EEOC v. Propak Logistics Inc., No. 1:09-CV-311 (W.D.N.C. Aug. 7, 2012), - due to the EEOC’s unreasonable and prejudicial delay in prosecuting the suit. The Court found the EEOC dealt Propak a “double fisted blow” by delaying the initiation of the lawsuit, as the passage of time hindered Propak’s ability to prevail on the merits while at the same time inflating the potential damages Propak faced if it did not prevail.

This ruling is a win for any employer forced to go head to head with the EEOC as it gives employers an additional strategy to use to potentially dismiss a suit against them. Further, it establishes good case law on the laches defense.

Facts of the Case

In EEOC v. Propak Logistics, Inc., the EEOC brought an action pursuant to Title VII of the Civil Rights Act of 1964 (“Title VII”) alleging Propak refused to hire non-Hispanic persons for non-management positions at a Wal-Mart distribution center.

Before the lawsuit was filed, and beginning in 2003, the EEOC conducted an investigation of the charge of discrimination. The investigation included an initial interview with the Charging Party in August 2003, an interview of Propak’s witness in August 2003, several requests for information from Propak during the period of May 2003 to September 2008, interviews with Propak’s management in April 2004, interviews of potential class members in May and June 2006, and subpoenas issued by the EEOC to third-party entities in late 2007. Id. at 6-15. Nearly five years after the initial charge was filed, the EEOC issued a right to sue letter to the Charging Party in February 2008. Id. at 11. Following dismissal of a lawsuit filed by the Charging party, a letter of determination from the EEOC finding reasonable cause of discrimination, and “conciliation failure” as declared by the Commission, the EEOC filed its lawsuit in August 2009 — almost one year after it declared conciliation failure, and seven years after the Charging Party filed a charge of discrimination. Id. at 12-13.

Propak filed a motion for summary judgment on the defense of laches, arguing that the EEOC’s delay was unreasonable and materially prejudiced Propak’s defense of the lawsuit.

The Court’s Ruling

To prevail on the equitable defense of laches, the Court reasoned that Propak was required prove: (1) lack of diligence by the EEOC, and (2) that Propak suffered undue prejudice as a result. Id. at 16.

In analyzing the first prong, the Court noted that “lack of diligence” is satisfied where a plaintiff’s delay is unreasonable. Id. The EEOC conceded that there was an almost seven year delay between the filing of the initial charge of discrimination and the filing of its lawsuit, but argued that the delay was not “unreasonable” because it was actively investigating the charge throughout the seven year period. Id. The Court rejected the EEOC’s argument, noting that there is not a particular period of time that is per se unreasonable, but that seven years was too lengthy. Id. at 18. The Court determined that even fairly consistent activity by the EEOC during an investigation would not be sufficient to avoid laches if the nature and quality of the investigation do not justify the delay. Id. The Court then noted that, in the case of Propek, there were significant periods where the EEOC took little or no action toward completing the investigation, and compared the EEOC’s lengthy investigation to an investigation of the same charge conducted by the Department of Justice, which was initiated and completed in less than one year. Id. at 19. Based on all the evidence, the Court concluded that the EEOC’s delay was unreasonable. Id. at 21.

Next, the Court considered whether Propak was prejudiced by the unreasonable delay. Id. at 21. The Court noted that the “classic” elements of undue prejudice include unavailability of witnesses, changed personnel, and the loss of pertinent records. Id. at 21-22. In support of its position, Propak argued that its two key witnesses, hiring mangers during the relevant period, as well as other former employees, were no longer with the company and could not be located. Id. at 22. Additionally, the personnel records for the Charging Party were no longer available. Id. at 24. Although the EEOC argued Propak was obligated by regulation to gather and retain the records of all its employees until the charge was completely resolved, the Court found this argument unavailing noting,“[a]s a matter of law, [Propak] does not have an obligation to maintain its employee records indefinitely after the filing of a charge with the EEOC. Id. at 25.

Finally, Propak argued that the EEOC’s delay in prosecuting the suit increased Propak’s potential liability for back pay to a class of individuals. Id. at 27. Because the EEOC delayed in its investigation, the potential back pay award for each class member increased daily. Id. Taking Propak’s arguments into consideration, the Court noted that “the EEOC has dealt [Propak] a double-fisted blow. The passage of time has hindered [Propak] in [its] ability to prevail on the merits while at the same time inflating the potential damages [Propak] face[s] if [it] do[es] not prevail.” Id. Finding sufficient evidence of material prejudice, the Court dismissed the EEOC’s lawsuit against Propak with prejudice.

Implications For Employers

The Court’s ruling in EEOC v. Propak Logistics, Inc. punctuates a trend of judicial intolerance for lengthy EEOC delays in pursing lawsuits against employers. Employers faced with several “rounds” of EEOC investigations, and lengthy delays during the administrative process, can use this case (among others), to achieve a “total knockout” of EEOC litigation.

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

By Gerald L. Maatman, Jr. and Laura Maechtlen

The U.S. District Court for the District of Nevada recently issued an opinion in EEOC v. Prospect Airport Services, Inc., U.S. Dist. LEXIS 103256 (D. Nev. July 25, 2012), which granted the EEOC sweeping injunctive relief and ordered the Defendant to implement steps to deter future violations of sexual harassment. The EEOC immediately trumpeted the ruling with a press release. The ruling provides some important guidance on the extent to which the EEOC can secure injunctive relief, and the threat employers face for such claims in EEOC-initiated litigation.

The Commission brought suit against Prospect Airport Services, a provider of wheelchair assistance services to airline passengers, on behalf of its employee, Rudolpho Lamas, who worked for the Defendant at a Las Vegas airport. The EEOC alleged that a female co-worker sexually harassed Lamas for over a year, and that the Defendant’s general manager failed to respond to Lamas’ complaints. In 2007, the Court dismissed the case on summary judgment. Subsequently, the Ninth Circuit reversed the dismissal and remanded the case for trial. Three days before trial, the parties entered a $75,000 settlement agreement. The Defendant’s payment, however, did not completely dispose of the case. Prospect refused to agree to any prospective relief to prevent future harassment, which forced the EEOC to petition for an injunction. The Court relied on the language of the settlement agreement and the seven year case history in issuing a lengthy order of injunctive relief against the Defendant. 

Background Of The Case

After receiving sexually suggestive notes from a female co-worker, Lamas, a male employee, brought the notes to a general manager working for the Defendant. The general manger allegedly did nothing.  The harassment intensified and the co-worker made verbal advances and gave Lamas a semi-nude photo of herself.  Lamas rebuffed his co-worker’s continual harassment. Lamas also claimed that other employees made remarks about his sexuality. In 2003, after Lamas was allegedly harassed for over a year, he finally resigned.

Two years later, the EEOC filed suit against the Defendant for subjecting Lamas to a hostile work environment in violation of Title VII. Almost immediately, the Defendant took remedial actions to prevent further unlawful conduct at its company. Id. at *7. Years of dispositive motions, appeals, and even trial preparation ensued. Days before trial, the parties reached a $75,000 settlement agreement, leaving only the question of non-monetary sanctions. Id. at *2. The Defendants refused to include any mention of prospective relief to prevent future harassment in its settlement agreement. Subsequently, the EEOC petitioned the Court for an injunction.

The Court’s Ruling

The Court noted two key points. First, Defendant had “taken substantial efforts [during the time since the lawsuit was filed] to ensure compliance with the sexual harassment provisions of Title VII.” Id. at *2. Second, all of the individuals involved with the harassment of Lamas had left Prospect by mid-2006. Id. at *3. However, in the Court’s analysis, these factors did not counsel against the EEOC’s motion.

In passing on the EEOC’s motion, Judge Kent J. Dawson determined that he was “convinced that injunctive relief is necessary in this case.” Id. at *8. Explaining that he could not issue injunctive relief “unless there is a cognizable risk of recurrent violations[.]” Judge Dawson  reasoned that the “Defendant’s failure to responsively investigate and remedy the sexual harassment was not accidental.” Id. at *5, *8. Further, the Court determined that these actions were “insufficient assurances that Defendant will not repeat the violation.” Id. at *7. In efforts to deter sexual harassment violations at the Defendant’s company, the Court enjoined prospective Title VII violations relating to sexual harassment for five years. The Court also ordered the Defendant to develop and implement an anti-harassment policy regarding sexual harassment at all of its facilities; an impartial investigation process of complaints of sexual harassment; disciplinary measures for employees that fail to comply with the investigation process; and mandatory annual training for all supervisors. Id. at *8-10. 

Implications For Employers

The Defendant in EEOC v. Prospect Airport Services, Inc. must abide by the Court’s injunction for five years. That is a long lesson to learn. The ruling is a reminder to employers that monetary settlements do not always dispose of a case, especially litigation with the EEOC. 

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

By Courtney Bohl and Laura J. Maechtlen

On June 28, 2012, Judge Thomas D. Schroeder of the U.S. District Court for the Middle District of North Carolina gave employers an additional tool for combating an increasingly common EEOC practice of dragging out investigations and the initiation of lawsuits. Judge Schroeder’s decision in EEOC v. PBM Graphics Inc., Case No. 1:11-CV-805 (M.D.N.C. June 28, 2012), addressed, among other issues, prejudice employers may face when the EEOC unreasonably delays pursing a Title VII claim. Judge Schroeder’s opinion is important for employers facing EEOC litigation after lengthy investigations into Title VII violations and seeking to utilize the doctrine of laches.

Background Of EEOC v. PBM Graphics Inc.

In October 2005, the EEOC filed a charge against PBM Graphics Inc. (“PBM”) alleging PBM engaged in employment discrimination by favoring Hispanic workers over non-Hispanic workers in its work-assignment practices. Id. at 35. The EEOC subsequently sent PBM notice of the charge and began its investigation. Id. at 35-36. During the EEOC’s investigation, the EEOC sent PBM numerous requests for information relating to the allegations in the charge. Id. at 36-37. PBM received and responded to the EEOC’s requests for information for more than four years - from December 2005 through February 2010. Id. at 35-42. In late February 2010, the EEOC concluded its investigation, finding evidence that PBM had discriminated against individuals on the basis of race or national origin. Id. at 42. The EEOC issued its Letter of Determination and invited PBM to conciliate. Id. Conciliation efforts failed and, in September 2011, almost six years after the initial charge was filed, the EEOC brought suit against PBM alleging PBM engaged in a pattern or practice of discrimination of favoring Hispanic workers over non-Hispanic workers in violation of Title VII. Id. at 47.

PBM moved for summary judgment on the grounds, among other things, that the equitable doctrine of laches barred the EEOC’s suit. Id. at 57.

The Court’s Ruling

In considering PBM’s motion for summary judgment, the Court noted that Congress did not establish a statute of limitations for civil actions brought by the EEOC, but where the EEOC’s inordinate delay in litigating a dispute significantly prejudices an employer courts have the authority to “locate a just result.” Id. at 57. The defense of laches requires a defendant to prove lack of diligence by the party against whom the defense is asserted, and prejudice to the party asserting the defense. Id. at 57-58. As to the first element, the Court noted the EEOC waited nearly six years between the filing of the charge and the commencement of the lawsuit. Id. at 61. Additionally, the EEOC failed to account for why it needed such lengthy amounts of time to conduct the investigation. Id. Because of this, the Court held this delay was not only lengthy, but unreasonable. Id. at 62. PBM thus satisfied the first element.

As to the second element, the Court was unable to find PBM was prejudiced on the present facts because the EEOC had yet to fully explain its theory of its case, disclose how it calculated evidence of discrimination, or disclose which employees were allegedly discriminated against. Id. at 65. The Court noted that although PBM pointed to particular employees who had faded memories of events, passed away, and left its employment, in the absence of more concrete information from the EEOC about the type of proof it will use to establish its case, PBM could not determine whether these faded memories, deaths, and departures will result in specific prejudice to its ability to mount a credible defense. Id. at 65-66. The Court acknowledged PBM’s argument may have merit and was reluctant to subject PBM to a costly and potentially lengthy discovery period when serious issues of equity could prevent the Court from ever reaching the merits of the case. Id. at 66. Therefore, the Court ordered a period of limited discovery confined to two issues, including: (1) the EEOC’s theory of the case, and (2) any prejudice to PBM. Id.  at 69. Once limited discovery was completed, the Court stated PBM could renew its motion for summary judgment or elect to abandon it. Id.

Implications For Employers

The Court’s ruling in EEOC v. PBM Graphics Inc. makes clear the EEOC cannot investigate claims for lengthy periods of time without running the risk that its claims may be dismissed under the equitable doctrine of laches. The Court's ruling acknowledges the significant prejudice employers may face if the EEOC drags its feet during the investigation process and specifically discusses the possibility that claims may be dismissed when the EEOC fails to diligently purse its case. EEOC v. PBM Graphics Inc. and similar cases not only give employers a potential way to dismiss the EEOC’s discrimination claims, but also give employers a bargaining chip to use during the conciliation process before litigation has begun. By informing the EEOC of the possibility its claims may be dismissed under the equitable doctrine of laches, the EEOC may be more willing consent to a conciliation agreement, thereby helping the employer avoid costly litigation. 

By Christopher DeGroff and Gerald L. Maatman, Jr.

Loyal readers of our blog -  here is a webinar focused on one of the most vexing challenges of workplace law - dealing with the EEOC's enforcement program.

On Wednesday, July 25, 2012 at 12:00pm Central / 1:00pm Eastern, Gerald L. Maatman, Jr. and Christopher DeGroff, co-chairs of the firm’s Complex Discrimination Litigation group, will host an interactive webinar on the shifting landscape of EEOC precedent and procedures in systemic enforcement litigation. Best of all, it’s free! Click here to register and attend.

It has been a tumultuous year for EEOC-related activity and there have been a number of developments since Seyfarth Shaw’s March 2012 EEOC webinar: EEOC-Initiated Litigation: Case Law Developments In 2011 And Trends To Watch For In 2012, where our speakers Mr. Maatman and Mr. DeGroff outlined the EEOC’s activities over the preceding year and gave a forecast of significant EEOC action in the coming year.

Many of these developments have now come to pass. The most recent buzz at the Commission  surrounds the launch of its new 2012-2016 Strategic Plan, which we previously blogged about here. The Commission also continues to carry out its promise to prosecute large-scale systematic litigation, which has shifted the landscape of EEOC precedent and procedures.  Given these recent developments, including the highly publicized EEOC v. CRST Van Lines opinion from May of 2012 (discussed here), employers are well-served to remain up to speed on - and craft their strategies to get ahead of - the government’s most recent tactics and  to address the Commission’s aggressive litigation agenda.

The webinar is particularly timely, as a significant majority of the EEOC's lawsuits are filed each year between July 1 and September 30 (the end date of the EEOC's fiscal year), in what has come to be known as the "red zone." 

This mid-year session will have a practical focus, including topics like:

• Signs that you are a target of an EEOC systemic Investigation;
• Pro-active steps to maintain the edge in agency-initiated investigations and litigation (including eDiscovery issues, expert statistical analyses, development of positive facts, and media issues);
• Core tenants of conciliation and tactics in high stakes EEOC investigations; and
• Taking control of the early stages of EEOC-initiated lawsuits.

It is critical that employers remain vigilant in the face of the EEOC’s aggressive agenda; an agenda that is all-too-often driven by political fuel rather than attention to substantiated EEO problems in the workplace. In an effort to support that vigilance, Mr. Maatman and Mr. DeGroff will discuss the tools and tactics that have been the most effective in their extensive practice with the EEOC.

Hurry over - there is still time to reserve a slot!

By Christopher DeGroff, Gerald L. Maatman, Jr., and Laura J. Maechtlen

The EEOC secured approval of its largest settlement in 2012 this past week in EEOC v. Yellow Transportation, Inc. and YRC, Inc., No. 09-7693 (N.D. Ill. June 28, 2012), a pattern or practice lawsuit involving allegations of systemic race discrimination. Approved by Magistrate Judge Susan E. Cox of the U.S. District Court for the Northern District of Illinois, the consent decree resolved two lawsuits (including a private plaintiff class action brought by 14 workers who also intervened in the EEOC's lawsuit) that had been consolidated for purposes of settlement negotiations. The EEOC and a class of African-American workers employed by Yellow Transportation, Inc. and YRC, Inc. alleged that the companies discriminated against employees at their Chicago Ridge facility because of their race, and subjected them to a racially hostile work environment. The EEOC asserted that the workers were subjected to multiple incidents of hangman’s nooses and racist graffiti, comments, and cartoons. The EEOC also claimed that Yellow Transportation and YRC subjected African-American employees to harsher discipline and scrutiny than their white counterparts and gave them more difficult and time-consuming work assignments.

