By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: In an EEOC lawsuit alleging that an employer failed to reasonably accommodate its Muslim employees’ requests for prayer breaks, a federal court in Colorado granted the EEOC’s motion for sanctions — as a result of the employer’s failure to preserve and produce various records — and barred the employer from presenting evidence, testimony, or arguments that unscheduled prayer breaks led to production line slowdowns or stoppages.  This ruling provides an important lesson for businesses regarding the preservation of documents in ongoing EEOC litigation.

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In EEOC v. JBS USA, LLC, Case No. 10-CV-02103, 2017 U.S. Dist. LEXIS 122908 (D. Colo. Aug. 4, 2017), the EEOC alleged that JBS USA, LLC (“JBS”), a meat packing company, discriminated against its Muslim employees on the basis of religion by engaging in a pattern or practice of retaliation, discriminatory discipline and discharge, harassment, and denying its Muslim employees reasonable religious accommodations.  After the EEOC moved for sanctions regarding JBS’s failure to produce two types of records relating to delays on JBS’s production line, Judge Phillip A. Brimmer of the U.S. District Court for the District of Colorado granted in part the EEOC’s motion and barred JBS from presenting evidence, testimony, or argument in its motions, at hearings, or at trial that unscheduled prayer breaks led to production line slowdowns or stoppages.

For employers involved in government enforcement litigation, this ruling serves as a cautionary tale regarding the importance of preserving and producing relevant records, and that the failure to do so might cost employers the ability to later use such records in their defense.

For more information on this lawsuit (and a similar Nebraska case where JBS successfully obtained summary judgment), see our blog posts here, here, here, here, here, here, and here.

Case Background

JBS operates a beef processing plant in Greeley, Colorado.  Id. at *2.  During the first week of Ramadan 2008, a dispute occurred between JBS and its Muslim employees over their opportunities to pray, resulting in hundreds of Muslim employees walking off the job.  On September 10, 2008, JBS fired 96 Muslim employees that refused to return to work.  After the mass termination, numerous former employees filed discrimination charges with the EEOC.  Id.  In response, on February 3, 2009, JBS submitted a position statement where it argued that granting prayer breaks to employees would be an undue burden, in part, due to losses resulting from “each minute of production down-time.”  Id.  JBS continued to assert its undue burden affirmative defense throughout the case, for instance, arguing in its summary judgment motion that production line slowdowns and downtime would have been caused by allowing prayer breaks to Muslim employees.

The EEOC sought discovery from JBS about its undue burden affirmative defense.  Relevant here, on November 21, 2012, the EEOC served a production request regarding the production of all reports or data showing all dates and times the fabrication lines on any and all shifts were stopped, as well as the speed of the lines.  In response, JBS produced documents that included records showing scheduled breaks, but did not provide or reference the Down Time Reports or Clipboards, which show unplanned downtime and slowdowns.  The EEOC thereafter moved for sanctions for the loss or destruction of documents directly relevant to JBS’s allegations of undue hardship.

The Court’s Decision

The Court granted the EEOC’s motion for sanctions.  While JBS had produced Clipboards from 2012-2016 and Down Time Reports from 2016, it claimed that all others had been destroyed.  JBS later testified via Rule 30(b)(6) deposition that the Down Time Reports were shipped to storage each year, but may have been destroyed.  After searching its warehouse for “a day” in 2017,  JBS later located and produced some additional records.  Id. at *6.  The Court thus found that JBS failed to supplement its production with responsive records in a timely manner.  The Court held that because JBS did not show that its failure to supplement was substantially justified or harmless, it would impose sanctions pursuant to Fed. R. Civ. P. 37(c)(1).  Id.

Next, the Court explained that spoliation occurs when a party loses or destroys evidence that it had a duty to preserve because it was relevant to proof of an issue at trial in current or anticipated litigation.  Id. at *7 (citation omitted).  JBS argued that it did not have a duty to preserve these documents because it had no way of knowing or anticipating that the EEOC would be interested in knowing the specific time of every instance of every day that the production line stopped for an unplanned or unexpected reason.  The Court rejected this argument, holding that JBS ignored the fact that it asserted an undue burden defense within a year of the September 2008 incident and after charges of discrimination had been filed against it.  As such, the Court held that JBS had a duty to preserve documents relevant to the burden posed by the proposed accommodations.  Id. at *8 (citation omitted).

