By Gerald L. Maatman, Jr.

The U.S. Equal Employment Opportunity Commission has made eliminating so-called “discriminatory” barriers in recruitment and hiring one of its top priorities. For practical purposes, this means the agency is targeting and scrutinizing the recruitment and hiring practices of all employers. 

As a result, issues with EEOC enforcement litigation remain at or near the top of corporate counsel’s radar screen. The financial stakes are typically high, corporate reputations are on the line, and problems with media attention can divert critical corporate resources. 

Often, I hear corporate counsel bemoan that defending an EEOC systemic investigation or pattern or practice lawsuit is akin to “holding a tiger by the tail…” This type of litigation can be tough, but sound defense strategies can turn the tables and secure successful outcomes.

Today I had the privilege of discussing these issues in a keynote address at the American Staffing Association’s Legal Symposium with over 650 corporate counsel.

Substantial Q & A focused on the defense victories earlier in 2014 in the two biggest and most-high profile EEOC lawsuits in the country – in EEOC v. Sterling (discussed here) and EEOC v. Kaplan (discussed here and here). The rulings in these cases have generated significant criticism of the EEOC’s systemic litigation program – with the Wall Street Journal calling the Sixth Circuit’s decision in EEOC v. Kaplan the “Opinion of the Year” (here and here).

But given the Commission’s current agenda, hiring and recruitment practices remain vulnerable to enhanced scrutiny.

Sound HR compliance programs, strong defense strategies, and practical litigation decisions are key to eliminating and/or minimizing these exposures.

By Rebecca Bjork and Gerald L. Maatman, Jr.

Our loyal readers know that we have been monitoring closely the proceedings in the EEOC’s appeal of the largest fee sanction award against the agency in its history — the $4.7 million awarded by the district court in the sexual harassment case entitled EEOC v. CRST Van Expedited, Inc., No.13-3159 (8th Circuit). You can read about the award and our take on the EEOC’s opening brief in the appeal here.

In essence, the district court awarded fees to CRST because it found the EEOC should not have brought the case in the first place. It found the EEOC’s conduct to be frivolous, unreasonable or groundless. Specifically, the district court found that the Commission failed to exhaust Title VII’s administrative prerequisites before filing suit, and also that its pattern or practice claim was unreasonable since it was based only on anecdotal evidence.

This past week, the EEOC filed its reply brief in the Eighth Circuit in support of its effort to overturn the fee award on the ground that CRST is not the prevailing party, even though the EEOC lost its pattern or practice case and 153 of 154 individual claimants’ cases, and the remaining individual’s case settled for $50,000. The EEOC’s hefty brief — which comes in at 45 pages — takes on CRST’s opposition brief point-by-technical-point, but ultimately turns on one overarching issue:  whether the EEOC should be considered the prevailing party because all of its claims and claimants must be understood as one claim because they are allegedly unified by common failures of CRST’s HR policies and procedures, or whether CRST prevailed by defeating multiple individual claims, and even under EEOC’s theory, “virtually 99.9%” of the case, in the district court. See Br. at 14. 

Among the most pertinent points the EEOC argues in reply is that CRST ignores controlling Supreme Court precedent cited in the EEOC’s opening brief on the standard for a prevailing civil rights plaintiff (Farrar v. Hobby, 506 U.S. 103 (1992)) and why EEOC supposedly meets that standard. Br. at 4. It also contends that the dismissal of the pattern or practice case is irrelevant to whether it is the prevailing party, because it can and did sue on behalf of individuals under its section 706 authority to represent aggrieved individuals. Br. at 4-6. And it argues that the finding that EEOC failed its pre-suit conciliation obligations is not a finding on the merits that would make CRST the prevailing party. Br. at 14-17. 

The stakes for the EEOC of course are high given the dollar figure at issue. So if the Eighth Circuit affirms the award, one can be quite sure that a hard look at the appellate decision will be forthcoming from decision makers at the highest levels of the EEOC. Watch this blog space for further developments.

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

By Laura Maechtlen and Michael Wahlander

Earlier this week, a federal district court in Nebraska dealt the EEOC two more blows in addition to its recent trial defeat in EEOC v. JBS USA, LLC, 8:10-CV-318 (D. Neb.), when it denied the EEOC’s request for a new trial and certified its trial ruling as an appealable judgment. We covered the Court’s earlier ruling here. Not only is the ruling a significant one for the case, but also it is significant to employers because an appellate ruling affirming the district court could provide further clarification on the requirements for establishing the “undue hardship” defense under Title VII of the Civil Rights Act of 1964.

Background

In EEOC vs. JBS USA, LLC, the EEOC alleged that JBS, which operates beef processing facilities, engaged in religious discrimination by refusing to allow Muslim employees unscheduled breaks to pray and refusing to move their meal break to a time that coincided with the sunset prayer time during Ramadan in 2008. The case included both “pattern or practice claims” and approximately 150 individual claims against JBS based on similar facts. 