As is its custom, the EEOC issued a press release after the approval order touting the settlement. The settlement in EEOC v. Yellow Transportation, Inc. and YRC, Inc. comes on the heels of other multi-million dollar settlements that the Commission concluded earlier this year, including the $5.4 million settlement in EEOC v. BP Amoco, the $3.3 million settlement in EEOC v. Pepsi (which we blogged about here), and the $1 million settlement in EEOC v. Whirlpool.

Background Of The Consent Decree

Two years ago, the EEOC secured a $10 million consent decree with YRC and Roadway Express stemming from the case of EEOC v. Roadway Express, Inc., et al., Case Nos. 06-CV-4805, 08-CV-5555 & 10-CV-5305 (N.D. Ill.). That previous litigation named both companies because Yellow Transportation operated the facilities until its merger with Roadway Express in 2008 to form YRC, the nation’s largest freight hauling company. 

The previous consent decree resolved the EEOC's claims that African-American employees at the companies’ Chicago Heights and Elk Grove Village, Illinois facilities were subjected to a racially hostile working environment and racial discrimination in violation of the Civil Rights Act of 1964. In addition to $10 million in monetary relief, the consent decree enjoined YRC from engaging in future racial discrimination at the company’s facilities and required YRC to appoint a monitor to oversee the company’s response to discrimination complaints. 

The consent decree, however, did not end the litigation in store for YRC. Although it resolved the EEOC’s discrimination charges at the Chicago Heights and Elk Grove facilities, the settlement did not address pending charges against the company’s Chicago Ridge facility. 

The $11 million consent decree approved by Magistrate Judge Cox this past week resolved the separate litigation involving the Chicago Ridge facility.

The Contents Of The Consent Decree

Magistrate Judge Cox entered a joint motion for preliminarily approval of the $11 million consent decree, which provides significant monetary relief to the class of allegedly aggrieved victims of race discrimination, and payment of $1.1 million in attorneys’ fees and costs to private class counsel.  The monetary payments to the class of alleged victims are to be distributed per the EEOC's determinations and discretion, with the intervening plaintiffs receiving incentive awards of $15,000 to $35,000. Any surplus funds left over after the class distribution shall be given to the Urban League in the Aurora/Quad City County area of Illinois.

In terms of equitable relief, the consent decree recognized that the Chicago Ridge facility closed in 2009, and that a number of the class members are still employed by YRC and now work at its Chicago Heights facility. Specifically, Magistrate Judge Cox found that 51 class members were still on active status and 53 class members were on lay-off status at the Chicago Heights facility. The Court found that the class members were protected by the previous 2010 consent decree that emerged out of litigation with the company’s Chicago Heights and Elk Grove facilities, and therefore no additional injunctive relief was necessary. 

Implications For Employers

The EEOC’s $11 million settlement - or looking at it in context, the $21 million settlement with the defendants involving its three Illinois facilities - underscores the Commission's goals for prosecution large-scale systemic litigation, a topic on which we have blogged previously here and here. The defendants' pay out of $21 million in the last two years reminds employers not to tread lightly on the EEOC’s focus on large-scale, high-impact and high-profile cases (similarly discussed here). 

By Christopher DeGroff and Gerald L. Maatman, Jr.

As we reported earlier this year in various blog posts, the EEOC has developed a 2012-2016 Strategic Plan designed to be the blueprint for all of its enforcement activity in upcoming years. The Plan focuses on Strategic Objectives accompanied by targeted Outcome Goals and Performance Measures.

The EEOC’s first Strategic Objective is to combat employment discrimination through strategic law enforcement. This “strategic law enforcement” includes a mandate to develop and implement a Strategic Enforcement Plan by September 2012. According to the EEOC, the Strategic Enforcement Plan will replace the current National Enforcement Program prepared in 2006. In addition to articulating the EEOC’s high priority cases, the Enforcement Plan will outline the Commission's plan to “integrate” the EEOC’s investigation, conciliation, and litigation responsibilities for private employers and state and local government sectors.

On June 5, 2012, the EEOC asked the public for input on its new Strategic Enforcement Plan. The EEOC indicated that it was most interested in, among other things, recommendations for improving enforcement, outreach and prevention, and customer service.

Today Seyfarth Shaw submitted its recommendations to the Commission for ways in which the EEOC can better achieve the goal of discrimination-free workplaces. We based these recommendations on years of close interaction with the agency in some of its largest and most complex matters. Our relationship with the EEOC has sometimes been as partners in developing effective, state-of-the-art programs with our clients, and at other times as adversaries with the EEOC in intense and large-scale litigation. Through this near-constant interaction, Seyfarth Shaw has developed a unique perspective on the problems facing employers seeking to work with the EEOC. Seyfarth Shaw’s recommendations can be encapsulated as follows:

The EEOC should abandon “hide the ball” tactics: With the EEOC’s focus shifted to large-scale, high-profile litigation, we have seen an alarming trend to abandon its core tenant of seeking voluntary compliance with EEO laws through cooperating with employers to eliminate real and perceived problems. Seyfarth’s submission notes that, although there are large segments of the agency still committed to working with employers before initiating litigation, there is at least a perception that this contingent is shrinking. We note in our submission that a number of federal courts have taken a dim view of these tactics, which only erode the EEOC’s effectiveness and reputation. We provided a number of suggestions on how the Commission can reverse this trend.

The EEOC’s abuse of its subpoena power: The EEOC increasingly relies on aggressive subpoena enforcement to achieve not only its fact-finding goals, but also as a lever in conciliation negotiations.  Some federal courts have supported the EEOC’s use of this tool, and others have not, but this is an instance where what the EEOC can do and what it ultimately should do may diverge.  Our submission urged a more reasoned, incremental approach to agency information requests and subpoenas.

The perils of melding the EEOC’s investigative and legal elements: The EEOC’s Strategic Plan notes that it intends to integrate some of its investigative and legal functions. If pursued, this would be a chilling development. As we pointed out in our submission, the EEOC is first and foremost a neutral fact-finder at the investigative stage.  Pairing investigators with agency lawyers who will ultimately litigate these matters corrodes any sense of impartiality. Seyfarth warned that the Enforcement Plan should not take the myopic approach of endorsing investigations that are intertwined with legal interests and involvement.

Addressing “consistent inconsistency:” The one common denominator of all of these problems is the EEOC’s often fractured organizational structure. The lack of procedural consistency between and among the various EEOC district offices is a constant source of frustration not only for employers, but also for the Commission itself. The concern that one hand not knowing what the other is doing leaves employers guessing as to how it should interact with the EEOC. 

The EEOC’s goal of eliminating workplace discrimination is a laudable one, and one shared by employers from coast to coast. We hope that, armed with Seyfarth Shaw’s suggestions, as well as the many other submissions presented to the agency, the EEOC will be better able to accomplish this mutual goal.

By Christopher J. DeGroff and Gerald L. Maatman, Jr.

Courts across the nation continue to weigh in on the Equal Employment Opportunity Commission's systemic investigation and conciliation tactics. While there is a growing split within the courts, the notion that EEOC litigation is not like monopoly - "just pass go, and collect money by virtue of suing…" - is a premise that is surfacing in these rulings.

Recent opinions from the Northern District of Illinois and Eighth Circuit (discussed here, here, here, and here) set the back drop for a split among federal courts concerning whether the Commission's “sue first, ask questions later” tactics are sufficient to satisfy the EEOC's pre-suit investigation and conciliation obligations.

The EEOC has recently hung its hat on the Northern District of Illinois ruling in EEOC v. United Road Towing, Inc., Case No. 10-CV-06259 (N.D. Ill. May 11, 2012), holding that the EEOC satisfied its pre-suit investigation requirements. The EEOC even went so far as to issue a press release about that ruling.  However, less than two weeks later, the Eastern District of Washington tipped the split back in favor of employers, holding to the contrary on analogous facts.

The Ninth Circuit has yet to definitively rule on this issue, but in EEOC v. Evans Fruit Co., Inc., Case No. 10-CV-03033, 2012 U.S. Dist. LEXIS 72836 (E.D. Wash. May 24, 2012), Judge Lonny Suko relied in part on the Eight Circuit’s decision in EEOC v. CRST Van Expedited, Inc., Nos. 09-3764, 09-3765 & 10-1682 (8th Cir. May 8, 2012), and held that the EEOC must engage in meaningful pre-lawsuit investigation and good-faith conciliation of the claims the EEOC intends to litigate under § 706. While Judge Suko was reluctant to dismiss the unconciliated claims outright, on the eve of trial he did require the EEOC to engage in mediation on those claims. The ruling is already receiving significant news coverage.

Factual Background Of EEOC v. Evans Fruit Co., Inc.

In EEOC v. Evans Fruit, the EEOC brought allegations against one of the nation’s largest apple producers claiming that it tolerated a sexually hostile work environment. The Commission’s claim began with three female claimants alleging that certain co-workers made unwelcome sexual comments and advances. During the course of pre-suit investigation efforts, the EEOC identified five additional claimants. 

The EEOC originally sought $1.9 million in damages for a group of allegedly injured employees. Pointing to the lack of evidence that there was a class of women who claimed sexual harassment by managers, defense counsel continued to entertain the possibility of resolving the matter in pre-suit negotiations. Id. at *16. Subsequently, the EEOC reduced its demand to $1 million. Id. at *17.

The EEOC’s demand, however, left Evans Fruit without answers to integral facts and wondering as to the identity of the allegedly injured employees and their justifications for bringing suit. After continued requests by defense counsel for additional information, the EEOC provided certain details about the alleged group of claimants, and identified a new alleged victim and purported harasser - but only by first name. Again, Evans Fruit requested more information from the Commission, such as the full name of the new alleged victim and the accused employee. A mere six days later, the EEOC brought all conciliation efforts to a halt deeming them “unsuccessful.” Id. at *18. 

Apparently, the EEOC was eager to pass go, skip the mandatory good faith conciliation efforts, and file suit against Evans Fruit. After filing its complaint, the EEOC took advantage of the discovery process as a tool to find allegedly injured employees. At the close of discovery, the EEOC’s so-called “class” grew to 25 total members. 

The Court’s Analysis Of The EEOC’s Investigation And Conciliation Tactics

On the heels of judicial decisions that addressed the EEOC’s pre-suit investigation and conciliation requirements, the EEOC argued that all alleged victims need not be identified before the EEOC commences a lawsuit. The EEOC, however, ignored a critical factor – the good faith requirement. Judge Suko explained that fruitless conciliation efforts are not enough. The Court reasoned that the EEOC’s abrupt declaration that conciliation efforts were “unsuccessful” without any explanation was unreasonable. Id. at *21. 

Highlighting examples of good faith, Judge Suko stated the EEOC must “be more forthcoming regarding the type of damages sought” and suggested that good faith efforts to conciliate include offering “some justification of the amount of damages sought, potential size of the class, general temporal scope of the allegations, and the potential number of individuals . . . alleged to be involved in the harassment.” Id. at *22.

Judge Suko granted defendant’s motion for summary judgment because he concluded the EEOC did not engage in good faith conciliation efforts. Citing Congress’ intent in creating Title VII, the Court held that conciliation efforts are not jurisdictional requirements and ordered the parties to participate in judicially supervised mediation.

Implications Of The Ruling

The ruling in EEOC v. Evans Fruit reminds employers of the importance in continually requesting investigation findings and engaging in conciliation efforts with the EEOC despite unresponsive replies from the Commission. Defense counsel's reasonable requests in EEOC v. Evans Fruit highlighted the EEOC's failure to engage in good faith efforts and created a clear record for Judge Suko to rule on in the employer's favor.

As federal courts continue to weigh in on the EEOC’s investigation and conciliation tactics, the ruling in EEOC v. Evans Fruit sends a clear message that employers can add the good faith requirement of investigation and conciliation to their arsenal of defenses.

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

After suffering a serious blow to its systemic investigation and conciliation tactics last week, the EEOC received a better result on May 11, 2012, when Judge Ruben Castillo of the U.S. District Court for the Northern District of Illinois rejected defense arguments in EEOC v. United Road Towing, Inc., Case No. 10-CV-06259 (N.D. Ill. May 11, 2012), holding that the EEOC had satisfied its pre-suit investigation requirements. 

In sharp contrast to the Eighth Circuit’s recent ruling in EEOC v. CRST Van Expedited, Inc., Case Nos. 09-3764, 09-3765 & 10-1682 (8th Cir. May 8, 2012) (discussed here, here, and here), Judge Castillo denied the employer's motion for partial summary judgment, concluding that the EEOC's failure to investigate the claims or disclose the identities of each claimant in a systemic lawsuit did not support dismissal for failure to satisfy its pre-suit obligations under § 706 of Title VII. 

While the EEOC continues to challenge the Eighth Circuit’s May 8, 2012 ruling, Judge Castillo’s opinion may foreshadow a split among the circuits that will support a potential bid for resolution in the U.S. Supreme Court. 

Factual Background Of EEOC v. URT

On July 23, 2009, Hazel Holmes filed a charge alleging that United Road Towing (URT) violated the Americans With Disabilities Act (ADA) by denying her a reasonable accommodation, terminating her employment, and refusing to rehire her. On September 26, 2009, another former employee, William Snyder, filed a charge with similar allegations. Id. at 2. 

On July 22, 2010, the EEOC issued a determination letter to URT stating that it had reasonable cause to believe that URT had committed three violations against Holmes and Snyder and against “a class of disabled individuals.” Id.  In particular, the EEOC alleged that URT discriminated against such individuals by applying its unpaid leave policy, denying them reasonable accommodation, and failing to rehire them. The EEOC identified only Holmes and Snyder by name. Id.

The EEOC invited URT to engage in conciliation efforts to resolve the three violations that it identified, and informed URT that it was seeking $2 million in monetary relief for the charging parties and “all affected class members.” Id. at 3. The EEOC also proposed that URT “bear the costs of searching for additional class members . . . not yet identified due to [URT’s] failure to maintain medical leave request records for employees ineligible for [FMLA].” Id. After receiving the EEOC’s demand, URT declined to participate in further conciliation. Id. at 4. 

Subsequently, the EEOC brought suit on September 30, 2010. During discovery, the EEOC disclosed 17 claimants in addition to Holmes and Snyder. URT filed a motion seeking summary judgment as to those 17 claimants on the ground that the EEOC failed to satisfy its administrative requirements before filing suit.    

Judge Castillo’s Decision

URT argued that summary judgment was appropriate because the EEOC failed to investigate or conciliate the claims of anyone other than Holmes or Snyder.

Judge Castillo rejected URT’s argument. As to pre-suit investigation, Judge Castillo reasoned that “the Seventh Circuit has made clear that courts may not review EEOC administrative investigations to determine whether a particular investigation sufficiently supports the claims that the EEOC brings in a subsequent lawsuit” because such an inquiry would shift the focus of employment discrimination litigation to the EEOC’s administrative efforts, rather than the validity of the actual claims. Id. at 7 (citing EEOC v. Caterpillar, 409 F.3d 831, 833 (7th Cir. 2005)). For this reason, Judge Castillo refused to inquire into whether the investigation adequately supported the claims of the 17 claimants on whose behalf the EEOC brought suit.

As to the conciliation requirement, Judge Castillo likewise rejected URT’s motion. He first noted that the Seventh Circuit has not decided whether a “deferential standard” or a “heightened scrutiny” standard should apply, but under either level of inquiry, the EEOC’s efforts were sufficient because: (1) the EEOC stated in its determination letter that it had found reasonable cause to believe that URT had committed violations against a class of disabled individuals; and (2) the EEOC identified the types of violations it was pursuing (i.e., application of its unpaid leave policy, denial of reasonable accommodations, and failure to rehire). Id. at 10. Judge Castillo also noted that, instead of requesting additional information or clarification when it received the EEOC’s $2 million settlement demand, URT terminated the conciliation; therefore, “any deficiencies in the conciliation process were caused by both parties.” Id. at 11. 

Although he concluded that summary judgment was not warranted, Judge Castillo stayed the proceedings for 14 days to permit the parties to attempt conciliation. 

Questions About The Court's Rationale

Query whether Judge Castillo focused on the correct issue in opining that he could not review EEOC administrative investigation to determine whether it sufficiently supported the claims that the EEOC brought in its subsequent lawsuit. The precise issue is whether the EEOC actually investigated the claims of the class, or simply used the threat of class claims to force a settlement higher than the case was worth. The Court neglected to analyze that issue. As a result, it gave a free pass to the tactic that many employers have - and courts - have criticized where the Commission makes an exorbitant settlement demand on behalf of "a class of allegedly injured persons," but fails to specify who, how many, or the extent of their alleged damages.