Arguing that the lack of production of records did not cause a prejudice to the EEOC, JBS stated that the records did not show whether any slowdown or stoppage was related to a prayer break because the information they contained was “only as specific as the information known to the person filling out the Down Time Report.”  Id. at *10.  The Court rejected this argument, holding that “[r]ecords such as those sought, which potentially show the actual impact of unscheduled employee prayer breaks, are particularly important to understanding the impact such breaks would have on production line slowdowns or stoppages because they would provide contemporaneous records of whether unscheduled breaks led to production downtime.”  Id. at *12.  Accordingly, the Court found that the EEOC was prejudiced by JBS’s spoliation of evidence.  Id.

In fashioning a sanction that “appropriately addresses the prejudice to the EEOC resulting from JBS’s spoliation or failure to produce the records and is proportional to JBS’s culpability,” the Court held that it would bar JBS from presenting evidence, testimony, or argument in its motions, at hearings, or at trial that unscheduled prayer breaks led to production line slowdowns or stoppages.  Id. at *14.  The Court explained that this sanction was “tailored to the evidence lost, destroyed, or withheld by JBS because it alleviates the prejudice which the EEOC would otherwise suffer, namely, that JBS may present evidence of stoppages through witnesses, but the EEOC would not be able to rebut such testimony with records that would likely prove whether stoppages actually occurred and, perhaps, for what reason.”  Id.  Accordingly, the Court granted in part the EEOC’s motion for sanctions for the loss or destruction of documents.

Implications For Employers

An employer’s likelihood of defeating a workplace class action is often dependent on its ability maintain and preserve thorough employment records.  Here, the employer’s failure to preserve records that ultimately could have helped establish an affirmative defense resulted in the Court limiting the employer from using certain types of evidence in its defense of the litigation.  This sanction should serve as a cautionary tale for employers in regards to complying with the written discovery process, as employers are best-positioned to defeat workplace class actions when they have as many defenses as possible in their arsenal.

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

By Gerald L. Maatman, Jr. and Julie Yap

Seyfarth Synopsis: Seyfarth Shaw submitted comments to the Federal Advisory Committee on Civil Rules regarding needed reform to Rule 30(b)(6), the rule that governs depositions of organizations in federal litigation. Our workplace class action group proposed two important areas for consideration that would encourage cooperation between the parties, including discovery proportional to the litigation, and more transparency and efficiency in an area that too often creates significant costs and burdens.

Proposed Changes To Rule 30(b)(6)

As most employers are aware, Rule 30(b)(6) allows a party to take the deposition of an organization by requiring the designation of an officer, director, managing agent, or other person competent to testify on a potentially wide range of topics requested by the opposing party.  This process often results in the imposition of significant burdens on the organization where the requesting party makes disproportional and overbroad demands for information, seeks to impose sudden deadlines, or refuses to cooperate in negotiations that would appropriately narrow the types of information sought.  In the face of such obstacles and inefficiencies, Seyfarth advocated for the need of procedural reform in this process.

The Advisory Committee on Civil Rules (the “Committee”) for the Federal Courts, which is responsible for recommending amendments to the Federal Rules of Civil Procedure, is contemplating possible changes to Rule 30(b)(6).  In furtherance of this process, the Committee has created the Rule 30(b)(6) Subcommittee, which invited comment on the need for reform to the rule.

Seyfarth’s written submission is here. Seyfarth’s comments were prepared by the team of Alex Meier, Gina Merrill, Esther Slater McDonald, Ryan Swindall, and Julie Yap.

Seyfarth’s submission identified two major areas of reform to Rule 30(b)(6) that could provide much needed guidance and transparency.  First, Seyfarth proposed that Rule 30(b)(6) should be amended to include presumptive limits on the number of topics that can be covered in deposition, on the scope of those topics, and on the number of deposition hours.  These presumptive limits would not only create efficiencies on the resources required for an organization to be prepared for deposition, it would better ensure that the organization is prepared to respond to all topics identified by the requesting party.

Second, Seyfarth proposed that Rule 30(b)(6) should provide a clear framework for when depositions must be noticed and how a party may object to the notice.  While district courts have created or endorse avenues for a party to protect itself from problematic Rule 30(b)(6) notices, disparities in the preferred approach has created confusion with respect to the proper procedure and the applicable standard of review.  As such, Seyfarth endorsed a 30-day minimum notice requirement that would help organizations properly prepare their witnesses.  Seyfarth also recommended adoption of an objection process similar to that employed to respond to subpoenas that would create a uniform, transparent process for challenging notices.

Implications For Employers

Rule 30(b)(6) can often create significant burden and impose substantial costs on employers facing all types of federal litigation.  Potential amendments to this rule could help address the disproportional impact that this type of discovery has on employers.  Seyfarth is hopeful that the Committee will continue to look at reform and potential amendments to address these issues.

