By Matthew J. GagnonChristopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With uncertain times and profound changes anticipated for the EEOC, employers anxiously await what enforcement litigation the EEOC has in store. Although 2016 showed a marked decline in filings, fiscal year 2017 shows a return to vigorous enforcement filings, with a substantial number of filings in the waning days of the fiscal year.

Employers are living in uncertain times. The impact of a Trump Administration and the EEOC’s new Strategic Enforcement Plan (SEP) for fiscal years 2017-2021 are still working themselves out in the FY 2017 filing trends. Nonetheless, one trend has reemerged: a vigorous number of EEOC case filings. It looks like the anemic numbers of FY 2016 were just a bump in the road, as FY 2017 has revealed an increase in total filings, even eclipsing the numbers from FY 2015 and 2014. (Compare here to here and here.) This year, the EEOC filed 202 actions, 184 merits lawsuits and 18 subpoena enforcement actions.

The September filing frenzy is still an EEOC way-of-life, as this past month yet again holds the title for most filings compared to any other month. At the time of publication, 88 lawsuits were filed in September, including 21 in the last two days alone. In fact, the EEOC filed more cases in the last three months of FY 2017 than it did during all of FY 2016. The total number of filings for the remaining months remains consistent with prior years, including a noticeable ramp up period boasting double digit numbers through the summer.

Filings out of the Chicago district office were back up in FY 2017 after an uncharacteristic decline to just 7 total filings in 2016. This year, Chicago hit 21 filings, an enormous increase from last year. This is closer to the total number of Chicago filings in FY 2015 and 2014 (26 in each year). The Los Angeles district office also increased its filings, hitting a high of 22, a substantial jump compared to previous years and the most of any district office in FY 2017. On the other end of the spectrum, the Phoenix district office has seen a notable drop, with only 7 filings compared to 17 in FY 2016.

New SEP, Same Focus

Every year we analyze what the EEOC says about its substantive focus as a way to understand what conduct it is targeting. This year, Title VII takes center stage. Although Title VII has consistently been the largest category of filings, last year showed a dip in the percentage of filings alleging Title VII violations, at only 41%. Nonetheless, this year Title VII has regained its previous proportion, accounting for 53% of all filings. This is on par with FY 2015 and 2014, showing once again that FY 2016 seems to have been an outlier.

Although the 2017-2021 SEP outlined the same general enforcement priorities as the previous version of the SEP (covering FY 2012 to 2016), the new SEP added “backlash discrimination” towards individuals of Muslin/Sikh/Arab/Middle Eastern/South Asian communities as an additional focus. One would expect this focus might increase the number of Title VII claims alleging either religious, racial, or national origin discrimination. However, those filings stayed relatively even, and were even a bit down from previous years. Religious, national origin, and race discrimination claims made up 42% of all Title VII claims, compared to 50% in 2016 and 46% in 2015.

Uncertainty For Equal Pay Claims

With a new administration came a new Acting Chair for the EEOC. President Trump appointed Victoria Lipnic as Acting Chair on January 25, 2017. Employers expected the EEOC’s new leader to steer the EEOC’s agenda in a different direction. Some believed Lipnic was foreshadowing future trends when she made it clear at her first public appearance – hosted by none other than Seyfarth Shaw – that she is “very interested in equal pay issues.” (See here.) And indeed, we have seen a slight uptick in the number of EPA claims filed in FY 2017. In FY 2017, The EEOC filed 11 EPA claims, compared to 6 in 2016, 5 in 2015, and 2 in 2014.

However, on June 28, 2017, President Trump tapped Janet Dhillon as Chair of the EEOC. Dhillon would come to the EEOC with extensive experience in a big law firm and as the lead lawyer at three large corporations, US Airways, J.C. Penney, and Burlington Stores Inc. Although it is too early to know how she could change the direction of the agency if confirmed, it is entirely possible that she could back away from previous goals to pursue equal pay claims more aggressively.