Lessons For Employers

The employer in EEOC v. United Road Towing, Inc., conceded in its briefing a key point - that the EEOC "may pursue relief in litigation for similarly situated claimants whose allegations were not individually conciliated but whom defendants were generally aware of during the conciliation process." Id. at 9. Given that concession, Judge Castillo's ruling is not all that surprising. Indeed, the Court faulted the employer for refusing to negotiate with the EEOC after receiving the $2 million demand, but then arguing that the case ought to be dismissed for failure to conciliate. Query whether the employer could have set up its defenses and made them stronger - and changed the result in the litigation - by responding to the EEOC's demand by requesting the names/the number of the alleged class members, their alleged injuries, and the specific amounts claimed for each person.

Implications

Judge Castillo’s decision stands in stark contrast to the Eight Circuit’s recent decision in EEOC v. CRST Van Expedited, Inc., Case Nos. 09-3764, 09-3765 & 10-1682 (8th Cir. May 8, 2012).  In that case, the EEOC similarly issued a vague determination that CRST had subjected “a class of employees” to sexual harassment, requested CRST’s assistance in identifying persons who might be part of a settlement, then brought suit without identifying or investigating the experiences of each purported class member.  A panel of the Eighth Circuit rejected the EEOC’s contention that it need only investigate, issue a cause finding, and conciliate “each type of discrimination alleged,” and affirmed dismissal of 67 claims that the EEOC failed to investigate.  Id. at 17-23. 

Judge Castillo did not address the Eighth Circuit’s decision in his ruling – or whether the EEOC must investigate only each “type” of claim – instead finding the scope of the EEOC’s investigation outside of his judicial review.  Judge Castillo’s approach effectively would leave employers no method to ensure that the EEOC conducts any investigation prior to suit and little check on the EEOC’s fulfillment of its other statutory prerequisites.  The EEOC already is touting the decision as authorizing its “sue now, ask questions later” tactics.    

As we previously predicted, the EEOC doubtless will exhaust every available avenue to undermine the Eighth Circuit’s decision and push for broad adoption of the hands-off approach applied by Judge Castillo.

By Gerald L. Maatman, Jr., Chris DeGroff, and Brian Wong

On the heels of its resounding loss on May 8, 2012 at the hands of an Eighth Circuit panel in EEOC v. CRST Van Expedited, Inc., Case Nos. 09-3764, 09-3765 & 10-1682 (8th Cir. May 8, 2012), the EEOC has renewed its petition for rehearing - again requesting that the full U.S. Court of Appeals for the Eighth Circuit review the panel’s opinion and judgment - just one day after its loss.

We blogged about the implications of the Eighth Circuit's May 8 decision and how the ruling in EEOC v. CRST Van Expedited, Inc. is a significant defeat for the Commission's tactical approach to systemic litigation. Yesterday's salvo from the EEOC demonstrates how it views the stakes and that it will not be going down without a fight, and likely a shot at a petition for certiorari to the U.S. Supreme Court should the Eighth Circuit reject the Commission's bid for en banc review.

In a blow to the EEOC’s current investigation and conciliation tactics, a panel of the Eighth Circuit held on May 8 that the EEOC must engage in pre-lawsuit investigation and good-faith conciliation of each claim it intends to litigate in court under § 706 of Title VII, and that the EEOC may not use discovery in a later lawsuit as a fishing expedition to uncover additional violations. The May 8 opinion closely tracks the Eighth Circuit’s earlier February 22, 2012 opinion, which it vacated just one day before. Our prior analysis of these opinions can be found here and here.

After an invitation by the court clerk either to file a new petition for rehearing en banc or to rely on its previous April 9, 2012 rehearing petition, the EEOC opted to notify the Eighth Circuit on May 9 that it wished to apply for rehearing by relying on its prior petition.

With the future of its systemic litigation tactics hanging in the balance, the EEOC doubtless will exhaust every available avenue to undermine the Eighth Circuit’s decision and head off similar outcomes in other jurisdictions. Stay tuned.

By Pamela Devata and Frederick Smith

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

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

Overview Of The EEOC's Guidance

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

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

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

What an Employer Can Ask

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

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

Arrest Records

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

Factors To Consider When Evaluating Criminal History

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

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

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

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

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

Individualized Assessment

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

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

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

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

Compliance With Other Laws

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

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

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

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

Seyfarth Webinar

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

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

By Christopher DeGroff and Annette Tyman

On March 7, 2012, the U.S. Court of Appeals for the  Seventh Circuit affirmed dismissal of a case brought by the EEOC challenging the reasonable accommodations guidelines implemented by United Airlines, Inc. (“United”) in  Equal Employment Opportunity Commission v. United Airlines, Inc., Case No. 11-1774 (7th Cir. Mar. 7, 2012).  The EEOC’s complaint was based on the theory that the Americans With Disabilities Act (“ADA”) requires that an employee who needs a reasonable accommodation must be automatically placed in any vacant position for which the employee is minimally qualified, regardless of the employer’s transfer policies. Id. at 2-3. The Seventh Circuit has long held, however, that the ADA imposes no such requirement. Id. at 3-4.   

The decision is noteworthy for employers given that, despite long-standing precedent and the EEOC’s failure to demonstrate that the Seventh Circuit’s prior rulings in similar cases should be reversed, the Seventh Circuit panel “strongly recommend[ed]” further review of the case by all of the judges of the Seventh Circuit - a hearing that is granted only in very limited circumstances. Id. at 11.

Furthermore, it is important for any company facing EEOC-initiated litigation under the ADA.

Factual and Procedural Background

In 2003, United established Reasonable Accommodation Guidelines that set forth the policy for accommodating workers who, because of a disability, were no longer able to perform the essential functions of their current job even with a reasonable accommodation. Id. at 2. The Guidelines emphasized that a transfer could be considered a reasonable accommodation, but that the transfer process was subject to a competitive bid process, meaning that the employee would not automatically be placed into a vacant position. Id. Nonetheless, employees needing an accommodation would be “given preference” in that they could submit multiple transfer applications, were guaranteed an interview, and would receive “priority consideration over a similarly qualified applicant.” Id. 

The EEOC sued alleging that United’s policy violated the ADA because it required disabled employees needing a job transfer as a reasonable accommodation to undergo a competitive job selection process to be selected for a position. Id. at 2-3. Following a transfer of venue from San Francisco to Illinois, the District Court granted United’s motion to dismiss because a previous Seventh Circuit case called EEOC v. Humiston-Keeling, 227 F.3d 1024 (7th Cir. 2000), held that a competitive transfer process alone did not violate the ADA. Id. at 3-4.

The Seventh Circuit’s Decision

In affirming the District Court’s decision, the Seventh Circuit agreed that its previous Humiston-Keeling case was “directly on point” and remained binding on the District Court. Id.  Nonetheless, the EEOC urged the Seventh Circuit to reexamine and reverse its prior decision in Humiston-Keeling and reinstate its case. Ultimately, the Seventh Circuit panel declined to do so given its prior rulings, but noted that the EEOC’s “interpretation may in fact be a more supportable interpretation of the ADA.” Id. at 5. As a result, the panel “strongly recommended” that the case be reconsidered by all of the judges of the Seventh Circuit in what is known as an “en banc review.” Id. at 11. 

Impact of the Decision

For now, Seventh Circuit precedent remains intact - the ADA does not require that employers reassign a disabled worker to a job for which there is a more qualified applicant, provided that the employer’s “consistent and honest policy” is to hire the best applicant for its open positions per EEOC v. Humiston-Keeling, 227 F.3d 1024, 1029 (7th Cir. 2000). Nonetheless, the panel’s decision signals that the Seventh Circuit may be willing to reconsider its prior holding. Assuming that it does so, it remains unclear whether the Seventh Circuit will go as far as the EEOC urges and affirmatively hold that employers must reassign employees to vacant positions for which they are minimally qualified as a reasonable job accommodation. 

Such a finding would be a sea change in the Seventh Circuit and would result in significant challenges for employers who are charged with balancing the rights of disabled workers with the rights of other workers who are also qualified for the position at issue. Indeed, the EEOC’s stance would put the employer in the unenviable position of giving preference to disabled workers over all other protected classes of employees. Such a situation is apt to lead to increased litigation in instances where a less-qualified, disabled applicant was selected for a position over a more-qualified older worker or an individual in some other protected group.  This is certainly a case to watch.  Our blog will monitor this case and update our readers with any developments. 

By Christopher DeGroff and Matthew Gagnon

Rulings over EEOC administrative enforcement subpoenas are increasing. It’s a manifestation of the EEOC's aggressive strategy in expanding systemic investigations, and of employers resisting those efforts.

On February 27, the U.S. Court of Appeals for the Tenth Circuit upheld a District Court’s refusal to enforce an overly broad administrative subpoena issued by the EEOC. EEOC v. Burlington N. Santa Fe Ry. Co., Case No. 11-1121 (10th Cir. Feb. 27, 2012). The case involved two charges asserting Americans With Disabilities Act ("ADA") claims by individuals in Colorado against Burlington Northern Santa Fe Railway Co. (“BNSF”) after they were rejected for employment based on a medical examination. Id. at 2.

The EEOC v. Burlington N. Santa Fe Ry. Co. ruling is noteworthy for its rejection of the EEOC's strategy.

Factual Background

On February 2, 2009, the EEOC sent a request for information to BNSF for “any computerized or machine-readable files . . . created or maintained by you . . . during the period December 1, 2006 through the present that contain electronic data about or effecting current and/or former employees . . . throughout the United States.” Id. at 2-3. BNSF challenged the scope of the documents requested by the EEOC, and sought documentation from the EEOC to support the EEOC’s investigation beyond the incidents involving the two individuals who filed the ADA charges. Id. at 3. Instead of providing that information, the EEOC instead served a subpoena on BNSF demanding the information requested in the letter.  BNSF contested the subpoena and refused to comply with it. Id. The EEOC then applied to the District Court to enforce the subpoena. The Tenth Circuit refused to do so. Id. at 3-4.

The Tenth Circuit’s Decision

The Tenth Circuit held that the District Court did not abuse its discretion in refusing to enforce the EEOC's subpoena. The statute that grants the EEOC the authority to issue administrative subpoenas states that the EEOC may access “any evidence of any person being investigated” so long as that evidence “relates to unlawful employment practices . . . and is relevant to the charge under investigation.” Id. at 5 (quoting 42 U.S.C. § 2000e-8(a)). Although the Court noted that the relevancy requirement was not particularly restrictive, it upheld the District Court’s determination that the subpoena was not relevant to the two charges pending against BNSF. Id. at 5.

The EEOC pointed to four other complaints filed against BNSF in other states making similar allegations of discrimination, and argued that it was entitled to nationwide discovery because it was investigating a pattern or practice of discrimination carried out on a nationwide basis. Id. at 4-5. The Tenth Circuit rejected the EEOC's argument by noting that there was no reference to any of the four additional charges in the EEOC’s subpoena. Id. at 6. The cover letter to the subpoena only stated that the requested information was related to pattern or practice discrimination, and that the EEOC was broadening its investigation “under the authority granted by the statute.” Id. The Tenth Circuit held that this statement “does not identify the statute to which it refers, it does not constitute a ‘charge’ of discrimination, and it conveys no basis for expanding the investigation.” Id. Accordingly, the only charges under investigation were those filed by the two individuals, and the EEOC only had power to issue a subpoena for information relevant to those charges. The Tenth Circuit concluded that nationwide record-keeping data was not relevant to individual charges of discrimination filed by two men who applied for the same type of job in the same state. Id. at 9-10.

The Tenth Circuit also rejected the EEOC’s attempts to justify the breadth of its request. The EEOC had contended that the two charges of discrimination would be a part of any pattern or practice of disability discrimination at BNSF, if such a pattern or practice existed. Id. at 7. The Tenth Circuit reasoned that this threatened to undermine the relevancy requirement of the EEOC’s subpoena power, since any act of discrimination could always be a part of a pattern or practice of discrimination. Id. Critically, the Tenth Circuit opined that not every charge of discrimination warrants a pattern or practice investigation. Id.

Key Observations In The Ruling

The Tenth Circuit made two observations of special interest to employers that frequently deal with the EEOC.

First, it noted that BNSF was likely aware of the other charges that had been filed against it because the EEOC is required to send an employer notice of any such charge within ten days of receiving it. Id. at 6 n.2. However, this could not excuse the EEOC’s refusal to inform BNSF of which other charges the EEOC was considering as additional support for a nationwide investigation.  Id.

Second, the Tenth Circuit distinguished a Seventh Circuit case - EEOC v. Konica Minolta Bus. Solutions U.S.A., Inc., 639 F.3d 366 (7th Cir. 2011) - on the basis that disability discrimination is different from racial discrimination. In that case, the Seventh Circuit upheld an EEOC subpoena based on an individual allegation of racial discrimination. The Tenth Circuit reasoned that racial discrimination is by definition class discrimination; although it may have been appropriate to allow such an investigation based on one complaint of racial discrimination, the same could not be said of individual complaints of disability discrimination. Id. at 9.

Key Take-Aways For Employers

Employers should expect that the EEOC will take the dicta about the distinction between race and ADA charges as a way to cabin the Tenth Circuit's reasoning. Nonetheless, the ruling in EEOC v. BNSF is a handy piece of ammunition for employers facing broad information requests in investigation of ADA claims.

By Christopher DeGroff and Gerald L. Maatman, Jr.

On February 1, 2012, Judge William Lawrence of the U.S. District Court for the Southern District of Indiana gave employers an added boost in combating a common EEOC litigation tactic in pattern or practice cases. Judge Lawrence’s decision in EEOC v. New Indianapolis Hotels, LLC, Case No. 1:10-CV-1234 (S.D. Ind. Feb. 1, 2012), addressed the EEOC's practice of seeking "punitive damages in Phase I" bifurcation, and its push for corresponding discovery bifurcation in pattern or practice cases. Judge Lawrence’s four page opinion is a short read but important for employers facing the EEOC in pattern or practice litigation.

The EEOC’s Claims

The EEOC sued New Indianapolis Hotels LLC and Noble Management LLC, alleging a wide range of discrimination theories, including claims for discriminatory/retaliatory termination of African-American housekeepers, disparate wages and hours for African-American housekeepers, and hiring discrimination with respect to African-American applicants for housekeeping positions, among other claims. Id. at 1.

The EEOC’s Procedural Tactics And The Teamsters Bifurcation Model

EEOC pattern or practice claims are analyzed under the framework first articulated by the U.S. Supreme Court in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). Under that model, the EEOC must first demonstrate in Phase I of a trial that unlawful discrimination is a standard employer procedure or policy. If the EEOC carries this burden, the employer can defend itself by challenging the EEOC’s proof or providing non-discriminatory explanations for its procedures. If the employer cannot mount such a defense, however, the Court can conclude that a widespread violation of the law has occurred, and it is presumed that all of the members of the class are victims of that violation. In Phase II of the trial, an employer may rebut individual claims and or challenge the award of damages to individual claimants, but it is an uphill battle at that point given what is known as the "Teamsters presumption."

A common EEOC tactic is to demand that punitive damages be determined in Phase I, after a liability finding but before any individual determinations of damages and possible defenses are made. The EEOC reasons that after a violation of the law is found, it is appropriate for the same jury to decide punitive damages, as the evidence of employer’s misconduct that created liability will be the same evidence used to support punitive damages. In keeping with this argument, the EEOC often argues that individual damages discovery should come later in the litigation, separate from the liability discovery, contending that individualized economic damages discovery would be too costly and time consuming before Phase I of the trial.

This tactic – seeking a bifurcated trial, a Phase I punitive damages determination, and bifurcated discovery – is precisely what the EEOC sought in the New Indianapolis Hotels case. Judge Lawrence rejected the EEOC's tactics in part. The Court bifurcated the trial according to Teamsters, but rebuffed the EEOC’s play for bifurcated discovery and a Phase I punitive damages determination.

The Court’s Holding Denying Bifurcated Discovery And A Phase I Punitive Damages Determination

Judge Lawrence determined that a bifurcated trial was appropriate but that punitive damages must be decided in Phase II, commenting that “presenting evidence of damages to a jury before a finding of liability is, with respect to a class of this size, putting the cart before the horse.” Id at 3.

The Court disagreed with the EEOC that discovery should be bifurcated, noting that “[discovery] bifurcation … results in an even greater inefficiencies; namely, denying discovery on applicant class members’ individualized damages until after liability is decided necessitates a separate jury be empanelled to decide damages.” Id. Judge Lawrence reasoned that empanelling and familiarizing a new jury saddled both the Court and the parties with more of a burden than unified discovery would. Id.

In essence, the EEOC’s discovery argument boomeranged on the government. As a justification for its bifurcated discovery model, the EEOC argued that it would be too inefficient and expensive to use a separate jury for each phase of the trial. Judge Lawrence noted that conducting all individual discovery before trial, then using the same jury for Phase I and Phase II, would address the EEOC’s concerns that repeating the liability evidence for punitive damages would be wasteful. Id. Under Judge Lawrence’s model, all discovery would be completed before any jury was even selected, i.e., one jury for both Phases.