Stay tuned for more updates regarding potential amendments to Rule 30(b)(6) as we continue to monitor developments on this important issue.

 

 

By Gerald L. Maatman, Jr. and Anthony S. Califano

Seyfarth Synopsis: In Smith v. City of Boston, Plaintiffs brought suit against their employer, the City of Boston (the “City”), challenging the City’s police promotional exam from sergeant to lieutenant.  Plaintiffs alleged that the exam had a disparate impact on racial minorities and was invalid under Title VII of the Civil Rights Act of 1964 (“Title VII”).  For the second time, in the same case, District Court Judge William G. Young ruled in favor of Plaintiffs and imposed liability on the City.

The Court’s decision, Smith v. City of Boston, No. 12-CV-10291-WGY (D. Mass. July 26, 2017) (“Smith II”), serves as a cautionary tale about the discretion that trial courts have to distinguish between similar cases and reach conclusions that might appear to be inconsistent with appellate authority.

Case Background

In 2012, a group of African-American police sergeants filed a lawsuit claiming that the City’s exam for promotion from sergeant to lieutenant discriminated against minority candidates in violation of Title VII.  In a 2015 decision, the Court agreed with Plaintiffs after a bench trial, holding that the “lieutenants’ exam had a racially disparate impact and was insufficiently job-related to survive the Plaintiffs’ challenge.” Smith v. City of Boston, 144 F. Supp. 3d 177, 180-81 (D. Mass. 2015) (“Smith I”).

In a different case, Lopez v. City of Lawrence, No. 07-11694, 2014 U.S. Dist. LEXIS 124139 (D. Mass. Sept. 5, 2014) (“Lopez I”), a different judge in the District of Massachusetts addressed similar claims.  In that case, a group of African-American and Hispanic patrolmen challenged the civil service exam for promotion from patrolman to sergeant, claiming disparate impact discrimination.  The presiding judge in Lopez, Judge George A. O’Toole, rejected the plaintiffs’ claim after a bench trial.  The trial court reasoned that, although the sergeants’ exam “imposed a significantly disparate impact on minority applicants,” the defendants established that the exam was nevertheless justified by business necessity.  Id. at *48, 60-61.  The Lopez plaintiffs appealed to the U.S. Court of Appeals for the First Circuit.

Before Judge Young undertook to determine a proper remedy consistent with its ruling in Smith I, the First Circuit issued a ruling affirming the trial court’s decision in Lopez ILopez v. City of Lawrence, 823 F.3d 102 (1st Cir. 2016), cert. denied, 137 S. Ct. 1088 (2017) (“Lopez II”).  The First Circuit concluded, as did Judge O’Toole, that the sergeants’ exam had a significantly disparate impact on racial minorities, and that Judge O’Toole did not clearly err in concluding that business necessity nevertheless justified the exam.  Id. at 107-111.

In light of the First Circuit’s order in Lopez II, Judge Young revisited his earlier ruling in Smith I.  The City argued that Lopez II compelled the Court to reach a different conclusion on the issue of business necessity, and to consider whether there existed an equal or better exam that identified the best candidates for the lieutenant position, which had a less disparate impact on racial minorities.  The Court disagreed.

The Decision

Job Related & Consistent With Business Necessity

The City advanced several arguments in reliance on Lopez II.  First, the City argued that the Court used the wrong legal standard to evaluate the exam’s validity.  It argued that Lopez II requires the Court to determine the exam’s validity by utilizing a “better than random selection” standard, not the “representative sample test” established by the Equal Employment Opportunity Commission’s (“EEOC”) Uniform Guidelines on Employee Selection Procedures (“Guidelines”).  Smith II, at *15.  In its earlier analysis, the Court reasoned that the Guidelines “provide a sensible way of evaluating whether a given test . . . measures an important work characteristic, and whether the outcomes of that test are actually correlated with the characteristic measured.”  Id. at *11.  Using the Guidelines, and relying on expert testimony, the Court determined that the exam results were not predictive of or correlated with the important work behaviors of police lieutenants.  IdLopez II, according to the Court, does not require a different conclusion.  Indeed, the Court stated that the “First Circuit certainly did not ban the use of the Uniform Guidelines’ representative sample test.”  Id. at *15-16.  Such a ban, the Court observed, would be “surprising” because they come from the EEOC and “are due an appropriate degree of deference.”  Id. at *16.