The Court divided the case into two phases. Phase I addressed the merits of the pattern or practice claims. Phase II would address the merits of the individual claims. In October 2013, after a bench trial, the Court dismissed the pattern or practice claims, finding that JBS established the “undue hardship” defense with respect to the requested accommodations. Specifically, the Court found that the requested accommodations would impose more than a de minimis burden on both JBS and its non-Muslim employees. The full text of Court’s ruling can be found here.

After the trial, the parties made three motions. The EEOC filed a motion for a new trial. JBS moved for an award of attorneys’ fees. Perhaps most significantly, JBS also filed a motion to have the Court’s ruling as to its “undue hardship” defense become a final judgment and an immediately appealable order. 

The Court’s Ruling

The Court denied the EEOC’s motion for a new trial and JBS’s request for attorneys’ fees, but granted JBS’s request to have the ruling on its “undue hardship” defense certified as a final judgment and an appealable order. See EEOC v. JBS USA, LLC, 8:10-CV-318, 2014 U.S. Dist. LEXIS 9635, at *2-8 (D. Neb. Jan. 27, 2014).  The Court’s full ruling can be found here.

In granting JBS’s motion to certify the earlier ruling for immediate appeal, the Court made several observations.  First, the Court observed that courts usually only grant certification motions made by the prevailing party in “special” cases. Id. at 3-4. Next, the Court found that its earlier ruling was a final disposition of the EEOC’s pattern or practice claims. Id. at 4. The Court then reasoned that because JBS would base its “undue hardship” defense to the 150 remaining individual claims on the same evidence as it did for the pattern or practice claims, certifying the order for appeal could serve to streamline the litigation of the individual claims. Id. at 5-6. In other words, if the Court of Appeal affirms the ruling on the “undue hardship” defense, it could resolve the remaining individual claims as well.

As mentioned above, the Court also denied the EEOC’s motion for a new trial. The Court noted that the motion essentially restated the EEOC’s previous factual and legal arguments, which it already rejected. Id. at 8. As a result, the Court found that the EEOC’s motion failed to set forth any grounds supporting a new trial and that a new trial was not necessary to prevent a miscarriage of justice. Id. at 8.

The Court also denied JBS’s request for attorneys’ fees. In coming to that conclusion, the Court found that there was “some basis” for the EEOC’s claims because it did establish a prima facie case for its failure to accommodate claims. Id. at 7. The Court also noted the high burden that an employer must carry to recover attorneys’ fees. Id. at 6-7.

The Court’s ruling with respect to JBS’s motion to certify the order for appeal and the EEOC’s motion for a new trial are significant in this case. Essentially, the ruling virtually forces the EEOC to appeal the Court’s dismissal of its pattern or practice claims in order to pursue the remaining individual claims because of the impact of the “undue hardship” defense on those claims. The Court’s ruling on JBS’s attorneys’ fees motion is not entirely surprising given the high threshold for showing that a claim is “frivolous.”

Implications For Employers

The outcome of this case could have important implications for employers. If the EEOC does file an appeal, the ruling could impact the developing case law relative to an employer’s obligation to provide religious accommodations to employees. An appellate ruling could also impact and further clarify what kind of evidence an employer must provide to establish the “undue hardship” defense. The ruling is also significant to employers in that it shows that the EEOC will continue to aggressively litigate a case, even after it loses. This should again underscore to employers the importance of taking proactive and preventative measures to ensure compliance with the law to minimize the potential for litigation and its associated costs.

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

By Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

Back by popular demand, our Annual Workplace Class Action Report Webinar is on Tuesday, February 11, 2013. Click here to register and attend.

In the past two years we have seen a combination of Supreme Court decisions help create a defensive barrier for employers in class action cases. Enough time has passed, however, that plaintiff lawyers have begun to breach this barrier with new theories and approaches and, combined with increasing and aggressive government enforcement litigation, employers may once again find themselves facing bet-the-company-type class actions in 2014.

More than any other development in 2013, Wal-Mart Stores, Inc. v. Dukes continued to have a wide-ranging impact on virtually all class actions pending in federal and state courts throughout the country. Many Rule 23 decisions in 2013 pivoted off of Wal-Mart and leverage points in class action litigation increased or decreased depending on the manner in which judges interpreted and applied Wal-Mart.

Our readers have given us wide-ranging feedback over the last three weeks since the launch of the 10th Annual Report in the second week of January. Over 5,500 copies of the report have been downloaded to clients and the readers of our blog. We are pleased with the positive press we received from commentators, including Forbes, The Wall Street Journal, Corporate Counsel, Law360, Insurance Business America, and Bloomberg BNA Daily Labor Report and Class Action Reporter (read more here, here, here, here, here, and here).

For an interactive analysis of 2013 decisions and emerging trends, please join us for our annual webinar offered in conjunction with the publication of our 10th Annual Workplace Class Action Report. The Report’s author, partner Gerald L. Maatman, Jr., along with partners Lorie Almon and Ian Morrison, chairs of our wage & hour and ERISA class action groups, will cover a changed national landscape in workplace litigation.