The Trump Administration has also made other moves that may indicate a change in direction with respect to equal pay initiatives. On February 1, 2016, the EEOC proposed changes to the EEO-1 report that would require all employers with more than 100 employees to submit more detailed compensation data to the EEOC, including information regarding total compensation and total hours worked by race, ethnicity, and gender. This was a change from the previous EEO-1 report, which only required employers to report on employee gender and ethnicity in relation to job titles. However, on August 29, 2017, the new EEO-1 reporting requirements were indefinitely suspended. We will have to wait and see whether the slight uptick in EPA claims in FY 2017 was a one-year anomaly.

Implications For Employers

The changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. The EEOC is no exception. Despite all of the unrest and uncertainty about where the EEOC may be headed, the FY 2017 filing trends largely show a return to previous years, albeit with a slight uptick in EPA claims. Certainly, changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda. Exactly what that impact will be remains to be seen.

Loyal readers know that this post is merely a prelude to our full analysis of trends and developments affecting EEOC litigation, which will be published at the end of the calendar year. Stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

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.

th7OX71VIZBy Julie G. Yap and Alison H. Hong

Seyfarth Synopsis: The EEOC obtains a multi-million dollar default judgment against an out-of-business company in a case alleging “human trafficking” discrimination claims.

In a ruling on April 26, 2016, in EEOC v. Global Horizons, Inc., Case No. 2:11-CV-03045 (E.D. Wash. Apr. 26, 2016), Judge Edward F. Shea of the U.S. District Court for the Eastern District of Washington entered a default judgment of over $7.6 million in the EEOC’s favor against an essentially defunct business, Global Horizons, Inc.  This multi-million dollar judgment harkens back to the $8.7 million default judgment entered in favor of the EEOC against this same defendant (and another out-of-business defendant) less than two years ago in the U.S. District Court for the District of Hawaii, the agency’s biggest judgment in 2014.  This Judgment – most likely symbolic, as it is apt to be uncollectable – finally closes the door on five years of litigation arising from the EEOC’s purported pursuit of “human trafficking” discrimination claims.

Background To The Case

In 2011, the EEOC brought claims against Defendant Global Horizons, Inc. (“Global Horizons”), among others, in federal district courts in both Hawaii and Washington, alleging a pattern or practice of unlawful discriminatory employment practices against foreign migrant workers based on their Asian race and/or Thai national original.  The EEOC also asserted claims for harassment and hostile work environment, retaliation, and constructive discharge.  The Asian and Thai workers were employed by Global Horizons under the U.S. Department of Labor H2‑A guest worker program to provide farm labor at various locations in California, Hawaii, and Washington.  The Commission had additionally sued other companies that had contracted with Global Horizons to supply workers to their farms and operations.  Subsequent to the litigation, Global Horizons went out of business.

By 2014, the EEOC litigation initiated in Hawaii had largely resolved, with most of the companies securing dismissals of the EEOC’s claims against them or reaching resolutions.  In December 2014, the EEOC obtained default judgment against Global Horizons and another out-of-business defendant in the amount of $8.7 million. It was the largest judgment obtained by the Commission that year.

In early 2015, in the U.S. District Court for the Eastern District of Washington, the EEOC sought default judgment against Global Horizons.  The other companies the Commission had sued in Washington obtained dismissal of the EEOC’s claims against them and were awarded attorneys’ fees and costs just shy of $1 million against the EEOC.

However, with respect to its claims against Global Horizons, the EEOC sought $300,000 for both compensatory and punitive damages for 66 individual claimants, submitting a 152 page supplemental table in support of its request as well as a number of declarations from the individual claimants.  In total, the EEOC sought entry of default judgment against Global Horizons in the amount of $19.8 million.  Based on those submission, the Court entered findings of fact and conclusions of law relative to the EEOC’s claims against Global Horizons on April 26, 2016 in a 30-page order.