Lessons For Employers

The ruling in EEOC v. New Indianapolis Hotels is believed to be the third decision rejecting the EEOC's "punitive damages in Phase I" bifurcation strategy. The rulings in EEOC v. Sterling Jewelers, 2011 U.S. LEXIS 44255 (W.D.N.Y. April 25, 2011), and EEOC v. McCormick & Schmick's, 2008 U.S. Dist. LEXIS 112283 (D. Md. Nov. 4, 2008), are the other reported opinions rejecting the EEOC's strategy. Although Judge Lawrence did not focus on it in his order, the "punitive damages in Phase I" bifurcation device is also improper due to additional statutory or constitutional grounds, as both EEOC v. Sterling Jewelers and EEOC v. McCormick & Schmick's rejected the EEOC's strategy based on the Rules Enabling Act and the due process clause. Employers are well served to utilize those arguments, for bifurcation with "punitive damages in Phase I" can be a "game-changer" for defense of these types of claims.

The EEOC has limited resources, and sometimes its reach exceeds its grasp. In EEOC v. New Indianapolis Hotels, the EEOC balked at the written and oral discovery of the over 100 of its applicant class members. Although the EEOC purported to be concerned about taxing the resources of both Plaintiff and Defendants alike, Judge Lawrence noted in footnote 2 of his opinion that Defendants did not share that concern, and had signaled that they were up to the task of full-throttle discovery. This is another example of the wisdom of calling the EEOC’s bluff and demanding that the government litigate the full scope of the case it has brought; a move that often results in a strategic advantage for employers.

By Laura Maechtlen and Brian Wong

When negotiating settlement terms with the EEOC, employers can expect the EEOC to make great efforts to incorporate expansive enforcement mechanisms into a proposed consent decree. To this end, the EEOC frequently demands any consent decree agreed upon by the parties for settlement purposes include an express “continuing jurisdiction” clause that allows the parties at any time to seek additional enforcement orders from the Court. In reality, this is a one-way clause to benefit the EEOC when and if it seeks to invoke the Court's power to force compliance with the consent decree. 

To be valid, a consent decree should spring from and serve to resolve a dispute within the Court’s subject-matter jurisdiction, come within the general scope of the case made by the pleadings, and further the objectives of the law upon which the complaint was based. Whereas parties must look to contract law to enforce typical settlement agreements, consent decrees allow the EEOC to seek equitable relief from the Court that may exceed the confines of the consent decree’s agreed-upon terms. 

In EEOC v. Product Fabricators, Inc., 2012 WL 264605 (8th Cir. Jan. 31, 2012), the Eighth Circuit made a strong statement as to a district court’s role in enforcing EEOC consent decrees when it held that a district court abused its discretion by rejecting a proposed EEOC consent decree. 

The consent decree in question arose out of a 2009 EEOC action against Product Fabricators, Inc. - in the case of EEOC v. Product Fabricators, Inc., Case No. 09-CV-2303 (D. Minn.) - in which the EEOC alleged the employer violated the Americans With Disabilities Act by making unlawful medical inquiries of employees, failing to keep employee medical information confidential, and discharging an employee because of his disability and/or as a result of an unlawful drug policy requiring employee reporting of medication use. 

When the parties presented a consent decree to the district court for approval, it rejected the proposed decree as unreasonable on the ground that it did not identify a basis for the district court to continue jurisdiction over the case for two years. 

On appeal, the Eighth Circuit held the district court abused its discretion because it “gave no consideration to the strong preference for settlement agreements as a means of protecting the federal interest in employment discrimination cases.” Id. at *6. Though the district court held the EEOC raised neither present nor past instances of employer conduct that would warrant the district court’s continuing jurisdiction, the Eight Circuit pointed to the employer’s purportedly unlawful drug policy and pattern or practice of unlawful medical inquiries and unlawful recordkeeping as justifications for continuing jurisdiction.

Further, while the district court based its rejection of the consent decree’s continuing jurisdiction provision on the EEOC’s statement that it did not expect to engage the district court to enforce the decree, the Eighth Circuit explained the importance of continuing jurisdiction stems not just from likelihood of enforcement, but also the parties’ ability to move quickly to enforce the decree, if necessary.

Tellingly, the Eighth Circuit further emphasized that “continuing jurisdiction is the norm (and often the motivation) for consent decrees,” and that “a consent decree offers more security to the parties than a settlement agreement where the only penalty for failure to abide by the agreement is another suit.” Id. at * 5. The Eighth Circuit further reasoned a consent decree’s inclusion of dispute resolution provisions such as a “notice-to-comply” clause does not supplant the deterrent effect of continuing jurisdiction on an employer.

This case serves as a reminder to employers that settlement of EEOC actions through consent decrees affords the EEOC much greater latitude in enforcement than would otherwise be available under a standard settlement agreement. Consent decrees may be enforced both as contract and judicial order, and the Eighth Circuit’s decision in EEOC v. Product Fabricators, Inc. puts employers on notice that district courts can exercise broad discretion in seeking compliance with consent decrees, and may not hesitate to flex their supervisory and enforcement muscles.

By Christopher J. DeGroff and Gerald L. Maatman, Jr.

The EEOC promised to file bigger, higher-profile cases in 2011. The EEOC did just that, with a second straight year of a record number of systemic investigations and class-like federal court filings. Indeed, for the last five years, the EEOC’s public strategy has been to further its agenda through prosecution of large-scale cases that will attract media attention, with the hope that this brand of high-stakes litigation will channel employers’ behavior. To that end, 2011 saw a mixture of judicial rulings in EEOC cases that range from refreshingly employer-friendly decisions to those that sent chills through the employer community. 

An annual staple of our blog that our readers tell us they enjoy is what we offer here with this post - our picks for the five of the most intriguing EEOC-related decisions handed down this past year.

We also prepared a special EEOC Litigation Report - entitled EEOC-Initiated Litigation: Case Law Developments In 2011 And Trends To Watch For In 2012 - analyzing these EEOC rulings. The Report is 95 pages in length, discusses the key trends in EEOC litigation for 2011 and what to expect in 2012, and analyzes the 79 major decisions of the past year.

The Report can be downloaded here.

So what are the 5 most intriguing decisions? Here are our picks:

1. EEOC. v. Bloomberg L.P., 778 F. Supp. 2d 458 (S.D.N.Y. 2011). We start in the U.S. District Court of the Southern District of New York, where Judge Loretta Preska put a resounding end to nearly four years of contentious litigation, holding that the EEOC’s case was so riddled with problems that the employer should not face a trial on the alleged pattern or practice of discrimination. First and most importantly, the Court found that the EEOC did not have the numbers to back up its claims of a widespread pattern of disadvantaging Bloomberg's pregnant or recently pregnant employees. Despite the instructions in the EEOC’s own compliance manual that statistical evidence is “extremely important” in a pattern or practice claim, the EEOC argued that statistical evidence was not legally required and therefore having none should not hurt its case. In rejecting the EEOC's position, the Court reasoned that a lack of statistics may not be fatal, but that in its absence was “severely damaging” and required the EEOC to provide significant anecdotal evidence. Id. at 479. But the EEOC did not have the anecdotal goods either. The Court held that the EEOC’s anecdotal evidence came from just a fraction of the women it claimed were victims, and even that evidence was, at best, a mixed bag and “insufficient to demonstrate a pattern or practice.” Id. at 470. Ultimately, the Court held that the EEOC’s non-existent statistical case - coupled with nebulous and downright unpersuasive anecdotal evidence - was not enough to move the case to an expensive and time consuming trial.

A grant of summary judgment is rare in such a case. EEOC v. Bloomberg is a case study where a massive claim brought by the government was found so wanting to be booted out of the courthouse for lack of proof, earning it a spot on our Top 5 List.

2. EEOC v. JBS USA, LLC, 2011 U.S. Dist. LEXIS 87127 (D. Colo. August 8, 2011). Next we turn to the somewhat complicated EEOC v. JBS case from the U.S. District Court for the District of Colorado. EEOC v. JBS offers a mixed opinion on the applicability of the bifurcation model first articulated in the U.S. Supreme Court case of International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). The Court in EEOC v. JBS applied a version of the familiar Teamsters model to some of the EEOC’s discrimination claims, but questioned its utility for pattern or practice harassment claims. Under the Teamsters model, a prima facie showing of a pattern or practice of discrimination creates an early presumption that the employer violated the law for a broad class of alleged victims. It is potentially difficult to un-ring that bell at Phase II during individual damages/remedies stage. The Court held that it would apply the Teamsters model to the EEOC’s religious accommodation, retaliation, and disparate treatment claims. Id. at *16-19. On the other hand, the Court held that the bifurcation model simply broke down for a pattern or practice harassment claim, concluding that hostile work environment claims were too individualized to decide on a class-wide basis. Id. Importantly, the Court held that the EEOC could not seek punitive or compensatory damages for individuals pursuant to its pattern or practice claims, noting that the statute’s plan language did not authorize those damages in a Section 707 claim. Id. at *16. Claims for those damages must come, if at all, in the more individualized Phase II damages proceedings. Id. at *18.

The impact of a successful pattern or practice finding is enormous, but the standard for demonstrating a pattern or practice in Phase I is high, and cases like EEOC v. JBS show that judges can and do narrow the bifurcated Teamsters framework to only those claims truly susceptible to class treatment. By virtue of the novel bifurcation issues examined in this decision, EEOC v. JBS also garners a spot on the Top 5 List.

3. EEOC v. Freeman, 2011 U.S. Dist. LEXIS 8718 (D. Md. Jan. 31, 2011). Since the inception of its Systemic Litigation Program in 2006, the EEOC has maintained that it is unencumbered by the 300-day statute of limitations in Section 706 of Title VII that applies to private litigants (and which frames any Title VII lawsuit as limited to events occurring within 300 days preceding the filing on an EEOC charge with the Commission). Typically, the EEOC argues that it can sue an employer back to the start of the allegedly illegal pattern or practice (e.g., a discriminatory practice of denying promotions to female employees) irrespective of when a charging party filed an administrative charge. In EEOC v. Freeman, the employer moved for partial summary judgment contending that, for claims that were not part of the original charge, the 300 days should run - not from the date of the original charge - but from the date that the EEOC notified the company that it was expanding its investigation to encompass new claims. The Court agreed, holding that the "relevant date" for purposes of the 300-day time bar is the "date of notice" of the new charges.  Id. at *14-17.

The EEOC's view of the 300-day rule inevitably expands the parameters of its typical case and sweeps in large numbers of claimants for whom the Commission seeks damages, raising the stakes for employers in this type of litigation. The EEOC has a mixed track record of success in convincing federal courts to adopt its view of the statute of limitations issue. EEOC v. Freeman flatly rejects the Commission's position, and gives employers additional ammunition when confronted by broad class periods in pattern or practice litigation brought by the EEOC. Due to its importance to employers, EEOC v. Freeman would make the Top 5 List in almost any year.

4. EEOC v. AutoZone, Inc., 2011 U.S. Dist. LEXIS 128927 (C.D. Ill. Nov. 8, 2011). The EEOC v. AutoZone case shows the unique risk factors in EEOC litigation, whereby a trial loss inevitably translates into injunctive relief on top of a jury's verdict of monetary damages. In EEOC v. AutoZone, the EEOC claimed the employer violated the Americans With Disabilities Act ("ADA") by failing to accommodate an employee's disability at its Macomb, Illinois facility. The EEOC asserted that the AutoZone forced one of its sales managers to perform jobs that violated his medical restrictions and that he ultimately experienced additional back and neck impairments. A jury found against the employer, and awarded lost wages, compensatory damages, and punitive damages. The EEOC then sought a post-trial injunction against the company designed to keep the employer from engaging in similar conduct in the future. The Court agreed with the EEOC's injunctive relief requests in part, and in its order found that "the conduct of the defendant's managerial employees at the highest level was clearly an intentional violation of the ADA" and was concerned with the "possibility of future infractions." Id. at *40-42. The Court entered an injunction covering all of AutoZone's stores in Central Illinois, requiring the company to report all requests for accommodations by employees to the EEOC for three years, and to maintain certain company records for four years, including how AutoZone responded to each request for a reasonable accommodation. Finally, the order granted access to the EEOC to view any such records on 48 hours notice. Id. at *41-42. 

The Court's post-trial order in EEOC v. AutoZone is a cautionary tale for employers. Given the breadth of the injunctive relief order, the ruling also garners a spot on the Top 5 List.

5. EEOC o/b/o Serrano, et al. v. Cintas Corp., 2010 U.S. Dist. LEXIS 86228 (E.D. Mich. Aug. 4, 2011). We close with a sanctions case that was welcomed by all employers facing the EEOC’s sometimes overzealous tactics. One of our “Top 5” cases in 2010, the EEOC o/b/o Serrano, et al. v. Cintas litigation heated up again in 2011 with a decision by Judge Sean Cox from the U.S. District Court for the Eastern District of Michigan to award Cintas over $2,638,443 in attorneys' fees and costs. The ruling is a resounding defeat for the EEOC's systemic litigation program, and is yet another in a recent series of set-backs for the EEOC in the courthouse. Employers facing systemic EEOC cases that ultimately go nowhere will obviously applaud this fee and cost award, even if it was only half of what the company sought in fees.

As the top sanction award of 2011, it was pretty easy to put EEOC o/b/o Serrano, et al. v. Cintas Corp. back on the Top 5 List. EEOC-initiated pattern or practice cases are incredibly time consuming and expensive, and even more problematic when grafted to private-plaintiff class actions like those faced by Cintas. The good news is, based on cases like this, employers have ammunition to make the government think twice about bringing and/or continuing to prosecute facially meritless claims.

Save The Date - Our annual webinar on EEOC litigation developments is now set for March 6, 2012 at 1pm EST. Registration materials will be posted on the blog in the next week.

By Gerald L. Maatman, Jr.

Today I had the honor of speaking on workplace class action litigation developments at the American Conference Institute's 17th Annual EPLI Program in New York City. It was a great conference. Corporate counsel, plaintiffs' lawyers, and defense counsel from around the country shared insights on a broad spectrum of workplace litigation issues.

The best part of the program reminded me of the old E.F. Hutton TV commercial with the tag line "When E.F. Hutton speaks, people listen…" For those who do not recall it, it’s on YouTube here.

In this instance, Constance Barker, one of the EEOC's Commissioners, gave the key note address on "EEOC Initiatives for 2012 and Beyond." Like that old TV commercial, when the EEOC talks, it behooves employers and business professionals to listen. Ms. Barker's presentation was no exception.

Commissioner Barker has been a member of the EEOC since 2008. She was nominated by President Bush on March 31, 2008, and unanimously confirmed by the Senate to serve the remainder of a five-year term expiring on July 1, 2011. On May 19, 2011, Commissioner Barker was nominated by President Obama to serve a second term to expire on July 1, 2016. The nomination to the second term was unanimously confirmed by the Senate on September 26, 2011.

As a former employment litigator representing primarily small businesses in Alabama, Commissioner Barker is known to be sensitive to the challenges and frustrations of businesses in the current economy. She summed up her personal philosophy in her opening remarks at the ACI Program - that vigorous enforcement of employment discrimination laws is an imperative, but it is unfair and inappropriate for any governmental agency to use the vast powers at its disposal to leverage a settlement from a business through threats and litigation tactics that force a business to settle due to the costs - measured both in litigation expenses as well as a loss of market share - of defending itself.

It reminded me of the chorus of criticisms from some quarters leveled against New York Attorney General Eliot Spitzer in the late 1990's for alleged abuses of prosecutorial discretion in pursuing civil and criminal litigation against Wall Street companies. While somewhat "apples to oranges" to the current state of workplace litigation, the refrain is not entirely irrelevant. More than one employer has shared stories of how the EEOC "just doesn't fight fair" in terms of the way it unfairly expands single worker charges into wide-ranging systemic investigations, negotiates via "take-it-or-leave-it" settlement demands while threatening to file a "big case," or sometimes litigates with a "shoot first and aim later" philosophy that more than one federal judge has deemed inappropriate (and then sanctioned the government for its litigation tactics). That topic has been popular theme from readers of our prior blog postings - especially on EEOC o/b/o Serrano, et al v. Cintas Corp., where Judge Sean Cox from the U.S. District Court for the Eastern District of Michigan awarded an employer $2,638,443 in fees and costs this past year for having to defend the EEOC's lawsuit.

Ms. Barker cited the EEOC's latest litigation statistics released yesterday by the Commission. Those statistics underscore the reality employers face - more charges than ever before in the Commission's history, more systemic investigations, and more - and bigger - EEOC lawsuits. The EEOC's most recent new release on its statistics further confirms the findings of its FY 2011 report from last Fall.

