By Gerald L. Maatman, Jr., Alex S. Oxyer, Andrew D. Welker

Seyfarth Synopsis: After over a decade of litigation between the EEOC and trucking company CRST Van Expedited, the Eighth Circuit recently affirmed a federal district court’s order requiring the EEOC to pay $3.3 million in attorneys’ fees to CRST for pursuing claims that it knew or should have known were frivolous and failing to satisfy its pre-suit obligations under Title VII. As such, it is the largest fee award entered against the Commission in 2019.The ruling is EEOC v. CRST Van Expedited, Inc., No. 18-1446 (8th Cir. Dec. 10, 2019).

This is the latest in a series of favorable rulings in this case for employers and provides a useful tool in future litigation where the EEOC fails to fulfill its pre-suit obligations.  We have chronicled the developments of this case in our previous blog posts, which can be found here.

Case Background

The case began in 2007 when the EEOC filed suit against CRST after a female driver alleged that two male trainers sexually harassed her during a training trip. The EEOC eventually sued CRST under § 706 on behalf of a group of approximately 270 female employees, claiming that CRST was responsible for severe or pervasive sexual harassment and that it subjected its female employees to a hostile work environment.  The district court ultimately barred the EEOC from seeking relief for individual claims on behalf of all but 67 of the women, found that the EEOC had not established a pattern or practice of tolerating sexual harassment, and dismissed the suit.  Finding that CRST was the prevailing party and that the EEOC had failed to satisfy its pre-suit obligations, the district court entered a startling attorneys’ fee sanction of nearly $4.7 million against the EEOC .

On appeal, the Eighth Circuit affirmed the dismissal of all claims but those pertaining to two women and vacated the fee award, determining that CRST was no longer the “prevailing party” because the EEOC now had active claims.  On remand, the EEOC settled one claim and withdrew the other. Thereafter, CRST again sought attorneys’ fees and was again awarded over $4 million.  However, on the second appeal, the Eight Circuit again reversed the district court’s fee award, holding that CRST was not a prevailing party under Title VII because the dismissal of the claims concerning EEOC’s failure to satisfy its pre-suit obligations was not a ruling “on the merits.” In addition, the Eighth Circuit reversed the fee award because the district court failed to make individualized findings in granting summary judgment against the other 78 women. The Eighth Circuit directed the district court to make such individualized findings and barred it from awarding fees for the claims that had been dismissed as a result of the EEOC’s failure to satisfy its pre-suit obligations.

CRST appealed the ruling to the U.S. Supreme Court, which reversed and remanded. The Supreme Court held that a favorable judgment on the merits is not a requirement to be a “prevailing party” for purposes of awarding attorneys’ fees. On remand, the Eighth Circuit vacated its prior judgment and remanded back to the district court for additional proceedings consistent with the Supreme Court’s opinion.

In 2017, the district court, after engaging in an individualized inquiries, found that most of the EEOC’s claims on behalf of 78 claimants for sexual harassment were “frivolous, unreasonable, and/or groundless.”  It further found that the dismissal of the 67 other claims as a result of the EEOC’s failure to satisfy its pre-suit obligations constituted a “material alteration” of the parties’ legal relationship, thereby justifying a fee award.  After settling on a method of fee calculation, which involved a “per-claimant-average-fee,” the district court ultimately issued a fee award of $3,317,289.17. Subsequently, the EEOC appealed the fee award again to the Eighth Circuit.

The Court’s Decision

On December 10, 2019, the Eighth Circuit affirmed the district court’s $3.3 million fee award against the EEOC, holding that the district court did not abuse its discretion in calculating the fee award. Citing the Supreme Court’s Christiansburg opinion (which held that fee awards to a prevailing defendant are permissible if the plaintiff’s lawsuit was “frivolous, unreasonable, or without foundation”), the Eighth Circuit found that, after conducting individualized inquires, the district court did not abuse its discretion in determining that 71 of the claims it had dismissed on summary judgment were frivolous and that a fee award was warranted.

The Eighth Circuit also upheld the district court’s method of fee calculation pursuant to the Fox standard.  In Fox v. Vice, 563 U.S. 826 (2011), the Supreme court held that “a court may grant reasonable fees to the defendant” where “the plaintiff asserted both frivolous and non-frivolous claims,” “but only for costs that the defendant would not have incurred but for the frivolous claims.” The Supreme Court made it clear that trial courts have “wide discretion” in applying this standard.  The appeals court took no issue with the district court’s fee calculation method, as it determined that the district court “carefully and thoroughly examined the supporting documentation that CRST … provided in support of its fee request” in crafting its calculation.

The EEOC made several arguments against both the determination that it had brought frivolous claims and the method used to calculate the fee award. Most notably, the EEOC argued that its lawsuit was not frivolous because it reasonably believed it had satisfied the Title VII pre-suit requirements and that the district court erred in granting fees because CRST had not established that any fees were incurred solely in defense of a frivolous claim.

The Eighth Circuit rejected the EEOC’s arguments. It opined that the EEOC could not hold a reasonable belief that it satisfied its pre-suit obligations when it actually “wholly failed to satisfy them.” The Eighth Circuit also determined that the district court’s methods of calculating the fee award, which involved subtracting unrecoverable amounts from the original fee award and then creating an average fee per claimant, achieved “rough justice” and was acceptable under Fox. In so holding, the Eighth Circuit reiterated that “frivolous claims may increase the cost of defending a suit in ways that are not reflected in the number of hours billed,” and that CRST was not required “to provide detailed, minute-by-minute documentation of the work it specifically performed on each individual claim that the court has determined are frivolous, unreasonable and/or groundless.”