The Court’s Ruling

The Court rejected the EEOC’s requests and entered an award of compensatory damages of $5,000 per month worked for Global Horizons to every claimant based on the Defendant’s default and uncontested liability for the pattern or practice of discrimination, a hostile work environment, and retaliation relative to the claimants that Global Horizons brought to work in Washington state.  In addition to compensatory damages, the Court also awarded each claimant $15,000 per month in punitive damages.  The Court further concluded that claimants who were detained by police for almost an entire day were each entitled to additional compensatory damages in the amount of $2,500 per claimant and additional punitive damages in the amount of $7,500 per claimant.  Based on these conclusions, the Court apportioned judgments to claimants ranging from $4,000 (for six days of work) to $210,000 (for ten months of work as well as police detention).  In total, the Court entered default judgment in the amount of $7,658,500.

It remains to be seen what to make of the judgment. It may be worth less than the paper on which it is written, as it is likely not collectable.

Implications For Employers

Since the judgment is likely not to be paid, the EEOC may still hope to use it as a basis for negotiation in like cases. Employers should be mindful of the Commission’s likely arguments as to the “value” of such cases.

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

gavel on white backgroundBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Northern Star Hospitality, Inc., No. 12-CV-214 (W.D. Wis.), a case we have blogged about previously here, Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin imposed contempt sanctions on an employer for failure to cooperate in post-judgment discovery and granted the EEOC’s request for attorneys’ fees for the time it spent bringing the contempt motion.

The ruling is a cautionary tale for employers, and shows how the EEOC can seek attorneys’ fees despite the fact that its attorneys do not bill a client, and demonstrates that the EEOC will pursue collection of even small judgments against unsuccessful defendants.

Case Background

Dion Miller, an African-American, was a cook for Northern Star Hospitality, Inc. d/b/a Sparx Restaurant (“Sparx”).  On October 1, 2010, when Miller arrived at Sparx to begin his shift, a co-worker told him to look in the kitchen cooler.  In the cooler was a one-dollar bill with a noose drawn around President Washington’s neck and a sketch of a hooded Klansman on horseback with “KKK” written on the hood.  Also in the cooler was a picture of the late Gary Coleman.

Miller had a co-worker take a photograph of the display in the cooler and lodged a complaint with the restaurant’s general manager.  The general manager learned that two of Miller’s superiors – the kitchen manager and kitchen supervisor – admitted that they were responsible for the display.  As a result of the complaint, the kitchen supervisor was given a warning, with the kitchen manager receiving no discipline at all.

After Miller’s complaint, the kitchen manager and supervisor began to criticize Miller’s performance.  Miller was then terminated less than one month after the display was put up.

On March 27, 2012, the EEOC filed suit against Sparx on Miller’s behalf, claiming that he was the victim of racial harassment and that he was wrongfully terminated for opposing that harassment.  On February 25, 2014, after a jury verdict in favor of the EEOC, the Court entered a $64,795.50 judgment against Sparx.  That judgment was upheld by the Seventh Circuit on January 29, 2015.

After the judgment was affirmed, the EEOC served interrogatories on Sparx, seeking information about its assets.  Deeming Sparx’s responses insufficient, the EEOC moved to compel Sparx to provide adequate answers to its interrogatories and for attorneys’ fees expended in seeking adequate interrogatory answers.  The Court granted the motion on June 16, 2015, ordering Sparx to provide further interrogatory answers and to pay the EEOC attorneys’ fees for time spent preparing the motion to compel.

Despite the order, Sparx failed to pay the EEOC’s fees and failed to provide updated interrogatory answers.  On July 27, 2015, the EEOC moved for sanctions for contempt of the Court’s order on the motion to compel.  It also sought attorneys’ fees for the time it spent preparing the motion for a finding of contempt.