Second, the City argued that the Court should reconsider its rejection of the Education and Experience (“E&E”) component of the lieutenants’ exam.  Because the First Circuit found in Lopez II that the E&E component of the sergeants’ exam was useful to assess qualities important to a sergeant’s daily work, the City argued that the Court should not have excluded the E&E component from its validity analysis of the lieutenants’ exam.  The Court was unpersuaded, noting that it did consider the E&E in its ruling, but held that the “E&E did not rescue an otherwise invalid written exam.”  Id. at *21.  The holding in Lopez II did not change the Court’s opinion given the variations between the two cases.  The Court: “(1) relied on expert testimony that the E&E component failed to differentiate among candidates or demonstrate the [knowledge, skills, and abilities] necessary in a lieutenant; (2) had no evidence that incumbent lieutenants performed better on the written exam; and (3) had no evidence to show that the E&E component was valid on its own.”  Id. at *21-22 (internal citations omitted).  Accordingly, unlike the evidence at issue in Lopez II regarding the sergeants’ exam, the evidence before the Court did “not establish that the E&E measured qualities important to a lieutenant’s daily responsibilities.”  Id. at *22.

Third, the City asserted that, in light of Lopez II, the Court “inappropriately applied a heightened validity requirement for rank ordering” and that “rank ordering furthers [the City’s] interest in eliminating patronage and intentional racism.”  Id.  The Court disagreed.  The Court reasoned that “[w]here a selection procedure not only has a disparate impact on a pass-fail basis, but also compounds that effect through use of rank ordering, each hiring decision carries an increased risk of a discriminatory result.”  Id. at *24.  In that case, the Court held that it “did not err in applying a heightened validity requirement for rank ordering,” and the First Circuit’s decision in Lopez II does not compel a contrary conclusion.  Id.  Even if the City faced a lower burden, it still failed according to the Court.  That is because the evidence before the Court did not support an inference that candidates who performed better on the lieutenants’ exam would be better performers on the job.  Id. at *25.

Equally Valid, Less Discriminatory Alternative Test

The City also challenged the Court’s finding of liability without first addressing whether an equally valid, less discriminatory alternative test existed to identify successful candidates for the lieutenant position.  Specifically, the City argued that the Court could not reject the City’s justification for the lieutenants’ exam absent “some showing that there exists an available alternative with less disparate impact that serves [the City’s] legitimate needs.”  Id. at *26.  Once again, the Court disagreed.  The Court held that the First Circuit’s ruling in Lopez II did not change the burden shifting framework that applies to the analysis of disparate impact cases.  Id.  If the plaintiff proves that a test has a significant disparate impact, and the defendant then fails to prove that the test is job related and consistent with business necessity, “then the defendant loses, regardless of the plaintiffs’ showing of an alternative.”  Id.  The City did not convince the Court that the lieutenants’ exam was sufficiently job related and consistent with business necessity.  Accordingly, the Court did not change its previous ruling in favor of Plaintiffs.

Implications For Employers

The Court concluded its decision by observing that Lopez and Smith are “significantly different” and “fact intensive cases.”  Id. at *29.  They involved different evidentiary records and different exams for different positions.  Id.  The Court held that it did not commit legal error by applying the same law to a different case and reaching a different conclusion.  Id. at *29-30.

The Smith II decision should therefore remind employers of the broad authority that trial court judges have when it comes to applying the law to the facts and evidence in order to reach a conclusion.  As Judge Young noted in Smith II: “Fact finding is the province of the district courts.”  Id. at *29-30.  Judge Young applied his understanding of disparate impact law to the evidence before him and determined that the City failed to meet its burden of proof.  Would a different judge have reached a different conclusion?  Will the First Circuit affirm the Court’s order if the City appeals?  These are fair questions, the answers to which are unclear.

By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis: Four African-American teachers alleged that their school district employer discriminated against them on the basis of race by failing to hire them as assistant principals, and filed a motion for class certification. A federal district court in Florida denied the teachers’ motion for class certification, finding the employees failed to satisfy the commonality requirement of Rule 23 based on the exercise of discretion by different hiring principals at different schools. The ruling has important lessons for employers facing Rule 23 motions in workplace class actions.

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In Gittens v. The School Board of Lee County, Florida, No. 2:16-CV-412, 2017 U.S. Dist. LEXIS 115987 (M.D. Fla. July 7, 2017), Plaintiffs brought suit against their employer, the School Board of Lee County, Florida (“School District”), alleging that the School District discriminated against them on the basis of their race, i.e., African-American.  After Plaintiffs moved for class certification, Judge Mac R. McCoy of the U.S. District Court for the Middle District of Florida denied their motion, finding that Plaintiffs “fail[ed] to provide the necessary glue to hold the putative class claims together under [the] commonality analysis,” that was set forth in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).  Id. at *34.  The Court also found that Plaintiffs failed to demonstrate the sufficiency of the proposed class definition, the ascertainability of the putative class, adequacy, typicality, and the Rule 23(b) requirements.