Other significant developments to be addressed include:

  • The increasing focus of the U.S. Equal Employment Opportunity Commission on high-stakes, big-impact litigation
  • A continuing rising tide of Wage & Hour cases
  • Implications of the Supreme Court’s first ruling on the Class Action Fairness Act in Standard Fire Insurance Co. v. Knowles
  • Additions to the increasing number of rulings allowing employers to use arbitration agreements to manage class action risks
  • Rapid strategic changes due to rulings like Comcast Corp. v. Behrend

The date and time of the webinar is Tuesday, February 11, 2014:

1:00 p.m. to 2:00 p.m. Eastern Time

12:00 p.m. to 1:00 p.m. Central Time

11:00 a.m. to 12:00 p.m. Mountain Time

10:00 a.m. to 11:00 a.m. Pacific Time

Speakers: Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

By Gerald L. Maatman, Jr.

 The keynote speaker at today’s program (January 27, 2014) on Employment Practices Liability Insurance in New York City (sponsored by the American Conference Institute) was Constance Barker, one of the five Commissioners of the EEOC. We spoke on workplace class actions and EEOC litigation at today’s program, and Commissioner Barker presented her thoughts in the keynote address on what 2014 has in store for the EEOC and employers alike.

Commissioner Barker is a thoughtful and articulate government official with a broad spectrum of litigation experience before coming to the EEOC. As a result, like the old E.F. Hutton TV commercial, “when Constance Barker of the EEOC speaks, employers should listen….” In this respect, Commissioner Barker’s comments are important for all employers concerned with employment-related compliance efforts, as well as avoiding EEOC litigation.

Commissioner Barker acknowledged that the Obama Administration has used the EEOC’s enforcement litigation to “regulate” industries given the gridlock in Congress and its inability to pass worker-friendly legislation. Commissioner Barker stated that her perception is that with too much delegation of litigation decision-making in the hands of the Commission’s general counsel, 2014 will see extensive and aggressive litigation against employers. Commissioner Barker asserted that the delegation is “too broad,” and that the discretion of the EEOC’s general counsel over litigation decision-making should be reduced (so that the five Commissioners take a more active role n determining whether and what types of lawsuits will be brought against employers).

Commission Barker identified ADA issues, transgender rights, pregnancy discrimination, disparate impact discrimination cases, and discriminatory hiring screens at the top of the EEOC’s enforcement agenda. She urged employers to consider compliance efforts in reviewing their hiring and workforce data to ensure the lack of disparate impact in the treatment of protected-category applicants and employees.

Commissioner Barker also suggested that elections have consequences, and that the EEOC’s Strategic Enforcement Program (“SEP”) manifests how the Commission will direct its overall efforts (our past post on the SEP is here. She predicted that litigation will increase and that the EEOC’s systemic litigation program will take precedence over discrimination prevention efforts. Commissioner Barker predicted that hiring and promotional practices will be the key focus of the EEOC’s litigation efforts, and “bigger” rather than “smaller” lawsuits will be brought by the government.

Finally, Commissioner Barker opined that the Seventh Circuit’s ruling in EEOC v. Mach Mining (our take on it is here) was the most important case of the year. She called the ruling “surprising” in that it allows government counsel to give short shrift to pre-lawsuit conciliation obligations, and indicated that the Seventh Circuit’s decision is apt to get to the U.S. Supreme Court for review due to its importance for the litigation process.

Recently the Commission published its statistical breakdown of EEOC charges with retaliation, race, and sex discrimination charges leading the way. The EEOC also had the third highest number of discrimination charges filed in 2013 – a total of 93,727 charges – than ever before in its 49-year existence. In addition, the EEOC’s docket of systemic pattern or practice cases grew to over 20% of the Commission’s docket. And the EEOC recovered $372.1 million for claimants, the highest level of recoveries in the Commission’s history. All of this signals more cases and issues coming in 2014 for employers.

The bottom line – employers are well served to remain focused on compliance activities relevant to their workplace obligations.

By Gerald L. Maatman, Jr.

In one of the first workplace rulings of 2014, the U.S. District Court for the Western District Of New York granted an employer’s motion for summary judgment in EEOC v. Sterling Jewelers Inc., Case No. 08-CV-706 (W.D.N.Y. Jan. 2, 2014), and dismissed the lawsuit because the Commission failed to show that its pre-lawsuit investigation was consistent with the scope of the nationwide pattern or practice allegations of pay and promotion discrimination in its lawsuit. The case is the largest EEOC lawsuit on its docket. The result is the complete dismissal of the EEOC’s nationwide pattern or practice claims.

Background To The Ruling

When it filed the lawsuit in 2008, the EEOC claimed that the employer discriminated against female employees starting in 2003 in setting starting pay and in making promotions. In addition to denying those allegations, the employer filed an answer and affirmative defenses asserting that the Commission’s pre-lawsuit investigation was not a nationwide investigation, and the scope of the lawsuit exceeded the pre-lawsuit investigation.