The Court’s Ruling

The Court granted the EEOC’s motion for a finding of contempt.  It ordered Sparx to pay a $1,000 per day fine starting three days following the finding of contempt for each day Sparx did not provide updated interrogatory answers and did not pay the EEOC’s fees for the motion to compel.  It further awarded the EEOC $1,000 in fees for the two-and-a-half hours it spent drafting the motion for a finding of contempt.

Implications For Employers

This case will provide further support for the EEOC’s position that, despite the fact its attorneys do not bill any client for their time, it should be entitled to attorneys’ fees in the right circumstances.  Moreover, the case indicates that the EEOC will pursue judgments, no matter how small, that it has won.

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

 

apple-full2.jpgBy Christopher DeGroff and Robb McFadden

Fresh on the heels of a full defense verdict in one of the EEOC’s highest profile sexual harassment cases of 2012-2013, the Commission was dealt another blow on April 19, 2013, when the U.S. District Court for the Eastern District of Washington dismissed a closely related retaliation case because of the lack of admissible evidence supporting those claims. The ruling — EEOC v. Evans Fruit, No 10-CV-3093, 2013 U.S. Dist. LEXIS 56668 (E.D. Wash. Apr. 19, 2013) — represents another significant setback for the Commission and a rebuke of its questionable litigation tactics.  

Factual Background

In EEOC v. Evans Fruit, No 10-CV-3093 (E.D. Wash.), the EEOC sued Evans Fruit on behalf of 10 charging parties who claimed that they were retaliated against for participating in the EEOC’s investigation into allegations of sexual harassment. The retaliation claims stemmed from a meeting between EEOC attorneys and the claimants, a group of former Evans Fruit employees, at a public library in Sunnyside, Washington. One of the charging parties recognized two men at the library who he believed were Evans Fruit employees. The EEOC argued that the employees’ presence at the library was meant to intimidate the claimants and further asserted that several of the individuals were threatened after they attended the meeting. In moving for summary judgment, Evans Fruit challenged the evidentiary basis for the EEOC’s assertions and argued that there was no proof of retaliation. 

The Court’s Decision

On April 19, 2013, Judge Lonny R. Suko granted Evans Fruit’s motion for summary judgment, dismissing all 10 of the EEOC’s retaliation claims. Significantly, the Court noted that unlike sexual harassment claims that take into account whether the alleged victim subjectively believed the work environment was hostile or abusive, retaliation claims are based on an objective, reasonable person standard. Thus, although “out of court statements relayed to a sexual harassment claimant regarding similar acts of harassment in the workplace may be admissible for the purpose of showing the effect on the listener (the claimant),” such statements serve no legitimate purpose in evaluating the charging parties’ retaliation claims because the “subjective effect of a statement on a particular claimant is irrelevant.”  Id. at *10.

In reviewing the EEOC’s purported evidence of retaliation, the Court found that none of the claimants could reasonably have believed that their presence at the library was retaliatory based on what they knew at the time, particularly because all but one of the claimants were either unaware of the two men’s presence at the library or did not believe their presence was significant at the time. Critically, the Court ruled that the claimants’ testimony that they later came to believe that they had been retaliated against — after they learned of the men’s identities and heard that threats had been made by third parties against those who attended the meeting — was based on out of court statements offered to prove the truth of the matter asserted. Finding that nearly all of the EEOC’s evidence was based on inadmissible hearsay, the Court granted Evans Fruit’s motion for summary judgment and dismissed all 10 of the claimants’ retaliation claims.

Implications For Employers

The EEOC has shown from time to time that it will play fast and loose with the “facts,” oftentimes claiming that second-hand rumors, gossip, and even its own pleadings and arguments are “evidence” of Title VII violations. Courtesy of the rule against hearsay, the Court’s decision in Evans Fruit shattered these smoke-and-mirrors tactics. 