For employers facing workplace class actions where putative class members are subjected to employment decisions by different supervisors at different facilities, this ruling is another post-Wal-Mart employer victory that can be used to oppose class certification.

Case Background

Plaintiffs, four African-Americans, held various teaching and administrative positions at various schools within the School District.  Id. at *6-12.  All four Plaintiffs had advanced degrees, and sought administrative positions at various schools, including the position of assistant principal.  All four had at least one interview for the assistant principal position, and two were interviewed by panels of all-White school administrators.  All four Plaintiffs were rejected for assistant principal positions.

To be considered for an assistant principal position, an applicant must first apply and be accepted into the AP Pool.  Id. at *13.  Once accepted, an individual may then apply and be hired for a specific assistant principal position at a certain school.  Each individual school advertises its open assistant principal positions, screens the applicants, conducts its own interviews and, when selected by the Principal of that specific school, the candidate’s name is submitted to the Superintendent, who then sends it to the School Board for final approval.

Plaintiffs alleged that the School District had a pattern or practice of refusing to hire well-qualified, African-American employees to administrative positions.  After bringing class-wide allegations under Title VII for race discrimination, Plaintiffs moved to certify a class of current and former employees who had applied for various positions with the School Board, including assistant principal positions.

The Decision

The Court denied Plaintiffs’ motion for class certification.  First, the Court rejected Plaintiffs’ class definition, “[a]ny and all black/African-American employees who applied for an AP Pool position in the four years preceding this action but who were denied such a position by Defendant,” as being improperly vague and ambiguous.  Id. at *18-20.  The Court noted that that the class definition was unclear as to whether “denied”  referred to the AP Pool or the actual assistant principal position.

After the Court found that Plaintiffs satisfied the numerosity requirement of Rule 23, it held that Plaintiffs failed to establish that there were common questions of law or fact sufficient to satisfy the commonality requirement.  The Court opined that “[s]imilar to [Wal-Mart v. Dukes], the Plaintiffs here wish to bring suit calling into question a relatively large number of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”  Id. at *28 (internal quotation marks and citation omitted).  The Court held that the exercise of discretion by schools and principals over time at different schools precluded a finding of commonality.  Id. at *30.

Turning to the typicality requirement of Rule 23, the Court held that the named Plaintiffs failed to meet this requirement because each individual school advertised its opening for an assistant principal position and had its own decision-maker screening applicants and conducting interviews before the school principal selected the top applicant.  Id. at *37.  The Court determined that Plaintiffs did not meet their burden to show that their claims were based on the same event, pattern, or practice as the claims of other putative class members.  Regarding the adequacy of representation requirement, citing Plaintiffs’ counsel’s motion to withdraw as counsel of one of the named Plaintiffs due to “a breakdown in the attorney-client relationship,” the Court concluded that Plaintiffs failed to meet their burden.  Id. at *39-40.  Finally, Plaintiffs could not meet the Rule 23(b) requirements since not all of the Rule 23(a) requirements were met.  Id. at *40-41.  Accordingly, the Court denied Plaintiffs’ motion for class certification.

Implications For Employers

One of the most crucial events in employment law class actions is class certification briefing, which can potentially lead to several more commas and zeros in a settlement figure or jury verdict if an employer is not successful.  The Wal-Mart v. Dukes decision has given employers an avenue to attack large class actions where decisions made by different supervisors at different facilities can make it difficult for employees to prove common questions of law and fact.  Although the Court here identified several reasons not to certify this particular putative class, employers are now armed with another post-Wal-Mart ruling that they can use as a blueprint to fight class certification on the basis of commonality.

By Gerald L. Maatman, Jr. and John S. Marrese

Seyfarth Synopsis:  In Harrington v. Sessions, No. 15-8009, No. 16-5285 & No. 16-5286 (D.C. Cir. July 21, 2017), the U.S. Court of Appeals for the D.C. Circuit found that absent class members may intervene in an appellate court proceeding to pursue a Rule 23(f) petition abandoned by a settling class representative, even if the intervention motion is filed after the dismissal of the settling representative’s claims.  The D.C. Circuit’s ruling illustrates that even the denial of class certification and final settlement of a class representative’s claims may not put an end to class action litigation.

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In Harrington v. Sessions, No. 15-8009, No. 16-5285 & No. 16-5286, 2017 U.S. App. LEXIS 13111 (D.C. Cir. July 21, 2017), the D.C. Circuit addressed whether it had jurisdiction to rule upon absent class members’ motion to intervene in an appellate court proceeding to pursue a Rule 23(f) petition abandoned by a settling named plaintiff-appellant.  The absent class members filed their motion to intervene after the settling plaintiff-appellant had already filed a stipulated dismissal of his settled claims.