Implications For Employers

Even despite the reduction in the attorneys’ fees award from $4.7 million to $3.3 million, the Eighth Circuit’s ruling is a stunning victory.  This case continues to serve as a warning to the EEOC to avoid rushing through its mandatory pre-suit duties in an effort to catch employers off-guard in litigating claims.  When the EEOC engages in these tactics, this ruling can be used by employers to hold the agency accountable

By Gerald L. Maatman, Jr., Andrew D. Welker, and Alex S. Oxyer

Seyfarth Synopsis: Every year the American Tort Reform Association (“ATRA”) publishes its “Judicial Hellholes Report.” The Report focuses on litigation issues in state court systems and challenges for corporate defendants in the fair and unbiased administration of justice. The ATRA’s 2019-2020 Report was recently published; find a copy here and the executive summary here.

The Judicial Hellholes Report is an important read for corporate counsel facing class action litigation because it identifies jurisdictions that are generally disadvantageous to defendants. The Report defines a “judicial hellhole” as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.

The 2019 Hellholes

In its recently released annual report, the ATRA identified 10 jurisdictions on its 2019 hellholes list – which, in order, include: (1) Philadelphia (especially in the Philadelphia Court of Common Pleas regarding product liability mass tort cases and asbestos litigation), (2) California, (3) New York City (particularly regarding Americans With Disabilities Act accessibility claims and consumer lawsuits against the food and beverage industry), (4) Louisiana, (5) St. Louis, Missouri, (6) Georgia, (7) Illinois (especially Cook, St. Clair, and Madison counties and regarding asbestos litigation and Illinois Biometric Information Privacy Act lawsuits), (8) Oklahoma, (9) the Twin Cities, Minnesota (particularly the Minnesota Supreme Court with several recent liability-expanding decisions), and (10) New Jersey. According to the ATRA’s analysis, these venues are less than optimal for corporate defendants and often attract plaintiffs’ attorneys, particularly for filing class action lawsuits.  Therefore, corporate counsel should take particular care if they encounter a class action lawsuit filed in one of these venues.

The 2020 “Watch List”

The ATRA also included 7 jurisdictions on its “watch list,” including Colorado (principally the Colorado Supreme Court and Court of Appeals), Florida (though the ATRA noted that Florida, previously number one on past judicial hellholes lists, has been making strides to improve its liability climate), Maryland, Montana (particularly the Montana Supreme Court), Pennsylvania (especially the Pennsylvania Supreme Court), South Carolina (especially in asbestos litigation), and West Virginia (regarding its Supreme Court of Appeals).

In addition, the ATRA recognized that privacy and security class actions are poised to become a “feeding frenzy” for plaintiffs’ lawyers.  The ATRA cited the pervasiveness of lawsuits under the Illinois Biometric Information Privacy Act as a “stark warning” for how these types of privacy lawsuits are likely to expand at the national level and the impact those lawsuits will have on legitimate businesses (we have previously discussed the rise in BIPA lawsuits and the onset of other biometric privacy legislation here). The Report also noted an escalation of lawsuits filed under the Telephone Consumer Protection Act (TCPA), with more than 2,500 TCPA suits filed this year alone.

Implications For Employers

The Judicial Hellholes Report dovetails with the experience of employers in high-stakes workplace class actions, as California, Missouri, New York, Pennsylvania, New Jersey, Illinois, Louisiana, and Florida are among the leading states where Plaintiffs’ lawyers file employment discrimination and wage & hour class actions. Many of these jurisdictions are also becoming a hotbed for privacy and accessibility-related lawsuits. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and by generous damages recovery possibilities under state laws.

Seyfarth Synopsis: Happy Holidays to our loyal readers of the Workplace Class Action Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report. We anticipate going to press in early January, and launching the 2020 Report to our readers from our Blog.

This will be our Sixteenth Annual Report, and the biggest yet with analysis of over 1,450 class certification rulings from federal and state courts in 2019. The Report will be available for download as an e-Book too.

The Report has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We are humbled and honored by the recent review of our 2019 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. Here is what EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation. Anyone who practices in this area, whether as a corporate counsel, a private attorney, a business execu­tive, a risk manager, an underwriter, a consul­tant, or a broker, cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class ac­tions from ‘A to Z.’ In short, it is ‘the bible’ for class action legal practitioners, corporate coun­sel, employment practices liability insurers, and anyone who works in related areas.” Thank you, EPLiC.

The 2020 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions – in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2019 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

Information on downloading your copy of the 2020 Report will be available on our blog in early January. Happy Holidays!

By Gerald L. Maatman, Jr., Christopher J. DeGroff, Matthew J. Gagnon, and Ala Salameh

Seyfarth Synopsis: On November 19, 2019, the EEOC released its inaugural “Agency Financial Report” (“AFR”)  for Fiscal Year 2019 (here). Substantively, the AFR is a data compilation regarding the EEOC’s financial health, initiatives, and guiding principles. The AFR is an important guide to how the EEOC spent its budget in FY 2019, and is therefore a useful harbinger of the Commission’s strategic direction and enforcement priorities in FY 2020 and beyond.

An EEOC led by its new Chair, Janet Dhillon, is starting to make some changes. One of those changes was released today in the form of the EEOC’s inaugural Agency Financial Report (“AFR”), which replaces the combined Performance Accountability Report (“PAR”) that used to be published in November of each year. The EEOC explains in the 2019 AFR that it has decided to separate the information that had been contained in the combined PAR into two separate reports.