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

apple-full2.jpgBy Christopher DeGroff, Gerald L. Maatman, and Laura Maechtlen

After years of smash-mouth litigation, it was a clean sweep for a large agri-business employer this week in one of the EEOC’s highest profile cases of 2012-2013 – a full defense verdict on April 3, 2013 by a jury of seven men and two women in the U.S. District Court for the Eastern District of Washington. The case – EEOC v. Evans Fruit, No. 10-CV-3033 (E.D. Wash.) – is a stunning defeat for the Commission. Evans Fruit was represented by a team from the top-rated Seattle/Yakima based Stokes Lawrence firm, later joined by Seyfarth Shaw as supporting strategic counsel. 

In EEOC v. Evans Fruit, the EEOC brought highly controversial and dramatic 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-trial discovery (and after a significant government “outreach” program including town-hall meetings with EEOC lawyers), the number of women claiming harassment swelled to 26. The defense team was able to cut the ranks of harassment claimants to 15 by trial.

Not insignificantly, during the years the case was pending, the District Court of the Eastern District of Washington was faced with some of the thorniest legal issues that arise in EEOC-initiated cases, including an early preliminary injunction issue and a stinging rebuke to the EEOC’s pretrial conciliation tactics. The EEOC nevertheless repeatedly pointed to the Evans Fruit case as one of its flagship litigation matters as early as 2011. The case was poised to be one of the EEOC’s most important matters of 2013.

But it all came down to trial.

Led by the Stokes Lawrence trial team, Evans Fruit spent a grueling two and a half weeks sparring with the EEOC’s complicated trial tactics and blunting the sensational evidence presented by the EEOC.  Evans Fruit relied heavily on its theme that the Company had been successful over the years by building a culture premised on trust, respect and common sense – a culture where harassment would have not been condoned had it been reported. That theme, coupled with significant credibility issues with the claimants, resonated with the jurors, who found that the EEOC was unable to prove a hostile work environment for any of its claimants by a preponderance of the evidence. In short, a complete defense win.

The EEOC has aggressively pursued companies employing what the government calls “vulnerable populations” like the claimants in the Evans Fruit case, elevating this to one of its six national priorities for 2012-2016. In this case, however, the EEOC’s aggressive approach to engage Evans Fruit at all costs ultimately collapsed. Brendan Monahan, Evans Fruit’s lead attorney, noted that “[t]he jury’s verdict represents justice and a big dose of reality …. [w]e can only hope this verdict changes the confrontational manner in which the EEOC approaches its claims against members of the agriculture industry.”

While rewarding to employers facing similar issues with the EEOC, the Evans Fruit case is a reminder that in some instances, taking the EEOC on through trial is the only viable business option. 

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

District of Nevada Seal.jpgBy 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.

udco.bmpBy 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.

ndil seal.gifBy Gerald L. Maatman, Jr. and Christopher DeGroff

As we blogged about here previously, in the EEOC’s first draft of its Strategic Enforcement Plan, the Commission telegraphed that it was increasingly focused on preventing, and when necessary, litigating workplace harassment and retaliation allegations. The EEOC’s warning was no bluff, for in 2012 the EEOC filed a significant amount of harassment and retaliation lawsuits (discussed here, here, and here). The EEOC kicked off 2013 by entering a series of consent decrees resolving allegations of retaliation. One week after we blogged about the EEOC’s rash of retaliation settlements, Judge Kocoras of the U.S. District Court for the Northern District of Illinois approved a consent decree in EEOC v. South Loop Club, Case No. 12-CV-07677 (N.D. Ill. Feb. 6, 2013), resolving allegations of sex harassment and retaliation. As we predicted in our EEOC-Initiated Litigation book, the EEOC’s SEP is functioning as the blueprint for the Commission’s enforcement activity. The recent consent decree in EEOC v. South Loop Club signals that the EEOC continues to vigorously pursue its stated “big six” agenda items enunciated in its SEP.