The D.C. Circuit found that it indeed had jurisdiction to entertain the absent class members’ motion to intervene in the Rule 23(f) petition.  It explained that the elimination of an Article III case or controversy does not preclude a district court or appellate court from entertaining a subsequent motion to intervene for purposes of filing an appeal, as long as the intervenor has a sufficient Article III stake in the appeal.  The D.C. Circuit further opined that absent class members may have a sufficient stake to appeal the denial of class certification even if the named plaintiff does not appeal.  As such, the D.C. Circuit found that it had jurisdiction under Rule 23(f) to hear the absent class members’ motion to intervene for purposes of appealing the denial of class certification.

On the merits, the D.C. Circuit found that the absent class members satisfied the prerequisites for intervention as a matter of right and, thus, it addressed their Rule 23(f) petition.  However, the D.C. Circuit declined to review the denial of class certification under Rule 23(f) as the absent class members presented no special circumstances justifying such review.

Case Background

In 2008, U.S. Marshal David Grogan filed a putative class action in the U.S. District Court for the District of Columbia against the U.S. Marshals Service (the “Marshals”) alleging racial discrimination under Title VII of the Civil Rights Act of 1964.  2017 U.S. App. LEXIS 13111, at *2-3 (D.C. Cir. July 21, 2017).  The complaint sought both injunctive and monetary relief, but alleged that “injunctive and declaratory relief [we]re the predominant forms of relief sought.”  Id. at *3.

By 2013, after pleading and motion practice, the named plaintiff Herman Brewer (“Plaintiff”) was the sole plaintiff representing the putative class.  Id. at *4.  Plaintiff retired from the Marshals a few months before discovery closed.  Id.  After discovery closed, Plaintiff filed: (i) a motion to amend the complaint to substitute four additional plaintiffs as class representatives; and (ii) a Rule 23 motion for class certification.  Id. at *5.

The district court denied Plaintiff’s motion to substitute new plaintiffs, finding that Plaintiff had not diligently pursued such substitution.  Id.

The district court also denied Plaintiff’s motion for class certification.  Id. at *5-6.  The district court found that, because Plaintiff had retired and was no longer an employee of the Marshals, Plaintiff could not adequately represent a class predominantly seeking injunctive relief.  Id. at *6.  The district court also found that Plaintiff’s individual claims for monetary relief were not typical of the class-wide claims for injunctive relief and, as such, did not provide a basis to certify a class either.  Id.  Finally, the district court refused to certify a narrower class, seeking damages only, because doing so constituted “claim splitting” and jeopardized class members’ ability to subsequently pursue other claims in the face of potential res judicata arguments. Id.

Plaintiff timely petitioned the D.C. Circuit under Rule 23(f) for interlocutory review of the denial of class certification.  Id.  However, during the pendency of the petition, Plaintiff settled his individual claims and filed a stipulation of dismissal under Rule 41(a)(1)(A)(ii).  Id. at *7.

On the same day Plaintiff filed the stipulated dismissal, three current and one former African-American employee of the Marshals (the “Intervenors”) moved to intervene in the district court to appeal the district court’s denial of class certification and moved to intervene in the appellate court to pursue the Rule 23(f) petition filed by Plaintiff.  Id.

While their motion to intervene in the district court was still pending, the Intervenors filed a notice of appeal from: (i) Plaintiff’s stipulated dismissal; (ii) the order denying class certification; and (iii) the “effective” denial of their motion to intervene insofar as the district court had not decided their motion to intervene within the time Intervenors believed they had to file a notice of appeal (i.e., within 60 days of Plaintiff’s stipulated dismissal).  Id. at *7-8.  Thereafter, the district court dismissed the Intervenors’ motion to intervene based on the rationale that the Intervenors’ notice of appeal stripped the district court of jurisdiction to rule on the motion.  Id. at *8.

On the Intervenors’ motion, Plaintiff’s Rule 23(f) petition and the Intervenors’ appeal were consolidated before the D.C. Circuit.  Id.

The Decision

The D.C. Circuit first addressed whether it had jurisdiction.  Id. at *9.  The stipulated dismissal of Plaintiff’s claims, which removed any live Article III case or controversy from the district court and appellate court, presented a quandary.  Although intervention could cure that quandary by substituting Intervenors for Plaintiff, the D.C. Circuit had to have jurisdiction in the first place to rule on the intervention motion.  See id. (“Thus, the situation may appear to present a Catch-22: Intervention can overcome the apparent jurisdictional problem created by the stipulated dismissal, but a court may grant intervention only if it has jurisdiction to do so.”).  The D.C. Circuit resolved the quandary by finding that it had jurisdiction over the Intervenors’ motion to intervene in the Rule 23(f) petition.  Id.