The AFR will continue to be published in November and will focus on financial results and a high-level discussion of performance results. A new Annual Performance Report (“APR”) will be published in February 2020 in coordination with the EEOC’s Congressional Budget Justification. The APR will report on the EEOC’s progress achieving the goals and objectives in the agency’s Strategic Plan and Annual Performance Plan, which is issued as part of the OMB’s budget request, along with performance and program results achieved for the previous fiscal year. Until the APR is published in February, we must look to the AFR as the most reliable guide to how the EEOC’s new leadership views the agency’s mission and intends to reach its goals for the coming year.

FY 2019: Political Developments Impact The EEOC

The EEOC leadership is appointed by the President and confirmed by the Senate, which inherently ties the Commission to the shifting political climate in Washington (see more here). The EEOC’s leadership includes the Chair, Vice Chair, and three Commissioners. Of the five members, there must be at least three acting Commissioners to satisfy quorum and exercise their powers. A vacancy was created due to the departure of Commissioner Feldblum, the first openly gay Commissioner, who was not re-confirmed by the Senate due to her perceived positions on LGBT rights issues. As a result, the Commission lacked quorum between January 2, 2019 and May 15, 2019. Because of the lack of quorum and the 35-day government shutdown, the Commission experienced a marked decline in filings across the nation relative to years prior, the impacts of which pervade the discussion of the EEOC’s financial performance in the AFR.

A Slight Drop In Recoveries

During FY 2019, the EEOC recovered more than $486 million for alleged discrimination victims. This represents a 4% decrease from $505 million in FY 2018 (see more here), and is roughly on par with the $484 million recovered during FY 2017 (see more here). In particular, the relief obtained through mediation, conciliation, and settlement declined from $354 million in FY 2018 to $347 million in FY 2019. Further, litigation recoveries dropped to $39.1 million in FY 2019 from $53.6 million in FY 2018 (the FY 2017 and 2016 numbers were $42.4 million and $52.2 million respectively).

Progress Reducing The Charge Backlog

Since FY 2017, the EEOC has made concerted efforts to process the significant backlog of pending charges. Despite the 4-month period when the EEOC lacked a quorum during FY 2019, those efforts remained strong. During FY 2018, Acting Chair Lipnic honored her commitment by addressing the backlog and reported a 19.5% decrease from FY 2017. In FY 2019, the Commission reduced the charge workload by an additional 12.1%. Because of these compounded initiatives, the total number of pending private sector charges was 43,850 – the lowest reported backlog number in 13 years. The ability to continue to drive down the backlog during FY 2019 was attributed, in part, to technological advances, including modernization of the Public Portal, Respondent Portal, and Digital Charge System. Collectively, these tools allow charging parties to self-screen their concerns and determine which federal agency is best suited to address their concerns.

Prioritizing Education & Outreach

One of the Commission’s six strategic enforcement priorities is preserving access to the legal system. In its FY 2019 Congressional Budget Justification (here), the EEOC indicated it would pursue greater access through education and outreach. The EEOC conducts both free and fee-based events targeting particularly vulnerable communities that may be unfamiliar with employment law protections (e.g., low-skilled workers, new immigrant workers, etc.). This year, the White House launched the Initiative on Historically Black Colleges and Universities (“WHIHBCU”), and the Initiative on Asian Americans and Pacific Islanders (“WHIAPPI”). In conjunction with the White House programs, the EEOC hosted 76 outreach events in concert with WHIHBCU programs drawing in 6,987 attendees, and 142 WHIAPPI events with 22,526 attendees. Further, roughly one third of the total outreach targeted vulnerable workers and underserved communities, amounting to 1,298 outreach events involving 112,410 participants. The EEOC reports that it prioritizes strong outreach efforts, particularly to disenfranchised workers, to promote greater understanding and communication between the Commission and the U.S. labor force.

Implications For Employers

Despite the ongoing political upheaval this year, the EEOC remains committed to pursuing its mission and increasing enforcement activity. Our fiscal year-end analysis, and the EEOC’s own AFR, reflect the EEOC’s continuing commitment to robust efforts to quickly process charges, bring and pursue enforcement litigation, and obtain litigation and settlement recoveries on behalf of workers. We will continue to monitor trends and developments in the EEOC’s mission, including the types of cases that are filed and how the agency chooses to fight those lawsuits in court. As we do every year, we look forward to providing you an in-depth look at those trends and developments in January.

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

By Gerald L. Maatman, Jr. and Christina M. Janice

Seyfarth Synopsis: In the latest development in the ultra-high stakes nationwide Prescription Opiate Litigation, the U.S. Court of Appeals for the Sixth Circuit recently granted the petition of six Ohio cities to appeal the  class certification order of U.S. District Court Judge Daniel A. Polster creating a new and innovative type of class action — the “negotiation class.” In In Re National Prescription Opiate Litigation, No. 19-0306, 2019 U.S. App. LEXIS 33629 (6th Cir. Nov. 8, 2019), the Sixth Circuit determined that Judge Polster’s “negotiation class” is so novel and relevant to class litigation in general that a prompt, interlocutory appeal of the legality of the certification order is warranted. Corporate counsel should keep this on their radar, as it signals how and to what extent class certification procedures might be construed in “tough cases” and in novel circumstances.