Background Of The Consent Decree

The case began when five women who worked at South Loop Club, a Chicago bar and restaurant, filed charges with the EEOC alleging discrimination in violation of Title VII. Pursuant to its statutory obligations, the EEOC investigated the charges and found reasonable cause to believe that the Defendant discriminated against the charging parties. Through the EEOC’s investigation, the Commission allegedly found reason to believe that the Defendant also discriminated against an unnamed “class” of female employees. In July 2013, the parties discussed conciliation, but their efforts were fruitless. 

Two months later, the EEOC filed a complaint in the U.S. District Court for the Northern District of Illinois alleging that the Defendant discriminated against a “class” of female employees by subjecting them to harassment because of their sex, retaliating against them, and constructively discharging them as a result of the sexual harassment. The EEOC asserted that the Defendant harassed the charging parties by subjecting them to repeated acts and comments of a sexual nature that were demeaning and unwelcome. Specifically, the EEOC alleged that the Defendant made comments about the female employees’ bodies and touched female employees’ bodies. In October, four additional employees moved to intervene and filed a complaint.  After a series of status hearings before Judge Kocoras and before the parties even initiated discovery, they settled the litigation and filed a joint motion for entry of a consent decree. The next day, Judge Kocoras signed the parties’ motion.

Terms Of The Consent Decree

Judge Kocoras granted the EEOC’s motion for approval of the consent decree, which provides significant monetary relief to the allegedly aggrieved victims of sex harassment and retaliation (to the tune of $64,000). The consent decree also provides that the Defendant will pay $36,000 in attorneys’ fees and costs to counsel for the intervening plaintiffs.

In terms of equitable relief, the consent decree includes injunctions prohibiting the Defendant from future sexual or gender-based harassment or retaliation, including forbidding the toleration of a work environment that is sexually hostile to employees. Additionally, the Defendant must adopt a policy and training to prevent sexual harassment, gender-based harassment, and retaliation.

Implications For Employers

Although the monetary amount of this settlement is not as significant as some of the multi-million consent decrees the EEOC secured last year (discussed here and here), this case provides insight on the EEOC’s continued interest in pursuing harassment and retaliation lawsuits. Notably, much is at stake for employers that the EEOC investigates for discriminatory harassment and retaliation actions.  EEOC v. South Loop Club serves as a reminder to employers that when employees complain about workplace harassment, employers must take prompt action. Implementing a policy that requires an investigation of reported harassment or discrimination can aid in avoiding employer liability, and also work toward the goal of discrimination-free workplaces. 

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

300px-US_DC_AZ_svg.pngBy Christopher DeGroff and Julie Yap

Despite a number of setbacks in 2011 and 2012, it appears that the EEOC is charging into 2013 with much the same playbook it adopted in years past: aggressive litigation tactics, unreasonable demands for settlement, and an expectation that it can investigate and litigate under its own special set of rules. As we have reported in earlier posts, the EEOC’s questionable practices have not gone unnoticed by the federal bench. In EEOC v. Swissport Fueling, Inc., Case No. 10-CV-2101 (D. Az. Jan. 7, 2013), the U.S. District Court for the District of Arizona joined the growing number of federal judges to reject the EEOC’s aggressive litigation tactics and unsupported arguments that it should receive special treatment under the rules.  Specifically, the Court concluded that the EEOC is not entitled to relaxed burdens of proof or to limitless time periods in which to file claims. Id. at 13, 34. The Court also concluded that the EEOC has a statutory duty to engage in good faith conciliation efforts prior to filing suit and cannot engage in “fishing expeditions” during the course of discovery. Id. at 43-44, 49-50.        

Background Of The Case

In EEOC v. Swissport Fueling, the EEOC brought claims for harassment, disparate treatment, and retaliation on behalf of a group of workers from various countries in Africa, including Sudan, Nigeria, Ghana, and Sierra Leone. From April 2007 to June 2010, the EEOC investigated allegations made by 18 employees and subsequently issued letters of determination for each. 