In so finding, the D.C. Circuit rejected the decisions of other courts that have held that a stipulated dismissal precludes a court from taking further action on motions filed after, or even before, such a dismissal.  Id. at *11-12.  The D.C. Circuit explained that a stipulated dismissal and a court-ordered dismissal are no different in their jurisdictional effect – both eliminate a live case or controversy.  Id. at *12-14.   As such, the D.C. Circuit found that it had jurisdiction to entertain any motion after a stipulated dismissal that it could entertain after a court-ordered dismissal.

In that regard, the D.C. Circuit explained that it is well-established that, even in the absence of a live controversy, courts retain jurisdiction to hear motions to intervene for purposes of appealing dismissed claims, as long as the intervenor has an Article III interest sufficient to pursue the appeal.  Id. at *14 (citations omitted).  Moreover, the D.C. Circuit asserted that it is similarly well-established that absent class members may have a sufficient Article III interest to appeal the denial of class certification even if the named plaintiff does not appeal.  Id. at *14-15 (citing Twelve John Does v. District of Columbia, 117 F.3d 571, 575 (D.C. Cir. 1997)).  Indeed, “[w]hen an absent plaintiff intervenes to appeal a denial of class certification, he has the same Article III stake on appeal as he would have had in the action had the class been certified.”  Id. at *15 (citing Twelve John Does, 117 F.3d 571, 575).  The D.C. Circuit reasoned that, because the absence of an Article III controversy does not preclude a court from hearing a motion to intervene for purposes of appealing and because an appellate court has jurisdiction to hear an absent plaintiff’s appeal from the denial of class certification, it had jurisdiction under Rule 23(f) to hear the Intervenors’ motion to intervene.  Id. at *15-16.

In finding such jurisdiction, the D.C. Circuit distinguished the recent U.S. Supreme Court decision of Microsoft Corp. v. Baker, 137 S. Ct. 1702, 1712-1713 (2017), wherein the Supreme Court held that a plaintiff’s voluntary dismissal of his claims, subsequent to an appellate court’s denial of his Rule 23(f) petition, did not create a final, appealable order.  Harrington, 2017 U.S. App. LEXIS 13111, *16.  The D.C. Circuit explained that, unlike Baker, the issue here involved only a petition for review under Rule 23(f), not an appeal from a final order.  Id. at *17.  Furthermore, equitable considerations present in Baker, where the plaintiff had orchestrated guaranteed appellate review of his Rule 23 claims through voluntary dismissal, were not present here.  Id.  (For further discussion of Microsoft Corp. v. Baker, see here).

Next, the D.C. Circuit turned to the motion to intervene.  It stated that it could address the motion to intervene in the first instance on appeal primarily for purposes of judicial economy.  Harrington, 2017 U.S. App. LEXIS 13111, *18-19 .  The D.C. Circuit then found that the Intervenors easily met the criteria for intervention as a matter of right under Rule 24(a)(2).  Id. at *19-23.

Nonetheless, the D.C. Circuit rejected the Intervenors’ Rule 23(f) request and declined to review the district court’s denial of class certification.  Id. at *24-31.  It found that the Intervenors failed to show that any special circumstances warranted such review.  Id.

Finally, the D.C. Circuit dismissed the Intervenors’ appeal from final judgment in the case below, restoring the district court’s jurisdiction over the case.  Id. at *31.  It ordered that, on remand, the district court should allow reasonable time for the Intervenors to file both a motion to substitute a new class representative and a renewed motion for class certification.  Id.

Implication for Employers

Defeating the class representative does not necessarily end class litigation.  Absent class members may be able to pursue such litigation after the class representative exits.  Accordingly, employers should litigate with an eye toward defeating the class even where they anticipate that a named representative is inadequate or that the claims of a named representative may be defeated.

Seyfarth Synopsis: Vote today for Seyfarth’s Workplace Class Action blog for the ABA Journal Blawg 100 Award.

Voting is open for the American Bar Association’s annual 100 Best Legal Blogs competition, and we hope you will cast your vote today to help Seyfarth’s Workplace Class Action blog get on the ABA’s list for 2017.