After significant discovery, including rounds of depositions of the EEOC’s investigators responsible for the case, the employer moved for partial summary judgment on the grounds of the scope of the investigation issue. The employer argued that there was no evidence that the Commission had conducted a nationwide investigation prior to commencing the lawsuit. Id. at 4.

The Court’s Opinion

Magistrate Judge Jeremiah McCarthy of the Western District Of New York granted the motion – with a 20-page report and recommendation – on January 2, 2014. He rejected the EEOC’s position that a Court may not inquire into the scope of the EEOC’s pre-suit investigation. Id. at 5-7. In analyzing the record, Magistrate Judge McCarthy concluded that there was no genuine issue of material fact as to the scope of the investigation in that the Commission’s investigation was not nationwide. Id. at 9-12.  The Court rejected all of the contentions of the EEOC in trying to show that its nationwide claims should not be dismissed.

Implications For Employers

As the EEOC is committed to prosecution of large systemic lawsuits against employers, the ruling in this case is important in elucidating the Commission’s statutory obligations in terms of the way it investigates and litigates its cases.

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

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

We are pleased to offer a year-end bonus for all of our loyal readers of our blog – a pre-publication preview of our annual study of EEOC litigation is here: the launch of our book entitled EEOC-Initiated Litigation: Case Law Developments In 2013 And Trends To Watch For In 2014. Distribution of the report is set for early January 2014.

This publication focuses exclusively on EEOC-related litigation; and it covers more decisions than ever before.  The attached Executive Summary excerpted from our book explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2013 and in the near term. As we did last year, this publication will be offered for download as an eBook. To order a copy, please click here

Further, as in the past, this year we selected a short list of what we consider the five most intriguing EEOC-related decisions handed down in 2013. See previous blog postings here and here for past year’s rulings of note. 

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

1.    EEOC v. Mach Mining, LLC, No. 13-2456, 2013 WL 6698515 (7th Cir. Dec. 20, 2013).   

In recent years, the EEOC has become increasingly aggressive in its enforcement efforts, even as its resources have dwindled. With mounting pressure to “do more with less,” the EEOC is re-imagining itself.  Some argue (convincingly) that the agency appears to be moving away from its mandate to combat discrimination by encouraging employers’ voluntary compliance and, instead, is focused on a “scorched earth” litigation agenda. Especially troubling are instances where the EEOC has rushed to file high-profile lawsuits that splash allegations of systemic discrimination across headlines, only to have its claims dismissed altogether or whittled down to a single claimant.  In some instances, courts have stepped in to right the balance and sanctioned the EEOC for failing to do its homework.  (See e.g., EEOC v. The Original Honeybaked Ham, EEOC v. CRST Van Expedited, Inc., EEOC v. Bloomberg LP, and EEOC v. Peoplemark, Inc., where courts sanctioned the EEOC for conducting haphazard and questionable investigations and conciliation efforts in its rush to court.)

Against this backdrop, the Seventh Circuit decision in EEOC v. Mach Mining, LLC, is stunning. On December 20, 2013, the Seventh Circuit broke from a majority of the U.S. Courts of Appeal when it held that the EEOC’s pre-suit conciliation efforts are not subject to judicial review, at all. This ruling has stark implications for employers in the Seventh Circuit – it arguably extinguishes the traditional failure to conciliate defense to an EEOC lawsuit.

The Seventh Circuit’s reasoning is puzzling. It brushes aside the agency’s mandate to encourage voluntary compliance with employment laws, noting: “[t]he statutory directive to the EEOC to negotiate first and sue later does not implicitly create a defense for employers who have allegedly violated Title VII.” It defers entirely to the agency’s ability to police itself and rejects the notion that “EEOC field offices are so eager to win publicity or to curry favor with Washington by filing more lawsuits that they will needlessly rush to court.” The 27-page opinion does not delve into the facts that recently have lead numerous courts to chastise the agency for precisely the type of conduct the Seventh Circuit characterizes as implausible. 

The Mach Mining decision, in effect, condones the EEOC’s questionable tactics. Because of the legal importance of the issues involved and the Circuit split on this issue, we expect that it is only a matter of time before the U.S. Supreme Court accepts a certiorari petition and weighs in on the issue. In the interim, all employers, and not just those in the Seventh Circuit, should expect the EEOC to enter 2014 vigorously challenging employers’ ability to challenge the sufficiency of conciliation efforts.

2.    EEOC v. Abercrombie & Fitch Stores, Inc., 731 F.3d 1106 (10th Cir. 2013). 

Abercrombie’s “Look Policy,” which requires its employees to dress in a manner that “exemplifies a classic East Coast collegiate style of clothing” has been intensely scrutinized, both in the courtroom and in the public arena.  Indeed, the Look Policy has been challenged in several lawsuits, one of which recently culminated in a Tenth Circuit ruling clarifying an employer’s duty to accommodate religious practices where an employer has notice that the practice conflicts with a job requirement or work policy.  We followed the case closely as it wound its way through the courts, taking sometimes unpredictable turns. The district court granted summary judgment for the EEOC, but the Tenth Circuit did an about face, not only reversing the district court’s judgment, but also granting summary judgment to Abercrombie.  On December 4, 2013, the EEOC filed a Petition for Rehearing En Banc seeking review of the Tenth Circuit decision.