Background

As previously reported here, on September 11, 2019 Judge Daniel A. Polster, presiding over the nationwide prescription opiate multidistrict litigation, certified for the first time ever an innovative “negotiation class” mechanism to structure a formal process for 34,448 cities, counties and municipalities in over 2,000 lawsuits to negotiate lump sum settlements with prescription opiate manufacturers and distributors. In Re National Prescription Opiate Litigation, No. 1:17-MD-2804, 2019 U.S. Dist. LEXIS 155118 (N.D. Ohio Sept. 11, 2019).

The hallmark of the district court’s order is the expansion of Federal Rule 23, which allows for class actions for trial and settlement purposes. The order creates a new type of class action before trial or settlement, comprised of a multi-step process: (i) allocating a lump sum settlement and a plan for class members to vote on its reasonableness; (ii) moving for class certification under Rule 23, including judicial approval of the proposed allocation and voting plan; (iii) issuing court-authorized notice to the class and opt-out period; (iv) engaging in lump sum settlement negotiations once the class size is set; and (v) and pursuing the approval process including preliminary judicial approval of the settlement, objections, voting on the settlement, and final judicial approval of the plan. Id. at 5-7; 33-40.

The district court certified the innovative “negotiation class” in the run up to the first scheduled bellwether trial for two Ohio county Plaintiffs, Cuyahoga County and Summit County.  The move to certify a “negotiation class” drew objections from most state attorneys general, numerous municipalities, and several drug manufacturers and distributors that the order would not allow for global settlement or would require parties to opt-out before fully knowing the terms of settlement.

Six cities in Northern Ohio – North Royalton, East Cleveland, Mayfield Heights, Lyndhurst, Huron and Wickliffe – objected to class certification without success. On September 25, 2019, these municipalities filed their petition for interlocutory appeal with the Sixth Circuit, arguing that the “negotiation class” was novel; that the district court was unlikely to reconsider the legality of its order until after the negotiation process plays out and settlements are reached; and that an appeal should be allowed to determine the legality and constitutionality of the order.

The Sixth Circuit’s Ruling

Observing that under Rule 23(f) there is no “hard-and-fast” rule for when it can permit an appeal from the grant or denial of a motion for class certification, the Sixth Circuit considered four factors in determining whether to allow an appeal that is interlocutory ─ before the entry of a final judgment or order: (i) whether the case raises novel or unsettled question; (ii) the likelihood of the petitioner’s success on the merits; (iii) the costs of continuing litigation; and (iv) the posture of the case before the district court. Id. at 2.

Here, the Sixth Circuit determined that whether the negotiation class is permitted under Rule 23 “is both novel and relevant to class litigation in general.” Id. The Sixth Circuit also viewed the order as sufficiently final to warrant review, stating that “the district court entered a final order to certify the class, with no indication that it will review its decision in the future.” Id.

The appeal will be briefed in the upcoming months. The implications of the appeal on proceedings in the district court, where the first bellwether trial scheduled for October 21, 2019 was settled just prior to the start of trial, is not yet clear.

Implication For Employers:

The Sixth Circuit’s decision to pump the brakes on the district court’s expansion of Rule 23 to create a new kind of class certification device will be watched by courts and litigants across the country. As class actions grow in breadth and complexity it is likely that the Prescription Opiate Litigation is the first of several trial balloons for innovation in case handling in the complex litigation arena. We will keep our readers apprised of developments in the emerging area.

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

Seyfarth Synopsis: In an EEOC disability discrimination lawsuit alleging that an employer failed to accommodate and then wrongfully terminated a laundry technician with anxiety, the U.S. District Court for the Middle District of Tennessee granted the employer’s motion for summary judgment, holding the EEOC did not establish that the employee was disabled for purposes of the Americans With Disabilities Act, 42 U.S.C. §§ 12101, et seq. (“ADA”).

This ruling provides insight for employers relative to defending ADA lawsuits where the alleged disability may be questionable.

Case Background

In EEOC v. West Meade Place LLP d/b/a The Health Care Center at West Meade Place (“WMP”), No. 3:18-CV-101, 2019 U.S. Dist. LEXIS 182600 (M.D. Tenn. Oct. 22, 2019), the EEOC alleged that WMP violated the ADA by failing to provide a reasonable accommodation to a former employee, and by wrongfully discharging her because of her disability. The employee, who worked as a laundry technician at WMP from February 2015 to November 2015, was terminated after requesting an accommodation for her anxiety disorder.  WMP argued that the employee was not disabled under the ADA, and therefore the EEOC’s failure to accommodate and unlawful termination claims failed.  After discovery, WMP moved for summary judgment.

The Court’s Decision

The Court granted WMP’s motion for summary judgment.  First, the Court explained that under the ADA, a “disability” is defined in three ways, including: (a) a physical or mental impairment that substantially limits one or more of the major life activities of an individual; (b) a record of such an impairment; or (c) being regarded as having such an impairment.  Id. at *4 (citing 42 U.S.C. § 12102(1)).  For purposes of this definition, “major life activities” include, but are not limited to, caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.  Id. (citing 42 U.S.C. § 12102(2)).

In support of its allegation that the employee was disabled, the EEOC relied on the testimony of a doctor who opined that the employee “could not work during flare-ups of her anxiety and therefore could potentially be unable to work for one to three days per month.”  Id. at *4.  The Court noted that although the doctor’s deposition testimony confirmed her diagnosis of the employee as having “anxiety,” she did not explain how she reached that diagnosis by use of her medical expertise.  Id. at *6.  The physician’s testimony suggested that she relied on a diagnosis made by a previous physician, which was suggested to her by the employee.  Id.

