By Christopher DeGroff, Gerald L. Maatman, Jr., and Robb McFadden

In a blow to the EEOC’s “top priority” — its four-year strategic plan to double-down on systemic discrimination claims — the Court in EEOC v. Bass Pro Outdoor World, LLC , No. 4:11-CV-03425 (S.D. Tex. May 31, 2012), dismissed the EEOC’s § 707 pattern or practice claim and made several significant findings with respect to the Commission’s litigation strategy. First, the Court expressly rejected the EEOC’s “attempt to merge § 706 and § 707 into a single, non-existent ‘hybrid’ claim.” Id. at 11. Noting that Congress made monetary relief available in § 706 enforcement actions on behalf of allegedly aggrieved individuals, but not in § 707 pattern or practice actions, Judge Keith P. Ellison of the U.S. District Court for the Southern District of Texas found that the procedures and remedies available in these two types of actions cannot be “blended.” Id. at 28. Second, the Court found that the complaint failed to state a “plausible” pattern or practice claim where it appeared to be based on a smattering of isolated incidents. Id. at 23. Finally, even if the EEOC could bring a § 707 pattern or practice claim, the Court found that it would be subject to the 300 day statute of limitations set forth in § 706. Id. at 36.

Taken together, Judge Ellison’s ruling strikes at the heart of the EEOC’s systemic initiative and is a significant win for employers. This was particularly stinging to the EEOC, given that it touted this Texas case – in press releases upon the filing of the lawsuit – as one of a short list of marquee cases it was pursuing in fiscal year 2012.

Facts Of EEOC v. Bass Pro Outdoor World, LLC

The EEOC filed a Title VII enforcement action against Bass Pro asserting claims under § 706 and §707. Citing several examples where various employees – holding different positions in different stores – allegedly made racist or derogatory comments, the EEOC claimed that Bass Pro engaged in a pattern or practice of race discrimination by maintaining a nationwide procedure of discouraging or denying the hiring of African-American and Hispanic job applicants. Id. at 2-3. In support of its retaliation claim, the EEOC cited two instances where employees were allegedly terminated once their managers learned that they had made a complaint. Id. at 3-4. 

Bass Pro moved to dismiss the first amended complaint because, among other things, the EEOC had failed to allege facts sufficient to state a claim under § 707 for pattern or practice claim of discrimination as it did not “identify a specific, objectively verifiable company-wide policy or practice of discrimination;” the complaint failed to identify any of the allegedly aggrieved individuals in support of its § 706 claims; the EEOC impermissibly attempted to cross-pollinate the differing standards, burdens, and remedies applicable to § 706 and § 707 actions; and the EEOC’s § 707 claim should be barred to the extent it arose more than 300 days before the Commissioner’s Charge was filed. Id. at 10-11.

The Court’s Ruling

The Court anchored its analysis by acknowledging the “continuing validity” of the rule stated in Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002), that “a complaint in an employment discrimination lawsuit [need] not contain specific facts establishing a prima facie case of discrimination.” Id. at 18. However, under Twombly and Iqbal, the Court still found that taken together, the EEOC’s “claims must be facially plausible.” Id. at 21. Although the Court declined Bass Pro’s invitation to evaluate the EEOC’s claims in the “shadow” of the commonality standard set forth in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), it nevertheless found that the EEOC failed to state a facially plausible pattern or practice because a “handful of racist incidents” fails to “render the EEOC’s allegations of a company-wide pattern or practice plausible.” Id. at 22-23.

Turning its attention to the EEOC’s § 706 claims, the Court observed that all too often judges have impermissibly “blurred the lines between class-wide claims brought pursuant to § 706 and pattern-or-practice claims brought pursuant to § 707.” Id. at 27-29. The Court further noted that in 1992, Congress “only extend[ed] punitive and compensatory damages to § 706 actions, not § 707 actions.” Id. at 28 (emphasis in original).  Yet, by “blending” these two types of actions, the EEOC was attempting to “have its cake and eat it too” by exploiting the bifurcated Teamsters burden shifting framework applicable to § 707 pattern or practice actions to establish a presumption of liability in the first phase of trial, and then relying on the presumption during the second phase of trial to seek monetary damages in connection with the allegedly aggrieved individuals’ § 706 claims. Id. To avoid creating a “redundancy” in the law, the Court concluded that “the EEOC cannot bring a hybrid pattern or practice claim that melds the respective frameworks of § 706 and § 707.” Id. at 29. Thus, the Court concluded that the EEOC cannot use § 706 as “a vehicle for pattern or practice claims,” nor may it recover monetary damages under § 707. Id.

Finally, the Court dismissed the EEOC’s § 706 retaliation claim because “[w]hile the EEOC is not obligated to provide the identities of all § 706 class members,” it cannot bring a § 706 claim without identifying a single plaintiff. Id. at 28-29. Thus, the Court found that even if the EEOC could allege a § 707 claim, it would be subject to Title VII’s 300 day statute of limitations. Id. at 33-36.

Implications for Employers

The Court’s ruling in EEOC v. Bass Pro throws a wrench into the EEOC’s plans to get the most “bang for its buck” by focusing on claims of systemic discrimination. It clarifies important distinctions between § 706 and § 707 actions, and makes clear that they cannot be blended into a non-existent hybrid claim. By putting the kibosh on the EEOC’s attempts to cross-pollinate the standards, procedures, and remedies available in § 706 and § 707 actions, Judge Ellison’s ruling could mark a significant shift in the legal landscape for Title VII enforcement actions and is a major win for employers combating pattern or practice claims.