This is a significant, employer-friendly decision regarding the relative burdens in religious discrimination claims alleging a failure to accommodate. The Tenth Circuit placed the burden of notice squarely on the applicant or employee who is uniquely qualified to know whether a particular practice is religiously motivated, and whether a workplace accommodation may be necessary. It  noted that the EEOC itself warns employers against asking about an applicant’s or employee’s religious practices, which are intensely personal and individual-driven, or making assumptions about religious practices based on stereotypes. Further, it acknowledged a line of cases holding that an employer’s actual, particularized knowledge of a conflict between a religious practice and workplace policy may be enough to trigger an employer’s duty to engage in the interactive process, but ruled that no such facts were present in this case. 

The EEOC is seeking reconsideration of the Tenth Circuit’s ruling, arguing that something less than an employer’s particularized, actual knowledge should suffice. If this argument finds traction in the courts, it would put employers in an impossible position: an employer would be penalized for not acting on stereotypical assumptions regarding an applicant’s or employee’s religious beliefs, an outcome that is directly opposed to Title VII’s goals. As the final chapter in this saga has yet to be written; employers should watch this case closely in FY 2014.

3.    EEOC v. Kaplan Higher Learning Educ. Corp., No. 10-CV-2882, 2013 WL 322116 (Jan. 28, 2013).

In December 2010, the EEOC filed a lawsuit alleging that Kaplan’s use of credit checks in connection with employment decisions had an unlawful disparate impact on African-American individuals in violation of Title VII.  The lawsuit was one of the Commission’s highest profile cases concerning a national priority under the current Strategic Enforcement Plan — “target[ing] class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.” 

On January 28, 2013, the court granted summary judgment to the defense and dismissed the EEOC’s suit. The EEOC’s claim faltered at the outset — its statistical evidence was unreliable. Specifically, the Court excluded the EEOC’s  expert reports and testimony of its expert as inadmissible because the EEOC failed to show that the expert’s methodology was reliable. The court tossed the entire case because without expert testimony, EEOC could not prove its disparate impact theory. 

Not only did Kaplan win the war (complete dismissal of the lawsuit), in the course of the litigation, it also won important battles including persuading the Court to compel the Commission to disclose its own consideration of credit history in connection with employment decisions. In doing so, Kaplan successfully turned the tables on the agency’s “do as I say, not as I do” litigation strategies. 

The court did not reach the merits of the EEOC’s underlying disparate impact theory; rather, it held that the methodology the EEOC chose to prove its claims was flawed. Indeed, the EEOC is appealing the ruling and in the summer of 2013 filed a new round of lawsuits attacking employers’ use of background screening tools based on the same disparate impact theories. Employers should expect that the EEOC to continue to aggressively litigate this theory in 2014.

4.    EEOC v. Boh Brothers Constr. Co., 731 F.3d 444 (5th Cir. 2013).  

The EEOC scored a significant win in the Boh Brothers case, when the Firth Circuit held that harassment based on gender-stereotypes can be actionable “because of sex” under Title VII. This case exemplifies the edge-of-the-envelope theories that the EEOC championed in 2013, in its drive to stretch the boundaries of existing law or make new law. 

In Boh Brothers, an ironworker was allegedly subjected to “almost-daily verbal and physical harassment.” The EEOC presented evidence that the supervisor thought the victim was not a “manly-enough man.” The Fifth Circuit held that the EEOC could prove that the same-sex harassment was “because of sex” by presenting evidence that the harassment was based on a perceived lack of conformity with gender stereotypes.

Almost immediately after the decision on appeal, the EEOC issued a press release touting the Fifth Circuit’s ruling. It remains to be seen whether other courts will adopt the Fifth Circuit’s reasoning. While Boh Brothers is arguably an extreme case of gender-stereotype discrimination, a colorful dissenting opinion (a must-read) highlighted the difficulty of identifying actionable conduct at predominately male-populated worksites, like construction sites and oil/gas fields. In the interim, we expect that the EEOC will continue to push the boundaries of Title VII to encompass cutting edge harassment theories.