Ms. Barker suggested that the key to successful compliance strategies for businesses and their legal counsel is to keep a focus on what is "coming down the road" in the future. Here are some of those take-aways from the Commissioner in terms of the EEOC's future focus -

1. An agency emphasis on hiring or "gateway access" issue to jobs

Despite the lack of any explicit legislative grounding for such claims, EEOC investigators and attorneys have their "radar on" for issues involving employers' use of criminal background checks and credit checks in the hiring process. The recent settlement with Pepsi for over $3.13 million bears witness to that focus. What's more, some EEOC personnel see a legitimate basis for examining employer conduct in "refusing to hire the unemployed" or using "high school diploma" hiring requirements. Ms. Barker opined that more often than not, these investigations and lawsuits are based on alleged race and national origin discrimination. At the same time, critics of the EEOC paint this as "legislating through the backdoor" by aggressive stretching of the envelope of workplace bias laws when Congress has never explicitly made such practices unlawful.

2. Numbers matter

Critics of the EEOC sometimes bemoan agency reports of measuring "success" by numbers of lawsuits filed (and settlement numbers and amounts). Commission Barker said that "quotas" do not exist and have no place in law enforcement, but that "target" numbers have seeped into the conversation from time to time. There is no doubt that this often fuels the critics who complain that decision-making on institution of lawsuits is not an ideal process in light of the law's aims. One only needs to check the right-hand side of the EEOC's website - in its news release section - to see the daily listing of "who got sued" or "what the latest settlement entailed in terms of the dollars paid."

3. Conciliation often entails frustration

Ms. Barker also addressed another employer headache in terms of the sometimes distasteful experience of "good faith" conciliation at the end of an investigation - the "take-it-or-leave-it settlement demand for full relief," and the stance of "if-you-don't-like-it-and-don't-agree-to-our-terms," we are going to bring "a substantial lawsuit against your company that will be even bigger." She ascribed this problem to the fact that such decision-making is often more local than headquarters-driven, and that perceived abusive tactics are sometimes the by-product of that process. She urged employers to document any such problems, and insist on compliance with the "good faith" duty that is part and parcel of the conciliation concept.

4. The future is disparate impact

The most intriguing comments in her address were Ms. Barker's prediction that statistical issues with workforce data - patterns in hiring, pay, promotions, and terminations - will become the most important focus of analysis and investigations in the EEOC's future. Given the EEOC's focus on systemic investigations, this prediction is already coming home to roost for many employers. In turn, an employer's efforts to capture, understand, and strategize about its workforce data will become an increasingly more important attribute of compliance efforts. Identification of vulnerabilities and remediation of problem areas often will spell the difference between success or failure in facing EEOC investigations or lawsuits.

* * * * *
Today was a great learning experience. When the EEOC speaks, it behooves us all to listen and understand how it views the world of workplace bias laws.

By Pam Devata and Kendra Paul

The EEOC started its year with a bang. On January 11, 2012, the EEOC announced publically that it had entered into a conciliation agreement with Pepsi Beverages for $3.13 million based on allegations that Pepsi allegedly discriminated against African-American applicants based on use of their criminal histories in the hiring process.

It is the first such settlement by the EEOC ever in this context. What is equally significant is the fact that the settlement stems from a private conciliation agreement ending an EEOC administrative investigation, which is normally confidential (as opposed to a public consent decree approved by a federal district court upon the settlement of an EEOC lawsuit).

According to its press release, the EEOC's investigation revealed that Pepsi had a policy of not hiring applicants with pending criminal charges that had not resulted in convictions, and failed to hire applicants with arrests or minor conviction records. Specifically, more than 300 African-American applicants were adversely affected when they were disproportionately denied permanent employment for failing Pepsi’s criminal background check. The EEOC’s argument is that people of certain races and colors are arrested and convicted more frequently than others outside of those groups; thus, employers using such information in hiring decisions may cause a disparate impact on those protected groups.

The conciliation agreement requires Pepsi to pay $3.13 million, provide job offers to qualified applicants who were negatively affected by the criminal history policy, and provide training on Title VII obligations for its hiring personnel and all of its managers. With rough math, that equates to approximately $10,333 per applicant, a tidy sum for an alleged failure-to-hire claim.

In its media statement, the EEOC commended Pepsi for reexamining and revising its criminal history policy. Presumably, the EEOC negotiated to make the conciliation agreement public in order to "send a message" relative to its enforcement focus in this area; one can surmise that part of the price of doing so was the "positive" statement about the settling employer.

The EEOC’s Perspective On Employer Use Of Criminal History Information

The EEOC has been focused on employer use of criminal history information for over twenty years. In 1987, the EEOC issued written policy guidance regarding the use of arrest and conviction records in employment whereby it presumed that any policy or practice that caused an adverse employment action to be taken solely because of an African-American or Hispanic person’s conviction record had a disparate impact on members of those protected classes because those groups were convicted at a rate disproportionately higher than the rest of the general population. The EEOC’s guidance provides that employers’ selection criteria regarding criminal history information must take into consideration the following factors to demonstrate business necessity:

•  
  1. the nature and gravity of the offense or offenses;
  2.  the time that has passed since the conviction and/or completion of the sentence; and,
  3. the nature of the job held or sought as related to the conviction.

The EEOC also issued a 1990 policy statement on employers’ use of arrest records stating that employers must consider the: (i) the likelihood that the individual engaged in the conduct arrested for; and (ii) job relatedness, before making a hiring decision. According to the EEOC, a blanket exclusion of individuals with arrest records (without convictions) would almost never withstand scrutiny.

The EEOC held public meetings in 2008 and most recently, on July 26, 2011, revisiting the use of arrest and conviction records in employment. Based on this meeting, we anticipate that the EEOC will likely be updating its policy guidance regarding the use of criminal records in employment in the very near future.

There has also been increased focus by the EEOC on employers’ use of criminal records as evidenced by recent litigation in EEOC v. PeopleMark, Case No. 08-CV-907 (W.D. Mich. 2008), and EEOC v. Freeman Companies, Case No. 09-CV-2573 (D. Md. 2009), as well as numerous Commissioner Charges and nationwide pattern and practice investigations into employers’ practices.

Implications For Employers

The EEOC has been and will continue to scrutinize employers’ use of criminal history in hiring decisions. Employers should review and revise their background screening/criminal history policies to ensure compliance with federal and state law as well as the factors set forth by the EEOC. Criminal history, when used, should be considered as related to a specific position and not an entire workforce. Finally, bright line rules relating to arrests or convictions will likely be deemed to have a disparate impact on certain minority groups and should be eliminated. Suffice it to say, this is a "white hot" area for the EEOC, and administrative enforcement is focused on these types of policies and practices.

We also expect the EEOC to cite this settlement in its other administrative investigations as a signal of what it is prepared to do in pursuing other employers. This is clearly an area of intense focus by the Commission.

We anticipate new guidance from the EEOC in the next few months, but for the time being it behooves employers to make sure their policies and procedures comport with the EEOC’s interpretation or risk being the next million dollar target.

By Jennifer Riley and Reema Kapur

On November 16, 2011, the Equal Employment Opportunity Commission (“EEOC”), by a 3-2 vote, approved a draft final regulation clarifying the parameters of the “reasonable factors other than age” (“RFOA”) defense under the Age Discrimination in Employment Act (“ADEA”). The proposed regulation now goes to the Federal Office of Management and Budget (“OMB”) for review and approval. If adopted, the proposed regulation potentially will make it easier for older workers to pursue disparate impact claims under the ADEA.

Background & Context
The EEOC purportedly proposed the regulation to bring its rules in line with two U.S. Supreme Court rulings that address the RFOA defense in the context of claims that facially neutral employment policies or practices have a disparate impact on older workers.

In Smith v. City of Jackson, 544 U.S. 228 (2005), a group of older police officers brought suit alleging that the City violated the ADEA when it adopted a pay plan that provided them less-generous salary increases than younger officers. The Supreme Court confirmed that disparate impact claims are cognizable under the ADEA and held that the appropriate standard for determining the legality of practices that disproportionately affect older workers is the RFOA defense, not the more stringent “business necessity” test. The Supreme Court concluded that the City’s decision, ostensibly for the purpose of bringing salaries in line with that of surrounding police forces, was a decision based on a “reasonable facto[r] other than age,” even though there might have been other reasonable ways for the City to achieve its goals.

Three years later, the Supreme Court issued its decision in Meacham v. Knolls Atomic Power Laboratory, 554 U.S. 84 (2008). In Meacham, the Supreme Court reaffirmed its previous ruling that the business necessity test “should have no place in ADEA disparate-impact cases,” but went on to hold that the RFOA exemption is an affirmative defense on which employers bear the burdens of production and persuasion. The Supreme Court recognized that “putting employers to the work of persuading fact-finders that their choices are reasonable makes it harder and costlier to defend [disparate impact cases],” but noted that such concerns would have to be directed at Congress. 

The EEOC's Proposed Regulation
The EEOC sought to revise the current ADEA regulations to clarify the RFOA standard. On February 18, 2010, the EEOC issued a proposed rule to revise current ADEA regulations under 29 C.F.R. § 1625.7(b). By a 3 to 2 vote this past week, the EEOC approved the proposal. EEOC Chair Jacqueline Berrien and Commissioners Stuart Ishimaru and Chai Feldblum voted in favor of sending the rule to the OMB. Constance Barker and Victoria Lipnic, the two Republican members of the EEOC, voted against the draft final rule. 

The inter-agency review process at OMB typically lasts 3 to 6 months. If approved by the OMB, more information on the final rule will be provided when it is published. Whereas the details are not yet available, the lack of bipartisan support and accompanying comments indicate that the new rule may make it easier for older workers to pursue ADEA disparate impact cases and more difficult for employers to assert affirmative defenses based on reasonable factors other than age. 

Implications For Employers
Our recent Management Alert on the proposed rule discusses the impact of the proposed regulation. Whether by design or effect, should they become law, the proposed regulation would raise multiple hurdles for employers needing to downsize their businesses in order to remain profitable or competitive. The proposed regulation also would throw a curve ball into the defense of ADEA collective actions for disparate impact claims involving application of the RFOA defense.

Employers should stay tuned!

By Christopher DeGroff and Brian Wong

On the heels of its early 2011 decision imposing fee sanctions against the EEOC for continuing to litigate a case after it should have known it could not prove its claims, the U.S. District Court for the District of New Mexico in EEOC v. TriCore Reference Laboratories, Case No. 09-CV-956 (D. N.Mex. Oct. 27, 2011), issued an order setting reasonable attorneys’ fees in the amount of $140,571.62 against the EEOC. This fee award joins a growing line of cases reflecting judicial intolerance for hard-line litigation tactics by the EEOC (see here and here).

In EEOC v. TriCore, the EEOC unsuccessfully claimed that TriCore failed to reasonably accommodate an employee’s disability and ultimately terminated her based on her disability in violation of the Americans With Disabilities Act. Earlier this spring, Judge John Conway granted TriCore’s motion for summary judgment, finding the EEOC had offered nothing to refute TriCore’s evidence demonstrating it provided reasonable accommodations to the employee and that her poor performance was a legitimate, nondiscriminatory reason for her termination.

TriCore then filed a motion for an “Order Deeming the EEOC’s Claims as Frivolous, Unreasonable, or Without Foundation.” Following the U.S. Supreme Court’s holding in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), that a defendant may recover attorneys’ fees “[w]here a claim is initially viable but later becomes frivolous, unreasonable, or groundless,” Judge Conway granted TriCore’s motion. The Court faulted the EEOC’s continued litigation of the case despite its having provided responses to requests for admission that gutted the failure to accommodate claim, and despite having received correspondence from the employer that outlined the insufficiencies of its claims.

TriCore subsequently filed a Motion for Attorneys Fees, supporting the reasonableness of its requested amount with affidavits and time records. Surprisingly, the EEOC chose not to dispute the reasonableness of the requested attorneys’ fees, instead opting to renew its opposition to the Court’s prior finding that its case had been frivolous. Noting that the EEOC’s arguments had already been considered and rejected, the Court granted TriCore’s application for attorneys’ fees to the tune of $140,571.62. On October 27, 2011, the Court stayed execution of the fee award pending an appeal by the EEOC.

EEOC v. TriCore serves as a reminder to employers that efforts to be reasonable when faced with aggressive EEOC litigation tactics can pay dividends in the end. After this case and a growing number of similar decisions, employers now have more ammunition with which to challenge unreasonable and groundless claims by the EEOC.

By Christopher J. DeGroff and Gerald L. Maatman, Jr.

EEOC complaints are known for their brevity, often consisting of a mere handful of terse paragraphs, even in complex pattern or practice cases. On September 28, 2011, Judge Robert M. Dow Jr. of the U.S. District Court for the Northern District of Illinois told the EEOC that its Spartan pleading style had gone too far or, more accurately, not far enough, in a ruling in EEOC v. United Parcel Service, Inc., No. 09-CV-5291 (N.D. Ill. Sept. 28, 2011).

The EEOC filed its original lawsuit in 2009, claiming that UPS discriminated against Trudi Momson on the basis of her alleged disability by terminating her at the conclusion of a 12-month leave of absence.  Our previous posts have identified these leave issues as a hot topic for the EEOC, particularly as a pattern or practice claim where employers use neutral leave polices in dealing with sick, injured, and disabled workers. Judge Dow dismissed the case in September of 2010 - in EEOC v. United Parcel Service, Inc., No. 09-CV-5291,2010 U.S. Dist. LEXIS 94401  (N. D. Ill. Sept. 10, 2010) - on the basis that the EEOC had not put enough detail concerning Momson’s alleged disability in the Complaint to determine she was qualified for her job with or without an accommodation, but gave the EEOC another chance to assert an amended complaint. The EEOC did so, and on September 30, 2010, filed an amended complaint asserting a pattern or practice claim by adding a claim by another employee (Mavis Luvert) and a class of unidentified UPS employees.

UPS filed another motion to dismiss. The Company did not challenge the EEOC's claims for the named claimants Momson or Luvert, but instead attacked the EEOC’s supposed “class” by arguing that the EEOC had not and could not plead facts regarding the class members’ disabilities, leaves of absence, or any accommodations that UPS supposedly failed to provide them. Id. at 3.

The Court agreed, and dismissed the case again.
UPS’s main argument was that the EEOC must be able to provide some evidence to support its class claims – that under precedent like the Supreme Court’s Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), simply providing the bare elements of a case is not enough to support a class-type case. The EEOC contended that it had put UPS “on notice” and that was enough. The Court did not agree, explaining that cases from the Northern District of Illinois have held that an ADA case must be plead with adequate specificity. Id. at 7. Although the EEOC pointed to Title VII cases where bare-bones pleading had been allowed, Judge Dow said the ADA is different – sometimes employment decisions based on certain impairments do not violate the law (unlike race or sex-based decisions), and therefore more detail is required in an ADA complaint. Id. at 7-8. 

The EEOC also argued that if it was required to collect specific facts of discrimination before filing suit, employers would hide such information during EEOC investigations. The Court rejected the EEOC's position out of hand, reasoning that the EEOC had more than enough tools to collect the proper information to support its case before filing suit. Id. 8-9. 

Finally, the EEOC argued (as it often does) that it is the government, and is not constrained by the rules that apply to private litigants. The Court rejected that argument as well, noting that although the EEOC did not face the full force of Fed. R. Civ. P. 23 when filing a class-like case, it still “must include sufficient facts to put UPS on notice of the nature of the claim(s) and must state a plausible claim for relief.” Id. at 9.

The Court gave the EEOC one final chance to file another amended complaint that has enough meat to pass Fed. R. Civ. P. 8 muster. It remains to be seen if the EEOC can do so. Often the EEOC asserts class-wide discrimination in its complaints, but those allegations dissolve when pressure-tested. Indeed, the EEOC often states that it expects to use the discovery process to uncover discriminatory practices, rather than having the goods to support such claims before filing a lawsuit. Employers facing similar bare-bones complaints should consider challenging the EEOC from the outset and, where appropriate, filing a Twombly-style motion to dismiss. As the UPS case shows, such a strategy may jettison large portions of the EEOC’s case at the front door of litigation.

By Alex Drummond and Erin Wetty

The debate continues in Corporate America and federal courthouses relative to the tactics utilized by the EEOC in pursuing its litigation enforcement program. Some like it; other do not. As detailed here, some federal judges have criticized the EEOC's tactics and dismissed the government's lawsuits on a variety of grounds, and some judges have entered large fee awards against the EEOC as a result. The one thing that is certain is that the EEOC's tactics are controversial, as the EEOC continues to push the legal envelope in litigating its cases in an aggressive fashion.