Further, the Court explained that the EEOC must also show that the impairment substantially limited one or more of the employee’s major life activities when her anxiety was active.  The Court held that nothing in the deposition testimony supported such a finding, inasmuch as the doctor’s notation on the medical form – that the employee could not work during flare-ups and could potentially need to take off one-to-three days per month – did not appear to have been based on a medical assessment, but instead based on a request made to the physician by the employee.

The EEOC also argued in the alternative that the employee had a “record of impairment” that was provided to WMP at the start of her employment.  An individual has “a record of a disability if the individual has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.”  Id. at *9 (citing 29 C.F.R. § 1630.2(k)(1)).  After examining the various onboarding forms cited in support of the EEOC’s argument, the Court held that nothing in those forms indicated that the employee had ever been treated for a mental condition, nor had she consulted or been treated by clinics, physicians, healers, or other practitioners with the past 5 years for other than minor illnesses, and thus did not establish a “record of impairment” under the ADA. Id. at *10-11.

Finally, the EEOC argued that the employee was “regarded as having an impairment” by WMP. Id. at *12.  The Court explained that “[a]n individual meets the requirement of ‘being regarded as having such an impairment’ if the individual establishes that he or she has been subjected to an action prohibited under this chapter because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity.”  42 U.S.C. § 12102(3)(A).  The Court rejected the EEOC’s argument, holding that nothing in the deposition testimony cited by the EEOC indicated that WMP did not take any action based on a perceived impairment.

Accordingly, because none of the evidence offered by the EEOC showed that the employee had a disability as defined by the ADA, the Court granted WMP’s motion for summary judgment.

Implications For Employers

While some disabilities and medical conditions are readily apparent, others may appear less obvious.  Although employers should take a cautious approach when confronted with requests for accommodations, in instances where such requests may not be medically supported, the ruling in EEOC v. WMP provides insight into how employers can defend against corresponding ADA claims by maintaining detailed onboarding records and aggressively deposing medical experts relied upon by the EEOC.

By: Gerald L. Maatman, Jr., Christopher J. DeGroff, Matthew J. Gagnon, and Ala Salameh

Seyfarth Synopsis: The Trump Administration has succeeded in replacing several open  positions within the upper echelons of the EEOC. Employers are anxiously looking for any sign as to how this slate of leadership will put its stamp on the agency’s mission and, more importantly, which employers and business practices the agency will most heavily target. But even though the names and faces are now known, what changes they will bring in terms of enforcement priorities and tactics remain elusive.

The Trump Administration is now well into its third year. And although it has recently filled most of the open positions at the headquarters of the EEOC, including a new Chair and a new General Counsel, the impact that will have on the EEOC’s mission remains largely uncertain. Employers may have hoped for greater clarity in terms of this Administration’s priorities for the agency. The agency’s new leadership has not been vocal about its intentions, and the new lawsuits the EEOC filed in FY 2019 offer few clues.

The term of former Commissioner, Chai Feldblum, expired at the end of the last calendar year, leaving the Commission without a quorum to make major decisions. That, along with heightened political division in Washington (including a 35-day government shutdown), caused the EEOC’s litigation activity to come to an unanticipated standstill. Despite this prolonged interruption, the Commission’s litigation program boasted three-digit filing numbers toward the end of the fiscal year.

As we have come to expect, the EEOC ended its fiscal year with increased activity, filing 52 lawsuits during September alone compared to the total of 12 filings during the entire first quarter of 2019. But in the end, the agency’s end-of-year rush and total number of filings did not come anywhere near the numbers posted last year. At the time of publication of this blog posting, the EEOC had filed 149 total cases in FY 2019, which includes 141 merits lawsuits and 8 subpoena enforcement actions. This total number of filings is significantly less than the last two years (see here and here), and is more in line with the drop off in filings that we saw in FY 2016 (see here).

Cases Filed By EEOC District Offices

In addition to tracking the total number of filings, we also keep a close watch on which of the EEOC’s 15 district offices are most actively filing new cases. Some districts tend to be more active than others, and some focus on different EEOC priorities. So the where of EEOC filings not only shows which areas of the country are most heavily targeted, but also offers a clue as to which priorities the EEOC is focusing on for the coming year. The following chart shows the number of filings by EEOC district office.

The most noticeable trend of FY 2019 is the marked decrease in coast-to-coast filings that we have seen compared to past years. Leading the pack in new filings are the Charlotte and Philadelphia district offices, with 15 and 14 filings respectively. The Chicago district office is usually at the head of the pack, but has been bumped to the shared number three spot along with New York and Houston at 12 filings each. The numbers for the other district offices are also fairly close to on par with what we have come to expect. This year, the Indianapolis, St. Louis, and Phoenix district offices posted comparatively mid-range numbers. This middle of the pack performance is fairly typical of those district offices. The Dallas and Los Angeles district offices were outliers on the lower end of the spectrum. Los Angeles filed just 8 new lawsuits this year compared with 17 last year, and Dallas filed just 3 compared to 10 last year.

Analysis Of The Types Of Lawsuits Filed In FY 2019

Each fiscal year we also analyze the types of lawsuits the EEOC files, in terms of the statutes and theories of discrimination alleged, in order to determine how the EEOC is shifting its strategic priorities. But here again, the numbers – when considered on a percentage basis – are largely in line with prior years, confounding attempts to ascertain where the new leadership will focus the agency’s attention in FY 2020 and beyond. The graphs set out below show the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, and Age Discrimination in Employment Act, etc.) and, for Title VII cases, the theory of discrimination alleged.