5.    EEOC v. Hill Country Farms, Inc. d/b/a Henry’s Turkey’s Servs., No. 11-CV-41 (S.D. Iowa). 

In a record breaking and widely publicized jury trial award, the EEOC recovered $240 million in an ADA case on behalf of a class of mentally disabled men who suffered mistreatment and discrimination on the basis of their disability. To put the $240 million award in context – between 1997 and 2012, the EEOC secured a total of $89 million in damages for all ADA claims. The EEOC’s complaint alleged that the 32 claimants were verbally and physically abused in a variety of ways over three decades.  Before the case proceeded the trial, the EEOC won summary judgment on a claim that the claimants were paid lower wages than their non-disabled counterparts.  On May 1, 2013, after a six-day trial on the remaining claims, the jury awarded $7.5 million in compensatory and punitive damages for each of the 32 claimants, totaling $240 million. The court later reduced the award per claimant to $50,000 ($1.6 million total for all claimants) pursuant to the ADA’s statutory cap on damages. On August 12, 2013, Hill Country Farms filed an  appeal raising two issues: one, that another entity, West Liberty Foods, Inc., should have been joined in the action as a necessary party, and two, that the court erred in admitting evidence regarding activities in the Bunkhouse. The outcome of the appeal is still pending. 

The egregious facts of this case drove the record-breaking verdict.  Nevertheless, the EEOC’s recent and growing focus on ADA claims should be taken as fair warning to employers that the EEOC will pursue any and all perceived violations.  

We hope you find this retrospective on 2013 and EEOC-Initiated Litigation helpful to corporate counsel. It was quite a year, and we expect 2014 will be no different.

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

We were privileged to attend the National Law Journal’s awards dinner for Law Department of the Year yesterday evening at the Ritz-Carlton Hotel in Chicago, Illinois. Seyfarth’s Labor & Employment Department won Department of the Year honors for our work on the defense of workplace class actions and EEOC pattern or practice litigation – a description of the award is here.

Photo Credit: Seyfarth Shaw

By Gerald L. Maatman Jr. and Howard M. Wexler

In both disability and religious discrimination cases employers, especially larger ones, are often taken to task by the EEOC for arguing that an undue hardship exists that prevents them from accommodating an employee’s disability or sincerely held religious belief. While in some cases a simple accommodation (e.g., ergonomic chair) may do the trick, in most cases – especially those that form the basis of a federal lawsuit – the accommodation is much more onerous and requires an employer to expend significant resources and/or severely restructure a job. Although this burden is high, a recent decision from the U.S. District Court for the District of Nebraska in EEOC v. JBS USA, LLC, 8:10-CV-318 (D. Neb.  Oct. 11, 2013), in dismissing a pattern or practice lawsuit brought by the EEOC, demonstrates that the undue hardship defense is alive and well!

In EEOC v. JBS USA, LLC, Chief Judge Laurie Smith Camp entered judgment for the employer, finding that it established the affirmative defense of undue hardship since “a religious accommodation for Muslim employees, within the parameters requested [by the EEOC], would have caused more than a de minimis burden on JBS [the employer] and on its non-Muslim employees.” Id. at 40.

Background

JBS operates beef processing facilities in several states, including Grand Island, Nebraska. Id. at 2. In 2007, between 80 to 100 Somali Muslim employees in the Grand Island location took part in a “walk out” in protest of JBS’s refusal to allow them use their “informal breaks” (typically reserved for bathroom breaks) to pray, instead requiring them to pray during their regularly scheduled breaks. Shortly thereafter, JBS also refused (after much deliberation) to change all employees’ meal break times during Ramadan to accommodate its Muslim employees’ prayer schedule and to shorten the overall workday (with a corresponding decrease in pay for all employees). Id. at 23. The EEOC brought suit alleging that JBS violated Title VII by engaging in a pattern or practice of failing to reasonably accommodate the religious practices of Muslim employees in that it failed to: (1) allow Muslim employees to take unscheduled breaks to pray; and/or (2) move the meal break during the remainder of Ramadan 2008 to a time that coincided closely with such employees’ sunset prayer time. Id. at 28.

Basis Of Decision

In reaching her decision, Judge Camp noted that an employer can establish an undue hardship in two ways: (1) the accommodation creates more than a de minimis cost to the employer; or (2) the accommodation would have caused more than a de minimis imposition on co-workers. Id. at 32-33. Judge Camp held that the two accommodations sought by the Muslim employees – permission to take unscheduled breaks during the day to pray and to move the meal break period during Ramadan and shorten everyone’s work shifts – would have resulted in  an undue hardship for JBS under either theory. Id. at 34.

With respect to the request for unscheduled prayer breaks, Judge Camp found that granting such a request would have imposed a greater than de minimis burden on JBS and on the non-Muslim employees. For example, if the production lines were not shut down completely during these break times, the remaining workers would have to work harder and at dangerous speeds. Id. at 35. Additionally, if the lines were merely “stopped or slowed,” the raw meat might be exposed to air and bacteria for a prolonged time, increasing the risk of contamination. Id. at 35-37. Such an accommodation would also have a negative impact on operational efficiency (e.g. the non-Muslim employees would have to work quicker, and thus, would not be able to meet quality specifications) and would also create a substantial financial burden based on the decrease in production and decreased employee morale if non-Muslims were forced to work harder and faster to cover for the Muslim employees taking extra breaks. Id. at 37.