Yet, following this summer's pro-government ruling in EEOC v. JP Morgan Chase Bank, N.A., No. 09-CV-00864 (S.D. Ohio July 6, 2011) - previously discussed in our blog here - on September 20, 2011, Judge James C. Dever III of the U.S. District Court for the Eastern District of North Carolina continued the trend of affording the EEOC great flexibility in pursuing claims without satisfying procedural requisites as to the claims of the purported victims of workplace bias for whom it sues. In EEOC v. Luihn Food Systems, Inc., No. 09-CV-387 (E.D.N.C. Sept. 20, 2011), Judge Dever ruled that the EEOC’s failure to investigate and conciliate an individual's claim and its failure to issue a cause determination as to that claim does not deprive a federal court of subject-matter jurisdiction under Section 706 of Title VII when the EEOC satisfied those same prerequisites for other allegedly injured individuals under similar factual circumstances.

Factual And Procedural Background
In August 2009, the EEOC sued Defendant Luihn Food Systems, Inc., a Kentucky Fried Chicken franchisee, on behalf of four named aggrieved employees, each of whom had filed an EEOC charge alleging that the same male co-worker had sexually harassed them and that Luihn had failed to take corrective action. These charges also referenced a class of other similarly-situated female employees. The EEOC pursued its claims against Luihn under Section 706 of Title VII. Subsequently, the four employees intervened in the litigation per the procedures of Title VII.

During the course of discovery, the EEOC identified former employee Pamela Johnson as an additional individual who had been subjected to alleged sexual harassment by the same co-worker as the four intervening employees. The EEOC’s amended complaint made no mention of Johnson; Johnson had never filed a charge with the EEOC; and the EEOC admittedly never investigated Johnson’s specific claim, never issued a cause determination regarding her claim, and never attempted to conciliate her specific claim with Luihn.

Based on the EEOC’s failure to satisfy these administrative prerequisites before pursuing Johnson’s claim, Luihn moved for summary judgment as to the EEOC's claim for Johnson, arguing that the court lacked subject-matter jurisdiction.

The Court Sides With The EEOC
The EEOC argued that its failure to investigate and attempt conciliation with respect to Johnson’s specific claim was not a jurisdictional bar because it had satisfied these procedural prerequisites with respect to similarly-situated employees, specifically, the four employees who had intervened in the litigation. Judge Dever agreed with the EEOC and denied Luihn’s motion for summary judgment.

In reaching his conclusion, Judge Dever relied heavily on EEOC v. American National Bank, 652 F.2d 1176 (4th Cir. 1981). In American National Bank, the Fourth Circuit held that it had subject-matter jurisdiction over the EEOC’s race discrimination claims regarding a particular branch of the defendant bank, even though the EEOC had focused its investigation and conciliation attempts on a different bank branch and not the branch at issue in the case. The Fourth Circuit found that the EEOC’s claims could proceed because nearly identical race bias claims at the other branch were sufficient to put the employer on notice of the challenged actions at the second branch.

Applying the reasoning from American National Bank, Judge Dever concluded that the EEOC had sufficiently alerted Luihn that it would be pursuing a class-like claim because, during conciliation efforts, the EEOC sought to settle the claims of the four intervening employees, as well as the claims for at least one additional worker (though, it was not Johnson). The Court held that “[t]he presence of this additional employee indicates that the EEOC maintained throughout conciliation that its claims related to the four charging parties and a class of similarly situated female employees.” EEOC v. Luihn Food Systems, at 8. In doing so, Judge Dever declined to follow contrary case law precedent outside of the Fourth Circuit. Id. at 9.

In addition, because Johnson’s claim related to the same employer at the same store during the same relevant period and involved the same co-worker as the four intervening employees' claims, Judge Dever held that it was proper to allow the EEOC to proceed with pursuing Johnson’s claim, even though Johnson and the EEOC had not fulfilled the procedural prerequisites for her specific claim.

Implications For Employers
Like EEOC v. JP Morgan Chase Bank, N.A., this is a disturbing case for employers.  It encourages "hide the ball" tactics whereby an employer is forced to box with shadows and remain in the dark as to the size of the class of claimants for whom the EEOC seeks recovery. The result is a situation where the EEOC scours the list of ex-employees and workers in the employer's current employee population in an effort to expand the case and add others to the claimant list.

This ruling also underscores the need for aggressive defense tactics. Where, for example, the EEOC makes general class-like allegations or refers to additional unnamed similarly-situated individuals during its investigation and conciliation efforts, an employer should insist that the EEOC identify the scope of the class (by work unit or supervisor, for example). If the EEOC continues to refuse to cooperate, then the employer should memorialize in writing what it believes is the scope of the class, so there is no mistake what the employer did or did not know during the investigation and conciliation stage. This documentation can prove useful in subsequent litigation when a dispute centers on whether the employer had notice of the potential class claims. Fortunately, and as Judge Dever even recognized, there is significant case law outside of the Fourth Circuit that reaches a different conclusion than Judge Dever did and which employers may rely on if they find themselves in a similar situation as Luihn.

By Christopher DeGroff and Gerald L. Maatman, Jr.

On August 17, 2011, Judge Loretta Preska in the U.S. District Court of the Southern District of New York issued a decision putting a resounding end to nearly four years of litigation in EEOC v. Bloomberg L.P., No. 07-CV-8383 (S.D.N.Y. Aug. 17, 2011). In 2007, the EEOC accused Bloomberg of violating Title VII by engaging in a pattern or practice of discrimination against pregnant employees or those who recently returned from maternity leave. Bloomberg had 603 employees who were pregnant or took maternity leave between 2002 and 2009 – 78 of whom the EEOC claimed were victims of discrimination. In granting the employer’s motion for summary judgment, the Court held that it “cannot say that the EEOC has proffered evidence from which a fact-finder could conclude that Bloomberg engaged in a . . . practice of decreasing the pay, responsibility, or other terms and conditions of employment” of its alleged victims. Id. at 2. In so doing, the Court took the EEOC to task on the very underpinnings of its case theory, and issued a stunning rebuke to the Commission in one of its highest-profile cases.

The EEOC Had No Statistical Support, But Bloomberg Did

First, the Court emphasized that the EEOC did not have the numbers to back up its claims of a widespread pattern of disenfranchising Bloomberg's pregnant or recently pregnant employees. Despite the EEOC’s own compliance manual’s instruction that statistical evidence is “extremely important” in a pattern or practice claim, the EEOC argued that statistical evidence was not legally required and therefore should not hurt its case. The Court reasoned that a lack of statistics may not be fatal in itself, but that in its absence was “severely damaging” and required the EEOC to provide significant anecdotal evidence (it could not, as discussed below). Id. at 25.

On the other hand, Bloomberg was able to present evidence that it did not discriminate against pregnant employees in either compensation or job responsibilities. In fact, Bloomberg’s statistical experts showed that the EEOC’s class members received greater compensation bumps than employees who took leaves for reasons other than pregnancy. Id. at 10.The EEOC could not counter that evidence. This one-two punch knocked out the EEOC’s assertion that there was a pattern or practice of discrimination.

The EEOC Had Only Weak, Disconnected, Or Outright Inadmissible Anecdotal Evidence

Without the numbers to back up the EEOC's claims, the Court analyzed whether the EEOC presented compelling anecdotal evidence to suggest this case should go to the jury someday. The Court concluded that the EEOC failed to deliver. The Court held that the EEOC’s anecdotal evidence came from only a fraction of the 78 women it claimed were victims, and even that evidence was at best a mixed bag and “insufficient to demonstrate a pattern or practice.” Id. at 13. The Court declined to identify a threshold percentage of a class that the EEOC needed to present in terms of anecdotal evidence, but “the fact that nearly 90% of Bloomberg’s pregnant or mother employees had no claims is significant.” Id. at 28. Moreover, when the EEOC was able to come up with at least some stories of alleged discrimination, it could not compare the experiences of its victims with similarly-situated employees. Id. at 29. The EEOC glossed over this point in the arguments in the briefing, but the Court noted that showing disparate treatment in this situation was “vital” in discrimination cases. Id. Finally, the Court determined that it was more interested in the quality of the anecdotal evidence it was reviewing – not mere quantity – and that the EEOC’s “evidence” was wanting. Id. 

The EEOC also attempted to establish that there were negative stereotypes against women that demonstrate the company’s intent to perpetuate pervasive discrimination. Id. at 42. The EEOC pointed to a number of comments that were offensive, but the Court found that much of this evidence was either inadmissible hearsay or did not support the EEOC’s claims. Id. at 43. While the Court acknowledged that the EEOC was able to unearth some admissible evidence of sporadic negative comments, it was unable to connect the dots of those statements to some grand, company-wide scheme to discriminate against all 603 women who took a maternity leave over six years. Id. at 45.

Ultimately, the Court held that the EEOC’s non-existent statistical case - coupled with nebulous and downright unpersuasive anecdotal evidence - was not enough to move the case to an expensive and time consuming trial. 

Implications Of EEOC v. Bloomberg

The Court’s decision concludes that the EEOC’s case was so riddled with problems that the employer should not have to face a trial as to the alleged pattern or practice of discrimination. A grant of summary judgment is rare in such a case. EEOC v. Bloomberg is a case study where a massive claim brought by the government was found so wanting to be booted out of the courthouse for lack of proof.

The failings identified by the Court may appear familiar to those who regularly litigate against the EEOC. Employers facing EEOC pattern or practice claims should consider each of the pressure points that often represent fragile vulnerabilities for EEOC cases: weak statistics, shaky or non-existent supporting evidence, and half-baked anecdotal stories that, when tested, dissolve. 

By Christopher DeGroff and Gerald L. Maatman, Jr.

One of our top five most intriguing cases of 2010 - EEOC o/b/o Serrano, et al v. Cintas Corp., 2010 U.S. Dist. LEXIS 18130 (E.D. Mich. Mar. 2, 2010) - heated up again last week by virtue of a decision by Judge Sean Cox from the U.S. District Court for the Eastern District of Michigan to award the Cintas Corporation $2,638,443 in fees and costs. The ruling is a resounding defeat for the EEOC's systemic litigation program.

In earlier proceedings in EEOC o/b/o Serrano, the EEOC refused to identify the women it represented in a gender discrimination case, claiming they should only be identified in a later phase of the case. The Court disagreed, noting that "Defendant quite reasonably seeks to focus its attention upon the specific women on whose behalf the EEOC intends to seek damages. The information is relevant to the issues in controversy … and the EEOC has no principled reason to withhold it." The Court relied on and reinforced the explosive ruling in EEOC v. CRST Van Expedited, Inc. 257 F.R.D. 513 (N.D. Iowa 2010), in which the EEOC similarly stonewalled the company in explaining who it sought to represent; that tactic ultimately resulted in the Court entertaining motions for a $4.5 million in that Iowa case. 

After the Court in EEOC o/b/o Serrano, et al v. Cintas Corp. dismissed the litigation brought by the EEOC, the defendant sought costs of $1,097,918.37 and attorneys' fees of $4,595,432.89. After extensive briefing, the Court gave the fee and costs award a significant haircut, but still left the EEOC owing over $2.6 million in fees and costs (link to decision here).

Overall Attorneys Fees Reduced
The amount of attorneys' fees is where the Court made its most significant cuts. Cintas sought just under $4.6 million in fees in this case, and $2.5 million of that was for fees it accumulated between the time the case was filed by the private plaintiffs to the date those private plaintiffs moved for (and lost) class certification. Cintas asked the Court to award it 33% of those fees. The Court was not persuaded by the employer’s backup for the fees for this phase of the case, as it was not able to connect the employer’s fees to EEOC-related litigation (the EEOC was only marginally involved in the case at that point), holding that the 33% factor was largely arbitrary. Thus, the Court rejected all pre-certification fees altogether. Id. at 10.

Cintas also sought over $3 million in fees accumulated after certification was denied - the time frame where the EEOC truly stepped in and took over the case. Here, the Court was more generous, agreeing that Cintas had met its burden showing that it was entitled to these fees, noting that the time spent by the 10-attorney defense team were reasonable and that “there is no dispute that Cintas [was] the prevailing party.” Id. at 11. The Court, however, reduced the demand to only that time related to defending the EEOC claims, and then cut an additional 10% because the employer’s fee records had some confusing entries and block-billing. The Court awarded fees of  $1,905,387.

Costs Awarded But Reduced
For many of the same reasons as the reduced award of fees, the Court denied pre-certification costs, and individual categories of expenses like computer legal research and travel costs were cut. Cintas was successful, however, in recouping $335,607 in expert witness fees necessary to rebut the EEOC’s expert - the largest cost line item. In all, the Court awarded Cintas over $730,000 in costs related to its defense of the EEOC's claims.

Individual Plaintiffs Not Responsible For Costs
As an interesting footnote, the Clerk had also arguably included the former individual plaintiffs as being on the hook for the litigation costs when it taxed the costs. The Court addressed this issue, noting that all of the parties understood that Cintas was seeking fees and costs only from the EEOC. The Court gave the individual plaintiffs a pass on the hefty costs award.

The ruling in EEOC o/b/o Serrano, et al v. Cintas Corp. is yet another in a recent series of set-backs for the EEOC's systemic litigation program. Employers facing systemic EEOC cases that ultimately go nowhere will obviously applaud this fee and cost award (even if it was half of the sought-after loaf). EEOC-initiated pattern or practice cases are incredibly time consuming and expensive, and even more problematic when grafted to private-plaintiff class actions like those faced by Cintas. The good news is, based on cases like EEOC o/b/o Serrano, et al v. Cintas Corp., employers have ammunition to make the government think twice about bringing and/or continuing to prosecute facially meritless claims.

By Christopher DeGroff and Gerald L. Maatman, Jr.

The EEOC continues to push the limits of its subpoena authority across the country in various systemic investigations, and no doubt will be further emboldened by its recent victory in EEOC v. Schwan’s Home Services, No. 10-3022 (8th Cir. July 13, 2011).This terse 8-page decision addresses a number of subpoena-related issues, all of which were decided in the EEOC’s favor. To that end, it ought to be required reading for corporate counsel and HR managers dealing with EEOC systemic investigations.

In this case, Kim Milliren filed a discrimination charge in 2007 against Schwan's Home Services ("SHS") claiming that she was harassed, demoted, and ultimately lost her job because of her gender. In particular, Milliren claimed she was not promoted to Local General Manager, even though she had completed the required General Manager Development Program (“GMDP”). 

The EEOC subsequently launched an investigation, and requested the names and genders of employees who had participated in the GMDP in 2006 and 2007. SHS provided partial information for 2007, but did not provide information for 2006 and refused to provide any gender information other than for a handful of employees who had failed the course in 2007.

After the EEOC made its original request for information, Milliren made additional allegations about her treatment by certain managers and discrimination against other female job applicants. The EEOC sent a second request to SHS concerning these new allegations, and again demanded the GMDP data the employer had declined to produce in response to the first request. SHS did not respond at all. In July 2008, the EEOC issued a subpoena for the requested information. SHS petitioned to revoke that subpoena, and the EEOC denied the employer's petition. SHS then complied in part, but still refused to give the gender breakdown of successful GMDP graduates.

Months later, Milliren filed an amended charge, repeating her original allegations but now including a specific class-related claim. SHS objected to the amended charge, noting that it was untimely because it was more than 300 days after Milliren separated from the company. The EEOC nevertheless served a second subpoena seeking the information that SHS had refused to provide in response to the first subpoena, and SHS refused to comply even after its second petition to revoke was rejected.

The EEOC filed a subpoena enforcement action, and the magistrate judge assigned to the case in the U.S. District Court for the District of Minnesota ordered SHS to comply with the subpoena. SHS filed objections with the district court, which were overruled. SHS then appealed to the Eighth Circuit.

Broad View Of What Constitutes A Valid Charge
SHS argued that the basis for the EEOC's second subpoena was Milliren’s amended charge, and because that charge was untimely, the subpoena was unenforceable. The Eighth Circuit rejected this argument out of hand, noting that the time to argue about the procedural propriety of the charge was when and if the EEOC filed a lawsuit, not at the subpoena stage. Id. at 6.

The Eighth Circuit similarly rejected SHS's argument that the systemic allegations were based on nothing more than Milliren’s hunch that there was a pattern or practice of discrimination. The Eighth Circuit noted that the charge itself was valid “regardless of the strength of its evidentiary foundation.” Id. The Eighth Circuit went on to observe that viewing the amended charge in the context of her other allegations, that her systemic allegations were “more than a mere boilerplate charge of discrimination.” Id. at 7.