Although the total number of filings is down across the board, when considered on a percentage basis, the distribution of cases filed by statute remained broadly consistent compared to FY 2018. Title VII cases once again made up the majority of cases filed, making up 60% of all filings (as compared with 55% in FY 2018). ADA cases also made up a significant percentage of the EEOC’s filings, totaling 37% this year, as compared to 42% in FY 2018. This too is fairly typical. There were only 7 age discrimination cases filed in FY 2019, which is a relatively small number. But again, when compared on a percentage basis, this does not represent a large shift in focus for the EEOC (5% in FY 2019 on par with the 5% in FY 2018).

Change At The Top

By any measure, FY 2019 was a “transition” year for the EEOC. The Commission’s leadership team include five members: the Chair, Vice Chair, and three Commissioners, collectively appointed by the President and approved by the Senate. Of the five Commissioners, no more than three may be members of the same political party, a requirement promising bipartisanship outliving administration changes. Janet Dhillon, the current EEOC Chair, was originally selected for that role by President Trump in June 2017, but was not approved by the Senate until FY 2019, taking office on May 15, 2019. She joined two Obama-appointed Commissioners, Victoria Lipnic and Charlotte Burrows, a Republican and a Democrat respectively. Two Commissioner positions remain vacant.

President Trump had originally re-nominated former Commissioner Chai Feldblum for a third term. As a bipartisan federal agency, it is customary for the President to nominate Commissioners who are members of both parties. However, Feldblum was the first openly gay member of the Commission, and a champion of LGBT rights. Although President Trump re-nominated Feldblum, she was not confirmed by the Senate due to her perceived views on those issues, leading to her term’s expiration on January 2, 2019. The EEOC was therefore left with only two Commissioners until Dhillon took her seat in May.

Three acting Commissioners are required for the EEOC to exercise its powers. Between the expiration of Feldblum’s term in January and Dhillon’s appointment nearly four months later, the Commission lacked a quorum, thereby hindering its ability to act. This may, in part, explain the drop in merits suits and subpoena enforcement actions in FY 2019. The government shutdown, which lasted from December 22, 2018 to January 25, 2019, may also have played a part. Upon Dhillon’s appointment, and despite two remaining vacancies, the three-member Commission satisfies quorum and has since resumed full operations at the EEOC.

Appointment of the new Chair came on the heels of thirty business organizations, including the U.S. Chamber of Commerce and American Trucking Associations, imploring Congress and the President to confirm then nominee Dhillon with expediency. Absent a quorum, the EEOC was unable to respond to newly issued court decisions and regulations impacting employers in costly ways. Among them was the March 4, 2019 decision issued by Judge Tanya Chutkan of the U.S. District Court for the District of Columbia, which revitalized the Obama-era requirement that employers report W-2 wage information and total hours worked for all employees by race, ethnicity, and sex within 12 proposed pay bands (EEO-1 Component 2 pay data).

Now that the EEOC has a quorum again, we may be starting to glimpse how things may start to change at the agency. On September 11, 2019, the EEOC announced that it is not renewing its request for authorization to collect Component 2 pay data because of the burden that collection imposes on employers. Although this change in policy came too late to prevent employers from having to submit such data this year (by today), this may be one of the first indications employers have seen as to how the new leadership may shake things up in years to come.

Implications For Employers

Commissioner Lipnic’s term expires on July 1, 2020 which could result in a loss of quorum again if she is not re-nominated and confirmed for her position, or otherwise replaced by a Trump nominee. This leaves open the possibility of three Commissioner appointments by President Trump during the upcoming election year. We fully expect that the EEOC’s future composition and the broader political climate will have major implications for the Commission’s enforcement priorities.

We will continue to monitor these changes closely and keep readers apprised of developments. Our annual comprehensive analysis of trends in EEOC litigation will be published at the end of the calendar year. As always, we will keep abreast of EEOC data amid the ever-changing political milieu, and share lessons learned from FY 2019 to carry employers through the new year.

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

By Gerald L. Maatman, Jr. and Christina M. Janice

Seyfarth Synopsis: In complex class actions, courts have looked to Rule 23 to authorize class actions either for trial, or for approval of a previously negotiated settlement. Now as thousands of public entities nationwide pursue financial relief from opiate manufacturers, distributors, and pharmacies, U.S. District Court Judge Daniel A. Polster has ordered into effect a third and “innovative” type of class action. In the litigation entitled In Re National Prescription Opiate Litigation, No. 1:17-MD-2804 (N.D. Ohio Sept. 11, 2019) the Court, over the objections of most of the state attorneys general in the U.S., has granted a “negotiation class certification” order allowing a nationwide class of public entities to negotiate potential settlement of the 2,000 pending lawsuits in this sweeping multidistrict litigation. For obvious reasons, the ruling of Judge Polster is well worth a read for any company involved in class action litigation.

Background

In 2017, federal lawsuits brought by public entities against the opiate industry for reimbursement of public funds used to address the opiate crisis were consolidated for pretrial purposes in a multidistrict litigation in the U.S. District Court for the Northern District of Ohio. In an opinion entered by Judge Daniel A. Polster this week in In Re National Prescription Opiate Litigation, No. 1:17-MD-2804 (N.D. Ohio Sept. 11, 2019), the Court observed that since “ the outset of this MDL, the Court has encouraged the parties to settle the case,” id. at ¶ 2, adding “[h]ere, a settlement is especially important as it would expedite relief to communities so they can better address this devastating national health crisis.” Id.