With respect to the requested accommodation of moving all employees’ meal break periods to coincide with the sunset prayer time during Ramadan, Judge Camp ruled that this too created an undue hardship since a 30-minute mass break would result in cattle being left on the “kill floor” for longer than 45 minutes, thus substantially decreasing its value and causing JBS to incur a financial loss. Id. at 38. Additionally, a 30-minute mass break would overwhelm JBS’s facility given that its locker rooms, restrooms, etc. were not large enough to accommodate the large influx of employees that such a mass break would cause. Id. Furthermore, Judge Camp held that JBS established greater than a de minimis imposition on its non-Muslim employees as this proposed accommodation would decrease  their compensation and negatively impact their work schedules. Id. at 39.

Implications For Employers

As we have previously blogged several times – most recently here – employers faced with a claim of religious discrimination under Title VII who refuse an accommodation request must be prepared to come forward with specific evidence demonstrating the “undue burden” that granting the request would cause. Conjecture and speculative “evidence” of the purported undue burden is not enough to establish a cognizable defense. Rather than merely speculating as to potential harm it possibly would have incurred, JBS – as all employers should do – came forward with facts and figures that Judge Camp heavily relied upon in dismissing the EEOC’s case as it was clear that the proposed accommodations posed an undue hardship both on JBS as well as JBS’ non-Muslim employees. This decision should serve as a helpful roadmap for employers going forward seeking to establish the undue hardship defense to a failure to accommodate claim under either Title VII or the ADA.

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

By Gerald L. Maatman Jr. and Howard M. Wexler

In one of the EEOC’s most high profile cases, Chief Judge Loretta Preska of the U.S. District Court of the Southern District of New York issued a pair of decisions (here and here) yesterday in the case of EEOC v. Bloomberg L.P., 07 Civ. 8383 (S.D.N.Y. Sept. 9, 2013). When read together, Judge Preska’s decisions leaves the EEOC with a single count of pregnancy discrimination on behalf of a single individual – a far cry from the systemic pattern or practice pregnancy discrimination class action allegations that originally formed the basis of this high-profile lawsuit back in 2007. In addition to dismissing most all of the remaining claims, and taking the EEOC to task for its pre-lawsuit action (or, more appropriately, inaction), Judge Preska provided Bloomberg with leave to file an application for attorneys’ fees as the prevailing party in this dispute.

Background

As we previously blogged here, in 2007, the EEOC accused Bloomberg of violating Title VII by engaging in a pattern or practice of discrimination against pregnant employees or those who recently returned from maternity leave. Bloomberg had 603 employees who were pregnant or took maternity leave between 2002 and 2009 – 78 of whom the EEOC claimed were victims of discrimination. In 2011, Judge Preska granted Bloomberg’s motion for summary judgment as to the EEOC’s class allegations, finding that it “cannot say that the EEOC has proffered evidence from which a fact-finder could conclude that Bloomberg engaged in a . . . practice of decreasing the pay, responsibility, or other terms and conditions of employment” of its alleged victims. In so doing, the Court took the EEOC to task on the very underpinnings of its case theory. The Court’s 2011 decision concluded that the EEOC’s case was so riddled with problems that Bloomberg should not have to face a trial as to the alleged pattern or practice of discrimination.

As its pattern or practice claims were dismissed, the EEOC sought to continue the action by asserting individual claims of pregnancy discrimination on behalf of twenty-nine non-intervening claimants as well as six additional Bloomberg employees who intervened in the lawsuit. Id. at 10. Bloomberg subsequently moved for summary judgment as to both the EEOC’s claims on behalf of the twenty-nine non-intervening Plaintiffs and the six intervening Plaintiffs. Id.

With respect to the non-intervening Plaintiffs, Judge Preska granted Bloomberg summary judgment, finding that the EEOC failed to engage in adequate pre-litigation activities, including investigating the claims of these individuals and attempting to resolve the alleged unlawful employment practice through conciliation. While noting that the Court’s role in assessing the EEOC’s conciliation efforts is modest and relying heavily on the congressional intent of Title VII, Judge Preska held that the role of a Court is not “inept” and is to ensure that the EEOC has provided sufficient notice to the employer of the natures of the charges against it so as to set the stage for fruitful, pre-litigation, conciliation discussions. Id. at 17-19.

With this background, Judge Preska determined that the EEOC wholly failed to satisfy its required pre-suit conciliation efforts given that it focused its efforts on its overly broad systemic claims while failing to provide Bloomberg with specific information regarding the facts and circumstances surrounding the individual claims it now sought to litigate. As such, Judge Preska held that Title VII “does not allow the EEOC to use class-wide claims…to conduct an end around the pre-litigation requirements that must be satisfied before bringing suit on behalf of individual claimants.” Id. at 20. In a striking blow to the EEOC’s “sue now, ask questions later tactics,” Judge Preska held that:

Allowing the EEOC to subvert its pre-litigation obligations with respect to individuals claims by yelling far and wide about class claims would undermine the statutory policy goal of encouraging conciliation. Thus, the Court holds that its prior filing that the EEOC satisfied its pre-litigation obligations with respect to a class-wide claim applies to that class-wide claim only and that it must look independently at whether the EEOC fulfilled its statutory pre-litigation requirements with respect to the individual claims upon which it purports to continue this litigation.