Between June and September of 2010, Swissport and the EEOC unsuccessfully attempted to conciliate the charges. The EEOC’s initial conciliation offer demanded back pay for only four charging parties in the amount of $61,328.84, non-pecuniary compensatory damages in the amount of $3,725,000.00, and punitive damages in the amount of $1,200,000. When Swissport requested more information regarding the basis for these alleged damages, the EEOC stonewalled. The EEOC refused to indicate what factors it considered or how it arrived at any of its figures. Though Swissport indicated throughout the conciliation process that it might increase its offer if given more information, the EEOC steadfastly refused. Indeed, the EEOC repeatedly changed its position regarding how many charging parties and class members it sought to represent. Accordingly, the “conciliation efforts” by the EEOC failed to resolve the investigation. 

After filing suit, the EEOC identified 17 charging parties, who had been the subject of the pre-litigation conciliation efforts. The EEOC also named 21 additional charging parties, who were not identified prior to bringing suit.

The EEOC’s claim was based on allegation that a Swissport manager verbally abused African employees, ridiculed their national origins, yelled and cursed at them, and generally treated them more harshly than their non-African counterparts.  

The Court’s Ruling

The Court dismissed the EEOC’s claims brought on behalf of the 21 charging parties not identified before filing suit, concluding that the EEOC had failed to comply with its statutory mandate to engage in good-faith conciliation. Id. at 43-44. Specifically, the Court concluded that the EEOC did not give Swissport a meaningful opportunity to make an informed choice to settle when it failed to disclose the claimants’ identities, particularly in light of Swissport’s repeated requests to do so. Id. at 40. The Court also noted that granting the EEOC a stay to attempt conciliation for claimants it had never previously identified would not only fail to resolve the deficiency, but also would “improperly reward the EEOC for using the discovery phase of this litigation to engage in prohibited ‘fishing’ to solicit more claimants.” Id. at 43-44.

Moreover, the Court ordered the EEOC’s claims brought on behalf of the 17 identified charging parties stayed, pending meaningful conciliation. Id. at 49-50. The Court concluded that the EEOC’s failure to respond to Swissport’s reasonable requests for necessary information regarding the asserted claims and their value constituted a failure to conciliate in good faith. The Court noted that “[w]hile the EEOC’s burden to attempt conciliation is not a heavy one, it is not a mere formality.” Id. at 49. Based upon its pre-litigation conduct, the EEOC failed to meet even that minimal burden.

In turning to the merits, the Court concluded that the EEOC could not litigate the claims of the charging parties “in the aggregate.” Id. Rather, it held that the EEOC must prove its hostile work environment claims on claimant-by-claimant basis. Id. at 13. Furthermore, the Court noted that the EEOC cannot substantiate hostile work environment claims based only on offensive comments made to persons other than the claimant. Id. at 17-18. As such, despite its efforts to carve out its own distinct burden of proof, the EEOC has to play according to the same rules applicable to everyone else.

Additionally, the Court joined a growing majority of federal courts by rejecting the EEOC’s contention that it does not have to abide by the time limits in the statute. Indeed, the Court clarified that the EEOC cannot attempt to apply the continuing violation doctrine in the aggregate. Id. at 34. The Court refused to adopt the EEOC’s argument that it may bring claims on behalf of any claimant that experienced a hostile work environment, so long as one act against one claimant fell within the proper time period.  Rather, the Court again noted that this type of theory must be litigated on a claimant by claimant basis. 

Implications Of The Ruling

The Court’s ruling is a tour-de-force of developing legal concepts that have cut against the EEOC in the last two years; and a decision that is encouraging for its precedential value but disheartening in the sense that it shows the EEOC continues to use the same counterproductive tactics it has used in the past. EEOC v. Swissport once again emphasizes that the EEOC must take the statutory conciliation obligations seriously. As the EEOC continues to take an aggressive litigation stance and seeks to bring more systemic discrimination suits in the coming years, employers should ensure that the EEOC is bringing sufficient information to the conciliation efforts in order to truly assess the value of the case. 

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