The stakes for crafting a path toward successful resolution could not be higher in In Re National Prescription Opiate Litigation, where bellwether trials are now scheduled for a sample of over 2,000 lawsuits involving 34,458 counties, cities, and other public entities nationwide on such claims against the opiate industry as violations of the Racketeer Influenced Corrupt Organizations Act and the Controlled Substances Act. Some defendants resisted potential settlements that did not assure them of a “global settlement” of all claims, and the Court and its Special Master, Professor Francis McGovern, recognized that “this situation required creative thinking.” Id.

The Special Master, the parties, and the experts “developed an innovative solution: a new form of class action entitled ‘negotiation class certification.’” Id. On June 14, 2019, some 51 cities and counties filed a motion for certification of a Rule 23(b)(3) negotiation class, drawing objections from State Attorneys General pursuing their own state court claims, and an order from the Court allowing Plaintiffs to re-brief their motion in light of the objections. Id. at 4.

On July 9, 2019, Plaintiffs filed an amended motion seeking certification of a Rule 23 “negotiation” class on behalf of a single nationwide class of all public entities listed on the Opioids Negotiation Class website, opioidsneotiationclass.com. Id. at 1, 16. Over the objection of 37 State Attorneys General and the Attorneys General for the District of Columbia and Guam, the motion was granted in part and the Court certified what it called “a negotiation class.” Id. at 1.

The Decision

Recognizing that since 1966 courts have certified two types of class actions under Rule 23 (class actions for trial on liability or damages and settlement class actions), the Court observed that “the text of Rule 23 does not dictate, nor therefore limit, the use to which the class action mechanism can be applied.” Id. at 8. The Court noted that the development of Rule 23 settlement class actions – where the settlement is reached in advance of certification – itself was not without its own detractors. Id. at 8-9.

Following this line of reasoning, the Court determined that neither Rule 23 nor the Due Process Clause of the U.S. Constitution prohibit a “negotiation class” certification, in which class members decide whether to opt out before knowing the size of the settlement. Id. at 9. This is so because the framework for the class approved by the Court has a multi-step process affording Rule 23 protections to class members and absent class members, including satisfying the requirements of class numerosity, commonality, typicality, adequacy of representation, and a showing of either a risk of multiple, inconsistent adjudications in the absence of a class, the appropriateness of injunctive or declaratory relief, or common questions of law of fact predominate over individual inquiries.

The multi-step process approved by the Court in the new “negotiation class” certification includes: (i) the allocation of a lump sum settlement and a plan for class members to vote on its reasonableness; (ii) a motion for class certification to consider the required showings for all class actions under Rule 23, as well as the proposed allocation and voting plan; (iii)  a Court-authorized notice to the class and opt-out period; (iv) the lump sum settlement negotiations once the class size is set; and (v) preliminary judicial approval of the settlement, the filing of objections, the vote on the settlement, and final judicial approval of the plan, notice and settlement as equitable and sufficient. Id. at 5-7; 33-40.

Ostensibly “putting to rest” the concerns and objections of the State Attorneys General, the Court excluded from the negotiation class any negotiations on behalf of city and counties against their state governments. Id. at 40.

Implication For Employers:

This decision boldly goes where no court has ever gone before. If endorsed by other district court judges and appellate courts, the ruling may usher in a new framework for negotiating settlements in complex, multi-defendant class actions. Employers facing regional or nationwide wage and hour litigations in particular, in which joint employer and other multi-defendant claims are made, may add the novel approach of negotiation class certification to their toolkit of dispute resolution strategies. We will keep our readers apprised of developments in the emerging area.

By: Gina R. Merrill, David B. Ross, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: In a decision with far–reaching implications for workplace class actions, the D.C. Circuit recently affirmed the denial of class certification of a Rule 23(b)(3) class on the grounds that the proposed class contained uninjured class members in the case of In Re Rail Freight Fuel Surcharge Antitrust Litigation, Dakota Granite Co, et. al. v. BNSF Railway Co., et. al. (decided August 16, 2019) (“Rail Freight”). In so doing, the D.C. Circuit joined the First Circuit in a decision issued last year, which denied certification on the same grounds. See In Re Asacol Antitrust Litig., 907 F. 3d 42, 51-58 (2018). The issue of whether a certified class may contain uninjured class members was left open in the Supreme Court’s decision in Tyson Foods Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016), and now has been answered in the negative by two federal  Courts of Appeal. It should be required reading for any corporate counsel involved in workplace class action litigation.

Background Of The Case

The Rail Freight case was brought before an MDL panel on behalf of a class of over 16,000 shippers, claiming price fixing by the nation’s largest freight railways in violation of the Sherman and Clayton Acts. Plaintiffs’ key evidence to establish common causation, injury, and damages consisted of a regression analysis from their economist, Dr. Rausser, which estimated “negative damages” for 12.7% of the putative class members or more than 2,000 shippers – in other words, the model estimated that a significant portion of the putative class suffered no damages whatsoever. Id. at 8. Lacking any other proof that they were injured by the alleged price-fixing violations – and lacking any “winnowing mechanism” to segregate these uninjured class members –  the D.C. Circuit ruled that plaintiffs’ statistical evidence, though admissible under Daubert, failed to show class-wide injury and therefore did not make the necessary showing of commonality and predominance under Rule 23. Id. at 11.