Expansive View Of EEOC’s Subpoena Authority
Having found the underlying charge was valid (or at least presumptively so), the Eighth Circuit next turned its focus to whether the EEOC’s subpoena was enforceable. SHS claimed the information sought was irrelevant to Milliren’s claims. The Eight Circuit acknowledged that an EEOC subpoena “cannot … wander into wholly unrelated areas” but here, the request for GMDP data was relevant to the determination of whether SHS ran that program to the detriment of women. Id. at 7-8. In fact, the Eighth Circuit reasoned that, even if SHS was correct that Milliren’s systemic claims were procedurally flawed, the EEOC still had authority to seek broad information concerning the company’s programs because the EEOC’s investigation had arguably revealed potential systemic discrimination.

Implications For Employers
While the reasoning behind the Eighth Circuit’s decision was not entirely novel, this case once again signals an increasing deference of federal courts to the EEOC's subpoena powers during the investigative stage. One possible take away from EEOC v. Schwan’s Home Services is a reminder to employers to pick one’s battles carefully during an EEOC investigation. Even where, as here, it was not unreasonable for SHS to argue that an EEOC subpoena based on a defective charge was unenforceable, an employer must make a judgment call as to providing otherwise benign or even favorable information. The EEOC may not have the resources to review all information it is given, but has recently shown it will spare no expense to defend the scope of its investigatory powers.

By Christopher DeGroff and Gerald L. Maatman, Jr.

On June 9, 2011, Judge Philip Brimmer in the U.S. District Court for the District of Colorado issued a complicated ruling addressing a tangle of administrative and procedural issues in the EEOC-initiated religious discrimination pattern or practice lawsuit entitled EEOC v. JBS USA, LLC, No. 10-CV-02103 (D. Colo. June 9, 2011).  The decision examines the gamut of issues in EEOC pattern or practice litigation ranging from timeliness issues, administrative prerequisites, and the sometimes confounding interplay between governmental and private litigants. 

The EEOC v. JBS case focused on the treatment of black Somali Muslim employees working at JBS’s Greeley, Colorado meat packing facility.  The EEOC's allegations included a host of claims, including harassment, discipline, discharge, and retaliation for engaging in protected activity.  Employees also claimed that JBS refused to allow them to pray during breaks and did not accommodate their observance of particular Muslim holidays.  As is noted below, it is significant that the employees were represented by the United Food and Commercial Workers Local #7, which was ringside for the back and forth between management and the Muslim employees.  Ultimately, the EEOC sued on the employees’ behalf on a pattern or practice theory.  Soon thereafter, two separate groups of employees filed their own respective complaints to intervene, seeking to join in the case en masse.  JBS moved to dismiss all three cases, claiming each was fatally flawed.

In a 30 page opinion, Judge Brimmer navigated a number of thorny procedural and administrative issues, with some interesting results.

Strict Adherence To Time Limitations
We start with one of the few positive notes - the Court limited the intervenors' claims to only those claims that occurred within 300 days of the filing of their respective administrative charges.  For some intervenors, this would gut their individual claims, as the flashpoint of the case occurred during Ramadan 2008 and in some cases more the 300 days before they filed their charges.  The Court acknowledged that with amorphous harassment claims, that claimants can sometimes rely on events outside of the 300 days, but noted that is not so of discrete acts.  Failure to accommodate religious beliefs, discipline, discharge and retaliation are discrete acts that the Court ruled must occur within the 300 day window. 

Unfortunately for JBS, the positive rulings end there.
Lenient View On Exhaustion Argument And Premature Filing
JBS also contended that the private litigants’ claims should be dismissed because some of the intervenors either filed unverified charges of discrimination, did not file charges at all, or in some cases filed suit before receiving a right to sue letter from the EEOC.  The Court first acknowledged that Title VII plaintiffs are required to exhaust their administrative remedies with the EEOC before filing suit, and the fact that the intervenors in this case were also named in the EEOC’s lawsuit did not give them a pass on those prerequisites.  Nonetheless, the Court took a broad view of those prerequisites.  Even though the Court agreed that many of the charges were unverified, the Court reasoned that not every technical defect defeats a case.  Here, JBS responded to all of the charges it received (even those that were unverified), was on notice of the claims facing it, and that this “technical” violation was not enough to stop the lawsuit. 

But what of those intervenors who did not file a charge at all?  Here, the Court relied on the “single filing rule,” allowing – in theory – the intervenors who did not file charges to piggyback on similar claims by those who had.  We say “in theory” because the Court did not fully rule on this issue.  Judge Brimmer asked for more briefing on just who had filed charges and who had not, and the timing of those charges. 

The Court then turned to intervenors who filed their claims before receiving a right to sue letter.  After an extensive discussion of the jurisdictional basis for a right to sue – and the fact that such a defect can be cured after the fact – the Court again sided with the intervenors. 

Union Not A Necessary Party, Either To The Lawsuit Or To Conciliation Efforts
Finally, JBS argued that under the Federal Rules of Civil Procedure, it was impossible for either the EEOC or the two teams of private litigants to bring their claims without including the Union.  JBS argued as much because much of the relief the parties sought included reinstatement, changes to policies and front pay to alleged victims – all elements that were in the Union’s wheelhouse.  The Court disagreed, noting that none of the private litigants were claiming that the Union did anything wrong, and most of the relief could still be accomplished with our without resort to the collective bargaining agreement or the Union. 

In a similar vein, JBS claimed that the EEOC had not met its pre-litigation obligation to attempt to conciliate the case in good faith because it had not involved the Union.  Again, Judge Brimmer disagreed, noting that the EEOC had attempted to reach accord with the company, and the fact that the Union was not at the table did not erase those efforts.

This portion of the decision is significant inasmuch as the opposite ruling would have suggested that in virtually all cases with an organized workforce, a union would necessarily have to be named as party.

A Decision Without A Difference?
Despite the legal issues presented by JBS’s multi-pronged motions to dismiss, in the end it appears it may not have achieved much at all.  Judge Brimmer was clearly not persuaded by JBS’s technical attacks on the pleadings, choosing instead to give the intervenors their day in court.  But even if the Court had held for JBS and had stripped away the intervenor claims, JBS would still have been faced with an aggressive action by the EEOC – a pattern or practice lawsuit where the EEOC is often not held to the same rules as private litigants. 

What is clear, however, is that with the EEOC’s increasing focus on large-scale litigation, employers can expect to see more and more intervenor actions, with private litigants making a grab for their personal claims while riding the government’s coat tails, or even partnering with the EEOC in a coordinated attack.  Viewed in that light, JBS’s attempt to fragment the intervening parties appears worth the gamble, even if it was unsuccessful in this case.

By Christopher DeGroff and Gerald L. Maatman, Jr.

As we have reported in other posts (here and here), there have been a disturbing trend in federal district courts to give the EEOC significant latitude in the scope of its investigations.  Recently, however, Judge Terrence McVerry of the U.S. District Court for the Western District of Pennsylvania reigned in the EEOC’s investigation in a subpoena enforcement action entitled EEOC v. UPMC, No. 11-MC-121 (W.D. Penn. May 24, 2011).

In that matter, the EEOC was investigating a charge filed by Carol Gailey, a Nursing Assistant at one of UPMC’s medical centers.  The employer granted Gailey a number of leaves of absence to address certain serious health issues.  After granting these leaves, short term disability benefits, and alternative work arrangements, UPMC granted Gailey a final Personal Leave of Absence (“PLOA”) for cancer surgery.  When Gailey exhausted the 14-week limit of PLOA leave and did not return to work, the employer terminated her employment.

Gailey filed a charge of discrimination claiming her termination violated the Americans With Disabilities Act.  UPMC filed a position statement denying the allegations and explained the basis of its PLOA policy.  In a request for information that the EEOC later converted into a subpoena, the government demanded that UMPC provide 10 categories of information about “all employees who were terminated after 14 weeks of a medical leave of absence….”  The subpoena addressed the entire UPMC corporate structure, not just the location where Gailey worked, and sought records from after the date Gailey was separated.  UPMC objected to the subpoena on a number of grounds, and the EEOC filed an enforcement action in the U.S. District Court for the Western District of Pennsylvania.

The Court first recognized that the relevance test for an EEOC subpoena “is not onerous” and that the government may seek any information that “might cast light” on the allegations against the employer.  The Court noted - and the EEOC openly admitted - that its investigation was not directed at Gailey’s charge, but rather was seeking other victims of what the Commission believed could be a policy that was illegal under the ADA.  The Court balked at the EEOC tactics, noting that the EEOC should have used “narrowly-tailored, potentially dispositive inquir[ies]” before it launched into an inquiry into what the Court called a “tangential alleged systemic violation.”  The Court concluded that the subpoena at issue “constitutes a ‘fishing expedition’ to discover the existence of other potential claimants rather than a reasonable effort to develop information tat is relevant to Gailey’s charge of discrimination.”  As a result, Judge McVerry denied enforcement of the subpoena.

The EEOC has signaled that it intends to test “per se” leave policies as part of its renewed focus on the ADA, and the EEOC v. UMPC case certainly seems to be in that vein.  Wide-ranging requests for information and aggressive subpoena enforcement actions are the "go-to weapons" in the EEOC’s arsenal, and are increasingly difficult to challenge.  Judge McVerry’s decision in this case, however, provides employers a well-reasoned piece of ordinance of their own, and hopefully represents an example of pragmatic reasoning that cuts against a more lenient trend in wide-ranging EEOC investigations.

By Christopher DeGroff and Gerald L. Maatman, Jr.

Employers sued by the EEOC under the ADA litigate with the threat of the full weigh of the government being brought to bear upon them.  But the tables were turned on the EEOC recently in a rare decision by the U.S. District Court for the District of New Mexico in EEOC v. Tricore Reference Laboratories (Case No. 09-CV-956 (D.N.Mex. April 27 2011), where Judge John Conway awarded attorneys' fees to the employer prevailing on summary judgment. The ruling follows on the heels of other fee sanction awards recently entered against the EEOC.

In EEOC v. Tricore, the Commission claimed that the employer failed to reasonably accommodate Rhonda Wagner-Alison’s disability and ultimately terminated her based on her disability, all in violation of the Americans With Disabilities Act.  Wagner-Alison’s job duties as a phlebotomist included standing and walking - functions that the EEOC eventually admitted she simply could not perform.  Tricore attempted to accommodate Wagner-Alison’s condition by moving her into a temporary data-entry position that did not involve standing or walking.  The EEOC could not dispute that Wagner-Alison committed numerous errors in that new position, so many so that Tricore ultimately had to fire her.  Given these fatal flaws in the EEOC’s case, the Court granted summary judgment for Tricore.  Tricore then filed a motion for an "Order Deeming the EEOC’s Claims as Frivolous, Unreasonable, or Without Foundation.” 

Like the recent decision in EEOC v. Peoplemark, Inc., the Court in Tricore applied the well-established standard from Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), that “[w]here a claim is initially viable but later becomes frivolous, unreasonable, or groundless,” a defendant may recover  attorneys' fees if the plaintiff - here, the EEOC - continues to pursue those claims.  The Court observed that “despite…black-letter law, with which the EEOC is presumably intimately familiar,” it nevertheless pursued a failure to accommodate theory even though it answered a set of Rule 34 requests to admit that gutted its claim.  Likewise, defense counsel for Tricore sent the EEOC a letter specifically cataloging how it could not support its unlawful termination claim.  The EEOC ignored the letter and nevertheless pressed on in the litigation.  Since the EEOC knew or should have known its case was - as the Court put it, “frivolous, unreasonable and without foundation”  - it was deemed responsible for Tricore’s attorney’s fees.  The exact amount of those fees is to be set in subsequent proceedings.

The EEOC is an aggressive litigator and only reluctantly throws in its hand.  EEOC v. Tricore represents another example of how employers faced with hard line EEOC tactics must maintain their composure and methodically chronicle their discovery efforts to be reasonable.  Although there may be a perceived tactical disadvantage to telegraphing defense arguments, EEOC v. Tricore shows that highlighting the fatal flaws in an EEOC case may work to the employer’s advantage in the end.

By Gerald L. Maatman, Jr. and Christopher J. DeGroff

After a year that saw the EEOC filing a record number of subpoena enforcement actions, employers now also face a disturbing trend of courts taking a broad view of the EEOC's subpoena power.  This trend continues in EEOC v. Konica Minolta Business Solutions USA., Inc., No. 10-1239 (7th Cir. April 29, 2011), a ruling of this past week.

EEOC v. Konica presents a familiar scenario: a single charging party - Elliot Thompson - claims he was terminated because he was African American.  In the early stages of the EEOC's investigation, it learned that the only African-American employees in the company ultimately landed in Konica's Tinley Park office.  Suspecting illegal steering, the EEOC sent Konica a broad request for information seeking information about the company's hiring practices.  Konica objected, and argued, among other things, that the request was over broad because its hiring practices had nothing to do with Thompson's termination claim.  The EEOC subsequently issued a subpoena for that information, and when Konica still refused to comply, the Commission filed an enforcement action before Judge Blanche Manning in the U.S. District Court for the Northern District of Illinois.  Judge Manning upheld the subpoena, and Konica appealed.

The Seventh Circuit observed that the EEOC's investigative authority is limited to evidence "relevant to the charge under investigation," but that the relevance standard is not particularly onerous, and could include "virtually any material that might cast light on the allegations against the employer."  The Seventh Circuit likened the standard to that of discovery in federal litigation, particularly Rule 26 of the Federal Rules of Civil Procedure.  The Seventh Circuit took the somewhat significant leap to say that race discrimination claims like those in Thompson's charge were "by definition class discrimination" claims, and information as to potential discrimination in hiring may cast light on individual race allegations.  Thus, the Seventh Circuit held, the EEOC had a "realistic expectation rather than an idle hope" that hiring materials would illuminate the circumstances surrounding Thompson's charge.

Konica made the additional argument that it would be unreasonably burdensome and expensive to comply with the subpoena.  The Seventh Circuit recognized that this argument may have some applicability in these types of cases, but noted that the company did not give anything more than a conclusory statement concerning the burden.  The Seventh Circuit, therefore, rejected Konica's burden argument.

EEOC v. Konica is troubling in its expansive view of the EEOC's ability to explore beyond the four corners of the charge for evidence of illegal employment practices.  The ruling highlights yet again that relevance is an increasingly difficult argument to raise in the face of a government subpoena.  Additionally, a request for information may still be challenged as over burdensome, but that claim must be backed with hard and compelling data, not conclusory statements.

A final takeaway from EEOC v. Konica may not be so favorable for the EEOC, however.  It appears that Konica's subpoena woes were originally triggered by the fact that it was perhaps too cooperative in the early stages of the investigation.  The EEOC's underlying steering theory relied on by the Seventh Circuit was first developed through Konica's voluntary disclosure of data.  Cases like EEOC v. Konica may have the unintended effect of suggesting to employers that they should closely scrutinize each information request asserted by the EEOC, and limiting responses to the bare minimum lest the EEOC use that cooperation against the employer in later stages of the administrative investigation.

Co-authored by Condon McGlothlen and Tracy Billows

The Final Regulations under the Americans with Disabilities Amendment Act (“ADAAA”) were released today for publication tomorrow in the Federal Register.  These Regulations, which will be effective sixty days after publication, are noteworthy not only because of the regulatory guidance they provide from the Equal Employment Opportunity Commission (“EEOC”) as to the broadened protections enacted under the ADAAA, but also because these new regulations were approved in less than 90 days, the usual regulatory review period.  This reflects the Obama administration’s continued commitment to increased civil rights enforcement.

As expected, the regulations confirm the shift in the landscape in terms of the “focus of an ADA case.”  Before the ADAAA, in most situations or lawsuits, the focus had been on whether an individual was substantially limited in a major life activity and thus disabled under the ADA.  Now, with an expanded definition of substantially limited in a major life activity, the focus will be on whether discrimination occurred, with significant emphasis on the reasonable accommodation provisions of the ADA.

The Regulations include a list of medical conditions that “virtually always” will meet the definition of disability.  Such conditions include autism, cancer, cerebal palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia.  In addition to creating certain per se disabilities, this change also makes it easier for groups of individuals to bring claims under the ADA as part of a class action or pattern or practice claim.  Previously, most courts asked to treat an ADA claim as a class action concluded that such claims are highly individualized, both in terms of the factual and legal circumstances surrounding such claims, as well as the defenses asserted to such claims.  Now, however, all who work for an employer and suffer from the same condition, e.g. cancer, can claim that they as a group have experienced discrimination.

Another major ramification of the Regulations is that they foreclose the argument than an impairment is not substantially limiting because it is “temporary.”  The Regulations reject any durational minimum and state that “[t]he effects of an impairment lasting or expected to last fewer than six months can be substantially limiting within the meaning of this section.”  This, too, will significantly expand the number of individuals who will be considered disabled and protected by the ADA.