***

The EEOC may bring any claims reasonably related to the charge it investigated. But such a principle does not grant the EEOC authority to abdicate its statutory responsibility to provide sufficient notice and pursue a pre-suit resolution in good faith. The Court is not aware of any binding legal authority, and the EEOC has provided none, that allows the EEOC to do what it is attempting to do here—namely level broad accusations of class-wide discrimination to present Bloomberg with a moving target of prospective plaintiffs and, after unsuccessfully pursuing pattern-or-practice claims, substitute its own investigation with the fruits of discovery to identify which members of the class, none of whom were discussed specifically during conciliation, might have legitimate individual claims under Section 706. The EEOC’s conduct here blatantly contravenes Title VII’s emphasis on resolving disputes without resort to litigation and lands far and wide of any flexibility Title VII might provide with respect to pre-litigation conciliation requirements where both individual and class-wide claims are asserted and potential claimants are discovered throughout the course of discovery.

Id. at 20 & 23.

In reaching her decision, Judge Preska expressly adopted the decision of Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa in EEOC v. CRST Van Expedited, Inc. (previously blogged about here and here) who dismissed similar pattern or practice claims also based on EEOC’s failure to comply with its pre-suit conciliation obligations. Id. at 27. As Judge Preska aptly held, “Congress surely did not intend that employers, even ones whose workplaces might be rife with [sex discrimination] face the moving target of allegedly aggrieved persons that [Bloomberg] faced in both the administrative and legal phases of this dispute.” Id. Therefore, Judge Preska held that, “as in CRST, the EEOC’s actions – or more appropriately inaction “foreclosed any possibility that the parties might settle all or some of this dispute without the expense of a federal lawsuit as Title VII prefers.”  Id. at 28.

Having found that the EEOC failed to satisfy its pre-suit obligations, Judge Preska rejected the EEOC’s argument that the “preferred remedy” – and the one should she order here – is a stay of the case to allow the EEOC to engage in settlement discussions with Bloomberg now – six years after it filed the lawsuit. Id. Judge Preska flatly rejected this “preferred” approach, finding that, “where, as here, the EEOC completely abdicates its role in the administrative process, the appropriate remedy is to bar the EEOC from seeking relief on behalf of the Non-Interveners at trial and dismiss the EEOC’s Complaint.” Id. In yet another “zinger” to the EEOC’s tactics, Judge Preska held:

The Court does not impose this severe sanction lightly and recognizes that certain of the Non-Intervenor claims may be meritorious but now will never see the inside of a courtroom. However, the Court finds that allowing the EEOC to revisit conciliation at this stage of the case—after shirking its pre-litigation investigation responsibilities and spurning Bloomberg’s offer of conciliation and instead engaging in extensive discovery to develop the Non-Intervenor claims—already has and would further prejudice Bloomberg. Moreover, if such a sanction were not imposed, the Court, in turn, would be sanctioning a course of action that promotes litigation in contravention of Title VII’s emphasis on voluntary proceedings and informal conciliation.

Id. at 29.

Given that she dismissed the EEOC’s claims on behalf of all twenty-nine non-intervener plaintiffs, Judge Preska granted leave for Bloomberg to file an application for its attorneys’  fees as it is the prevailing party. Id. at 30. Given the litigation tactics the EEOC engaged in during this six year old case, one can reasonably expect Bloomberg’s fee application to be a big one.

In Judge Preska’s “other” decision issued yesterday in this case, she also granted (in a whopping 181 page decision) Bloomberg summary judgment as to most all of the claims brought on behalf of the six intervening Plaintiffs. Judge Preska fully dismissed the claims of five of the six intervening plaintiffs, leaving just a portion of one of the intervener plaintiff’s discrimination claims with respect to her 2006 demotion and compensation decrease.

The sum total of Judge Preska’s two decisions, when combined with her prior rulings in this case, whittled down this once massive, high-profile pattern or practice pregnancy discrimination case in which the EEOC originally requested more than $6 million per Charging party during conciliation to a shell of its former self and a rather large bill from Bloomberg that the EEOC will have to “pick up.”

Implication For Employers

As we have previously blogged several times – most recently here and here – the EEOC is actively pursuing the position that courts have no authority to review its investigations or conciliations. This decision is a big win for Bloomberg as well as all employers who have been forced to deal with the EEOC’s “sue now, ask questions later” tactics and should provide a measure of relief to those employers engaging with the EEOC in attempting to not only understand the basis of charges brought against them, but also the foundation for the EEOC’s conciliation demands. 

Given the scope of its defeat, and the expected magnitude of the fee award that may be entered against it based on Judge Preska’s ruling, we expect that the EEOC may challenge all (or part) of Judge Preska’s ruling. Stay tuned!

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