The D.C. Circuit’s Reasoning

The D.C. Circuits also reiterated a prior holding in the case that common evidence must “show all class members suffered some injury.” Id. at 9. Even accepting for the sake of argument that predominance might exist despite a de minimis number of uninjured class members, the D.C. Circuit suggested that it was the “raw number” here and not the percentage that was troubling because presenting individualized evidence for 2,037 class members was incompatible with the requirements of Rule 23. Id. at 10-12. Finally, the D.C. Circuit noted that questions of overly broad classes cannot be deferred to a post-certification stage, but must be confronted up front as “part-and-parcel of the ‘hard look’ required” by the Supreme Court for statistical models that purport to show predominance. Id. at 4, citing Comcast Corp. v. Behrend, 569 U.S. 27 (2013).

Implications For Employers

The type of statistical evidence which was critical to plaintiffs’ case in Rail Freight is also essential in workplace class actions asserting claims of adverse impact, and raises the same problem of uninjured class members. The standard regression models supporting class certification in adverse impact cases address the question of whether an alleged discriminatory policy or practice adversely affects a protected class, on average, at a statistically significant level, after accounting for all major non-discriminatory variables. By way of example, plaintiffs might challenge an employer’s crediting of certain levels of education in deciding whether to promote candidates to a supervisory position, arguing that this factor is not sufficiently job-related and favors men. Plaintiffs might then offer a statistical model that purports to isolate the effect of education on promotions of men and women (controlling for other major factors), with the goal of establishing that this factor has a statistically significant adverse impact on women candidates. 

If plaintiffs are able to produce such a model, is that sufficient for class certification? The Rail Freight decision suggests that the answer may be no.

By its nature, a standard regression model only reflects average disparities (that is, the mean value of a normal distribution of observations). Class members may be more or less affected, and it is likely that some were not affected at all. To use our example, there will be some women who had credited levels of education and therefore received the benefit of its consideration (even if they were not ultimately promoted) and others who even with the credential would never have been promoted because their other qualifications were lacking in some other way. Neither of these categories of women have suffered any damages under plaintiffs’ case theory. 

In adverse impact class-based litigation, courts have nevertheless allowed cases like this to proceed as class actions. Courts have reasoned that even if individualized damages are typically not amenable to class treatment, damages can be determined at a later phase where individuals pursue their own claims with a favorable presumption based on class liability, subject to the employer’s right to produce exonerating evidence. Rail Freight, however, instructs that the overinclusion of uninjured persons must be confronted at class certification and not deferred to a later stage. This standard applied to adverse impact litigation would make class certification more difficult, because the very statistical evidence used to support class certification, when given a “hard look,” may also defeat the showing of commonality or predominance in the first instance.

By Gerald L. Maatman, Jr., Michael L. DeMarino, and Andrew Cockroft

Seyfarth Synopsis: Complex class actions often present a scenario in which some or most of the putative class members are subject to arbitration agreements, but the named plaintiff is not. In Gembarski v. PartsSource, Inc., No. 2018-0125, 2019 Ohio LEXIS 1639 (Ohio Aug. 14, 2019), the Supreme Court of Ohio concluded that because the defendant could not have raised an arbitration defense against the named plaintiff prior to class certification, such a defense did not have to be raised in the Answer. For this reason the defendant was not precluded from raising arbitration as a defense to class certification for putative class members.

Background

In Gembarski v. PartsSource, Inc., No. 2018-0125, 2019 Ohio LEXIS 1639 at 2 (Ohio Aug. 14, 2019), Plaintiff filed a class action complaint against his employer, PartsSource, alleging that the company improperly withheld commissions that he and other putative class members earned while working as account managers. PartsSource filed an answer to the complaint, denying any wrong-doing and denying that the suit could be maintained as a class action. Id. at 4.

Eventually, Plaintiff filed a motion to certify the case as a class action and PartsSource opposed the motion. Specifically, PartsSource argued that Plaintiff could not meet the typicality or adequacy requirements for class certification because, unlike members of the putative class, Plaintiff did not sign an arbitration agreement agreeing to arbitrate claims on an individual basis. PartsSource argued that Plaintiff’s interests were divergent from those putative members who were subject to an arbitration defense.  Id. at 5-6.

Plaintiff, however, argued that PartsSource had waived its arbitration defense because PartsSource had not asserted an “arbitration defense” in its answer prior to raising it at the class certification stage. Id. at *7. PartsSource countered that it never had a right to demand arbitration from Plaintiff and contended that it would have been premature to raise any argument related to arbitration prior to the class certification phase of the litigation. Id.

The Decision

The Ohio Supreme Court ultimately agreed with PartsSource, holding that, when a case originates with a single named plaintiff and that plaintiff is not subject to an arbitration agreement that was agreed to by unnamed putative class members, the defendant need not raise a specific argument relating to arbitration in the defendant’s answer.

The Supreme Court explained that “[a]rbitration as a defense to an action is a concept that is separate from arbitration as an attack on a plaintiff’s” satisfaction of the requirement to certify a class.  Id. at 12. Because PartsSource had no duty to raise with specificity a class certification argument in its Answer, such an argument was not waived by failing to raise it at that time. The appropriate time to raise such an argument was precisely when PartsSource did so: at the certification stage. Id. at 21.

Implication For Employers

The decision in Gembarski gives employers more time to investigate and contemplate unique defenses to class certification. However, the best practice for employers battling class actions is to raise arbitration as a defense in an answer, as that will altogether preclude plaintiffs from asserting a waiver argument. Outside of the potential for waiver, employers must be sure to investigate every potential avenue for defeating the class as early as possible in the case. Arbitration defenses and other similar defenses that can defeat class certification should be developed and flagged early in every class action.