The ADAAA and new Regulations also greatly increase coverage for individuals who are “regarded as disabled.”  The ADAAA prohibits discrimination based on an employer’s alleged perception of a mental or physical impairment, even if that impairment is not perceived as an actual disability.  For example, if an employee has a minor lifting restriction which does not rise to the level of an actual disability, it could still nonetheless be the basis for a “regarded as disabled” claim.  Fortunately for employers, however, the Regulations (like the ADAAA) do not require employers to reasonably accommodate those individuals who are “regarded as” being disabled.

Besides issuing and enforcing its new Regulations, the EEOC is also cracking down on employers who have maximum leave time policies.  For example, some employer policies state that once an employee has been off for six months, he or she is automatically terminated.  The EEOC has taken the position that this per se rule violates the ADA requirement of an individualized, case-by-case assessment as to whether a reasonable accommodation is available.  The EEOC may now be able to bring a pattern or practice claim, or employees may now successfully assert a putative class action claim, alleging in certain instances that this per se rule or policy impacts all disabled individuals, regardless of the nature, duration, or other individualized circumstances surrounding their disabilities.

In sum, prior case law and guidance under the ADA is largely contrary to the ADAAA and new Regulations.  It is expected that the EEOC will use the regulations to assist in “pushing-the envelope” of its litigation theories in prosecuting ADA litigation.  As a result, employers should focus on the issue of reasonable accommodation, and whether an individual with a physical or mental condition or impairment is otherwise qualified to perform essential job functions, with or without a reasonable accommodation.  This will require employers to reevaluate policies and procedures related to reasonable accommodation, job descriptions and job qualification standards.  It is a brand new world in terms of disability discrimination and compliance with the ADA.

For further details and analysis regarding the new Regulations, please go to www.seyfarth.com, Publications, and view Seyfarth Shaw’s Management Alert.

Co-authored by Gerald J. Maatman, Jr. and Christopher J. DeGroff

Information buried within the minutia of the EEOC's recent budget proposal submitted to Congress [link to EEOC report] this past week is telling, and should be of concern to employers trying to stay clear of litigation with the Commission. It also underscores the EEOC's commitment to its Systemic Initiative for investigating and bringing cases involving groups or classes of alleged victims of discrimination.

First are the raw numbers. The EEOC hopes to increase its budget and assign more front-line investigators to its administrative investigations of employers. President Obama’s fiscal year (FY) 2012 budget includes a 9.5-percent increase – $18 million dollars – over the EEOC's actual budget for FY 2010. The agency has been operating under a continuing resolution in FY 2011, the most recent of which is scheduled to expire on March 4, 2011. The $385,520,000 allotted for the EEOC’s FY 2012 budget includes employment of 2,557 full-time equivalents (FTEs), a 9.2-percent increase over the 2,371 FTEs in the agency’s FY 2010 actual budget. A majority of the new hires will be on the front line of investigations.

Second are the reasons behind the numbers. The President’s budget states that the EEOC's "priority for agency resources continues to be litigation of systemic cases ...” Page 3 of the EEOC's submittal explicitly asserts that it desires to "prioritize spending for the Systemic Initiative…[since] systemic cases generate substantial media and other public notice, [and] they help to deter other employers from engaging in similar prohibited conduct." The EEOC's submittal also declared at page 23 that it expects to file more lawsuits in 2011 and 2012, and to increase the number of systemic lawsuits on its docket.

Third is the detail behind the reasons. In its budget projections for FY 2011, the Obama administration estimates that the EEOC will receive 105,917 new private sector discrimination charges, topping last year's record high of 99,922. The EEOC projects it will have a case backlog of 93,006 charges as of September. 30, 2011, the end of fiscal 2011. For fiscal 2012, the EEOC projects that it will receive 108,036 private sector charges and that EEOC will end FY 2012 with 100,834 pending charges in its backlog. These are increases upon the FY 2010 numbers, which saw the highest level of charges ever in the history of the Commission.

Finally, the EEOC's submission also gives a wider view of its systemic litigation program in the coming year. The Commission's submittal acknowledges at page 23 that '[a]s a greater proportion of [the EEOC's] litigation docket is focused on systemic cases, the amount of resources needed to perform the work will rise." The EEOC noted that its litigation costs have increased by over 70% in the last five years, and that it expects this trend to continue given the focus on systemic litigation.

By Christopher J. DeGroff

The EEOC prosecuted a record number of both systemic investigations and lawsuits in 2010, all part of its mushrooming systemic litigation initiative launched in 2005. The EEOC's end of the year report stated that it filed 250 new suits in 2010, and resolved another 285 for a total of $85 million in settlment proceeds. View EEOC Report Blog Post. Narrowing the sheer number of 2010 cases in a meaningful way is challenging, but we have collected our picks for the most interesting rulings in EEOC matters last year. These include cases that highlight the government's increasingly aggressive litigation and investigation methods, and tactics employers have used in response.

EEOC v. Bloomberg L.P., 2010 U.S. Dist. LEXIS 92511 (S.D.N.Y. Aug. 31, 2010). In this case, the EEOC claimed that the company engaged in a pattern or practice of unlawful employment practices, including discrimination on the basis of sex/pregnancy and retaliation. This decision had components that were both helpful and vexing for employers. The Court dismissed the EEOC's retaliation claim based on its failure to meet its prerequisite to attempt to conciliate claims before filing suit. This was a severe sanction under what has traditionally been a fairly loose standard, but the Court was mindful that the EEOC sought $41 million to settle the matter, but would not explain how it arrived at that number. On the other hand, the Court refused to dismiss the class claims based on Defendant’s "scope of the investigation" defense, arguably expanding what an employer is expected to appreciate as a class case even though it does not have particular information of the extent of the EEOC's investigation.

EEOC o/b/o Serrano, et al v. Cintas Corp., 2010 U.S. Dist. LEXIS 18130 (E.D. Mich. Mar. 2, 2010). In EEOC o/b/o Serrano, the EEOC refused to identify the women it represented in a gender discrimination case, claiming they should only be named in a later phase of the case. The Court disagreed, noting that "Defendant quite reasonably seeks to focus its attention upon the specific women on whose behalf the EEOC intends to seek damages. The information is relevant to the issues in controversy … and the EEOC has no principled reason to withhold it."  This case relies on and reinforces the explosive ruling in EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 (N.D. Iowa 2008), in which the EEOC similarly stonewalled the company in explaining who it sought to represent. That tactic ultimately resulted in the EEOC being sanctioned a whopping $4.5 million (which it is now appealing).

EEOC v. Evans Fruit Co. Inc., No. 10-CV-3033-LRS (E.D. Wash. Oct. 5, 2010). In Evans Fruit, the EEOC secured a rare but chilling injunction in what first appeared to be a garden-variety discrimination case. The EEOC alleged that the company created a hostile work environment for women, targeting a particular manager as a harasser. The EEOC later claimed the manager and others were intimidating witnesses, including following them from the facility, tracking their movements, and even photographing witness meetings.  The EEOC sought emergency injunctive relief, and the Court concluded that, while an injunction was an "extraordinary remedy," it was appropriate given the evidence that the government's investigation would be compromised if the alleged intimidation continued. The facts of this case are fairly extreme and overt intimidation like that alleged is uncommon. Given the success of this injunction tactic in this litigation, however, the EEOC may be primed to expand its use of this tool to less obvious situations, both to gain momentum in the underlying litigation as well as early positive media coverage.

EEOC v. Kronos, Inc., 620 F.3d 287 (3d Cir. 2010). Kronos arose out of a disability discrimination claim. The charging party applied for a job with Kroger Food Stores and was not hired based on an employment test created by Kronos. The EEOC focused on the Kronos test and its potential disparate impact on disabled candidates. The EEOC sought testing information from Kronos through a third-party subpoena. The EEOC also expanded its investigation to include race discrimination, even though the charge had not alleged race discrimination.  The Third Circuit allowed the EEOC’s administrative subpoena as to the disability aspects of the test used by the company, as it related to the claim of disability discrimination. It rejected, however, the EEOC's request race impact data. The Third Circuit reasoned that "the inquiry into potential race discrimination is not a reasonable expansion of [the] charge. Instead, the EEOC’s subpoena for materials related to race constitutes an impermissible ‘fishing expedition.’” EEOC v. Kronos gives employers ammunition to challenge overbroad EEOC demands for employment information, which is particularly important given the EEOC's trend to greatly expand the scope of its investigations as part of its Systemic Initiative.

EEOC v. Wal-Mart Stores, Inc., 2010 U.S. Dist. LEXIS 13192 (E.D. Ky. Feb. 16, 2010). The EEOC's agenda to target systemic employment practices necessarily includes its increased reliance on experts. In particular, using social scientists to show hiring biases and trends is a cutting edge tactic of both the government and plaintiffs' class action lawyers. In this case, the EEOC sued Wal-Mart claiming the company under-hired women.  In support, the EEOC relied on the expert opinion of a sociologist to argue that the company was the sort of environment where gender stereotyping could occur. Wal-Mart fought to exclude the EEOC's expert opinion, and the Court rejected the evidence. The Court noted that the sociologist could not clearly connect any stereotyping to hiring shortfalls. The Court concluded that since gender stereotyping existed in all facets of life, an opinion that somehow such stereotyping necessarily translates into unlawful hiring decisions could be more prejudicial than probative and presented a risk of unfairly confusing a jury.  The Wal-Mart case strikes a blow against the EEOC's use of certain expert evidence to bolster an otherwise questionable case.

This is just a handful of the many cases of note from 2011. Practitioners may disagree as to the "best" (or "worst" depending on one's point of view) EEOC cases in 2010. One thing is certain - the EEOC's accelerating litigation agenda will undoubtedly yield additional surprises and will result in more intriguing decisions in 2011.

Seyfarth Shaw LLP will be presenting a comprehensive webinar concerning strategies for employers targeted by the EEOC's systemic initiative on February 23, 2011. Click here for details and advance registration information.

Seyfarth Shaw's 2011 Workplace Class Action Report is coming soon! The report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation. Our loyal readers can expect to receive their copy in several weeks, with rulings and case law developments reviewed and analyzed through December 31, 2010.

To say the least, 2010 was a significant year for workplace class action litigation. We will address these developments in detail in the upcoming Report, and this post provides a preview.

Key developments over the past year manifest multiple trends that impact employers.

First, 2010 was the year of big headlines in employment discrimination class actions.  Those headlines involved the biggest class action trial verdict ever – the $250 million verdict in Velez, et al. v. Novartis in May of 2010 – and its subsequent settlement two months later for $175 million.  As success by the plaintiffs’ bar often prompts copy-cat litigation filings, these headlines are likely to encourage more class actions in the future, as well as enhanced settlement demands by the plaintiffs’ bar to resolve their cases.

Second, 2010 also spawned landmark Rule 23 decisions; none was more momentous than the ruling by the Ninth Circuit in Dukes, et al. v. Wal-Mart Stores, Inc. on April 26, 2010, and the subsequent grant of certiorari in the case by the U.S. Supreme Court on December 6, 2010.  In a 6 to 5 en banc opinion, the Ninth Circuit upheld, in part, certification of the largest employment discrimination class action ever – a pay and promotions class of approximately 1.5 million female workers.  The Supreme Court’s grant of certiorari put the Ninth Circuit’s decision in flux and other decisions on hold, while the class action bar awaits the next chapter in the litigation.  The Supreme Court’s expected ruling in Dukes in 2011 is apt to be a bellwether decision in areas that the Supreme Court has left mostly to federal circuit courts of appeals in recent years. 

Third, the continued economic challenges and low hiring rates during 2010 fueled more class action and collective action litigation.  Most significantly, the plaintiffs’ bar increased the pace of FLSA collective action filings seeking recovery for unpaid overtime wages.   These conditions spawned more employment-related case filings, both by laid-off workers and government enforcement attorneys.  In turn, this resulted in higher settlement numbers (especially in government-initiated lawsuits and wage & hour litigation).  Even more class action litigation is expected in 2011, as businesses continue to re-tool their operations.

Fourth, by sheer numbers, wage & hour litigation continued to far out-pace all other types of workplace class actions.  This trend was also manifest in more wage & hour class action and collective action decisions by federal and state court judges than any other area of workplace litigation.  It also reflected the fact that in terms of case filings, collective actions pursued in federal court under the Fair Labor Standards Act (“FLSA”) outnumbered all other types of private class actions in employment-related cases.  As a result, FLSA collective actions produced more rulings in 2010 than class actions for employment discrimination or under ERISA.  Significant growth in wage & hour litigation also was centered at the state court level, and especially in California, Florida, Illinois, New Jersey, New York, Massachusetts, Minnesota, Pennsylvania, and Washington. This trend is likely to continue in 2011.

Fifth, as Democratic legislative initiatives for labor and employment reform stalled, in the wake of Republican Congressional gains, the Obama Administration continued to ramp up its enforcement efforts through the U.S. Equal Employment Opportunity Commission (“EEOC”) and the U.S. Department of Labor (“DOL”).  The Obama Administration’s emphasis on administrative regulation and enforcement lead to more government-initiated litigation over workplace issues.  Those efforts are expected to intensify as the Administration’s policy goals, which may be thwarted in the Congress, are advanced through agency regulation and government enforcement litigation.  Many state labor departments are following this lead. Increased funding for the DOL and the EEOC also resulted in the recruitment and training of more DOL and EEOC attorneys and investigators.  It is expected that employers will encounter more investigations – and more governmental enforcement lawsuits – in 2011 as the augmented staffs of the DOL and EEOC carry out their law enforcement functions.  Likewise, when measured by monetary recoveries, government enforcement litigation resulted in higher settlement amounts for workplace litigation than past years.  Even more aggressive government enforcement litigation is likely in the coming year.

Sixth, the Class Action Fairness Act of 2005 (“CAFA”) continued to have significant effects on workplace litigation, and most significantly on wage & hour class actions filed in state court.  The past twelve months saw evolving case law developments on jurisdictional issues under the CAFA.  As the plaintiffs’ bar continues to devise techniques to adapt to the CAFA, rulings on the scope, meaning, and application of this law, of relatively recent vintage, have occurred at a surprising rate.  In this respect, the development of CAFA-related law continued to mature quickly in the Ninth Circuit, as the high volume of California-based wage & hour class action filings resulted in a deluge of CAFA removals in California federal courts in 2010.

Seventh, and finally, the financial stakes in workplace class action litigation increased in 2010.  Plaintiffs’ lawyers have continued to push the envelope in crafting damages theories to expand the size of classes and the scope of recoveries.  These strategies resulted in a series of massive settlements in nationwide class actions, particularly in the context of wage & hour litigation.  This trend is also unlikely to abate in 2011. 

Co-authored by Christopher J. DeGroff  and  Laura J. Maechtlen

On November 4, 2010, Judge Elaine Bucklo of the U.S. District Court for the Northern District of Illinois ordered Kable News Company to respond to a wide ranging EEOC subpoena over stiff resistance by the Company, view ruling.  The EEOC sought nearly three years of detailed, Company-wide employee data to investigate a single former employee’s age claim.  Kable News first objected that the subpoena was overbroad and sought information irrelevant to the employee’s claim.  The Court rejected the argument, citing the extremely broad latitude the EEOC was arguably afforded when investigating age claims.  Kable News also complained that the subpoena represented too much of a burden, and responding to the subpoena would monopolize its HR staff for as much as three months.  The Court rebuffed these arguments as well, expressing skepticism that this would pose such a significant burden on a large corporate employer, View Docket Entry.

With the sharp rise in EEOC subpoena enforcement actions, employers must pick their arguments wisely.  Relevance is a difficult argument, particularly in age claims, and arguing that responding to a subpoena would be unduly burdensome must be backed up by compelling and detailed arguments, particularly when made by a large corporate employer.

Injunctions in EEOC pattern or practice lawsuits are rare at least before a finding of on-going, systemic discrimination. In the case of EEOC v Evans Fruit Co. Inc., No. 10-CV-3033-LRS (E.D. Wash. Oct. 5, 2010), the EEOC just secured one, which is exceedingly rare. The order may telegraph another tactical tool it intends to use when retaliation is alleged during the course of a case.  The underlying complaint brought by the EEOC alleged that Evans Fruit created a hostile work environment for women, targeting Evans Fruit manager Juan Marin in particular.  After the suit's filing, the EEOC received allegations that Marin and others were intimidating witnesses, including following them from the facility, tracking their movements, and even photographing witness meetings.  The EEOC sought emergency injunctive relief; the Court held a four day hearing to determine if a preliminary injunction was necessary to stop the retaliatory conduct.  The Court concluded that, while an injunction was an "extraordinary remedy," it was appropriate given the strong evidence that the government's investigation would be compromised if the alleged intimidation continued.  The facts of this case are fairly extreme and overt intimidation like that alleged in Evans Fruit is uncommon.  But given the success of this injunction tactic in this litigation, the EEOC may be primed to expand its use of this tool to less obvious situations, both to gain momentum in the underlying litigation as well as early positive media coverage.