As many of you may know, the Workplace Class Action blog was selected as one 2016’s ABA Journal Best 100 Legal Blogs!  The ABA Journal said the following: “This Seyfarth Shaw blog is worth reading for any employer-side labor law attorneys or in-house counsel. In addition to giving readers summaries of the outcomes of various lawsuits, the blog publishes Seyfarth’s Annual Workplace Class Action Litigation Report, which compiles vital information for corporate counsel about what companies can and should be doing to stay ahead of lawsuits.”

We were also honored this year again with a review of our Annual Workplace Class Action Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here.

EPLiC said: “The Report is a definitive ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, a business executive, a risk manager, an underwriter, a consultant, or a broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’”

Please help us gain some extra recognition by nominating us for the ABA’s annual 100 best legal blogs competition today! We want to keep the streak going for 2017!

Nominations are open now untill July 30, 2017.

Click the link here and provide a short explanation of why you like this blog.

Hurry over to the site and nominate!  Thank you for your consideration and support!

supreme-court-546279_960_720By: Michael L. DeMarino and Gerald L. Maatman, Jr.

Seyfarth Synopsis:  In Bristol-Myers Squibb Company v. Superior Court of California, et al., No. 16-466 (U.S. June 19, 2017), the U.S. Supreme Court articulated the narrow circumstances under which specific jurisdiction will lie when it rejected the California Supreme Court’s “sliding scale” approach to evaluating specific jurisdiction. The decision is decidedly employer-friendly. As a new weapon against forum shopping, this case is a must read for any employer facing class action litigation in a jurisdiction where the company is not incorporated or does not have its principal place of business.

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Case Background

In Bristol-Myers Squibb Company v. Superior Court of California, et al., No. 16-466 (U.S. June 19, 2017), 86 California residents and 592 non-residents from 33 other states sued Bristol-Myers in California  state court, asserting California state law claims for product liability, negligent representation, and misleading advertising. Id. at 2. Plaintiffs specifically alleged that the company’s drug, Plavix, damaged their health.  Id. In contrast to the California residents, the non-resident plaintiffs did not allege that they obtained Plavix in California, nor did they claim that they were injured by Plavix or treated for their injuries in California. Id.

After Bristol-Myers challenged personal jurisdiction with respect to the non-residents’ claims in the trial Court and the California Court of Appeal, the California Supreme Court held that specific jurisdiction existed. Id.

Although the California Supreme Court determined that general jurisdiction was lacking, it nonetheless found that specific jurisdiction existed under its “sliding scale” approach. Under this approach, the more wide-ranging the defendants’ forum contacts, the greater the connection between the forum contacts and the claim. Id. at 3. Because of Bristol-Myers’ extensive contacts with California, the California Supreme Court required less direct connection between the company’s forum activities and the non-residents’ claims than otherwise might be required. Id. Particularly important to the California Supreme Court’s determination that specific jurisdiction existed was that the claims of the California residents and the claims of the non-residents were similar. Id.

The Company thereafter successfully secured review by the U.S. Supreme Court.

The Decision

In an 8-1 decision, the U.S. Supreme Court held that the California Supreme Court failed to identify an adequate link between the State of California and the 592 non-resident plaintiffs to support specific jurisdiction.  After explaining that specific jurisdiction requires an “affiliation between the forum and the underlying controversy” the Supreme Court noted that the “sliding scale” approach relaxes this requirement and “resembles a loose and spurious form of general jurisdiction.”  Id. at 7.

The Supreme Court further explained that “[t]he mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California — and allegedly sustained the same injuries as did the non-residents — does not allow the State to assert specific jurisdiction over the non-residents’ claims.” Id. at 8. Importantly, the Supreme Court emphasized “[w]hat is needed —  and what is missing here — is a connection between the forum and the specific claims [i.e., the non-residents’ claims] at issue.” Id.

Implication For Employers

Although the Supreme Court’s decision does little to alter the requirements of specific jurisdiction, it is nonetheless important in its practical effect of impeding forum shopping in the class action context. Plaintiffs, for instance, will have a much more difficult time suing in a jurisdiction where the company is not “at home” for general jurisdiction purposes and where the company’s conduct in the forum state is not sufficiently connected to the claims of nonresident plaintiffs.

This decision is particularly important to employers with a national presence or satellite offices. The lesson here is employers should not take personal jurisdiction for granted, particularly when defending claims brought by residents and nonresidents of a forum state where there is no general jurisdiction.

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

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

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

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

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

Case Background

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

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

The Fourth Circuit’s Decision

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

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

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

Implications For Employer

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

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

 

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

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

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

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

Case Background

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

The Sixth Circuit’s Decision

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

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

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

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

Implications For Employers

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

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

 

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

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

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

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

Case Background

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

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

The Sixth Circuit’s Decision

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

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

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

Implications For Employers

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

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