By Gerald L. Maatman, Jr., Thomas Ahlering, Alex Karasik, and Sarah Bauman

Seyfarth Synopsis: On September 20, 2021, the Seventh Circuit ruled in Fernandez v. Kerry, Inc., No. 21-1067 (7th Cir. Sept. 20, 2021), that a cause of action filed under the Illinois Biometric Information Privacy Act (“BIPA”) by employees of Kerry, Inc., was preempted by Section 301 of the Labor Management and Relations Act because the claims were premised on an alleged failure by the employer to obtain consent before requiring their employees to scan their fingerprints, and the issue of consent was covered by a collective bargaining agreement. As a result, the Seventh Circuit held that the class action claims could not be pursued by the employees against Kerry, Inc. in federal court.

The Fernandez ruling exemplifies that certain employee disputes implicating the BIPA will be dismissed if the parties intended such disputes to be resolved by the employer and the employees’ collective bargaining representative.

Case Background

Five former employees of Kerry, Inc. (“Plaintiffs”) filed a class action under the BIPA, alleging that Kerry, Inc. failed to obtain their consent before requiring Plaintiffs to scan their fingerprints for timekeeping purposes.  Id. at 1-2.  Defendant moved to dismiss on the grounds that the suit was preempted by Section 301 of the Labor Management Relations Act, 29 U.S.C. §185 (“LMRA”), because the resolution of the claims depended on interpretation of collective bargaining agreements between Defendant and the union that represented Plaintiffs while employed with Kerry.  Id. at 2.  Pursuant to preemption principles, federal law prevents states from interfering in relations between private employers and unions.  Id.  The district court agreed with Defendant and dismissed the lawsuit. Plaintiffs thereafter filed an appeal with the Seventh Circuit.

The Seventh Circuit’s Decision

In reviewing the district court’s ruling, the Seventh Circuit relied primarily on its decision in Miller v. Southwest Airlines Co., 926 F.3d 898, 903-05 (7th Cir. 2019).  There, it held that provisions in the Railway Labor Act that parallel Section 301 prohibit employees from “bypassing their employers about how to clock in and out.”  Id. at 2.  The Miller decision further “doubted that Illinois has attempted to give unionized workers a privilege to bargain directly with employers — after all, the [BIPA] permits an employee’s ‘legally authorized representative’ to consent to the collection and use of biometric information.”  Id. (citing 740 ILCS 14/15(b)).  Relying on Miller, the Seventh Circuit held that where an employer asserts that a union has consented, any dispute regarding the accuracy of such consent must be resolved between the employer and the union.  Id. at 2.  And if any employer “plausibly contends that the union[] has consented,” that “is enough to prevent suits by individual workers.”  Id. at 3.

The Seventh Circuit rejected Plaintiffs’ argument that the Railway Labor Act is “more preemptive” than the LMRA, recognizing that the U.S. Supreme Court “has equated the two” in Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 260 (1994).  Id. at 3.  The Seventh Circuit similarly rejected Plaintiffs’ suggestion that a permissive topic (i.e., with respect to the LMRA, clocking in and out) of bargaining need not be subject to the union’s representation.  Id.  Rather, it held that “a certified union is each worker’s exclusive representation on collective issues,” and thus covers disputes regarding timekeeping.  Id.

In conclusion, the Seventh Circuit held that as in Miller, Defendant “invoke[d] a management rights clause,” and whether “‘unions did consent to the collection and use of biometric data, or perhaps grant authority through a management-rights clause, is a question for [decision under the agreement].  Similarly, the retention and destruction schedules for biometric data, and whether [employers] may use third parties to implement timekeeping . . . are topics bargaining between unions and management.’”  Id. at 4 (quoting Miller, 926 F.3d at 903).  Accordingly, the Seventh Circuit explained it would be impossible to litigate a dispute about how an employer uses biometric information without asking whether the union has consented on the employees’ behalf — as such, states “cannot by-pass the mechanisms” of federal law and allow direct negotiation or litigation between workers and their employers.  Id. 

Finally, the Seventh Circuit rejected Plaintiffs’ request to send the dispute to arbitration to the extent that the collective bargaining agreements at issue did not allow workers to demand arbitration if the union forgoes the procedure, and the union had not requested arbitration.  Id.  For these reasons, the Seventh Circuit upheld the district court’s decision and dismissed the case.  Id.

Takeaways For Employers

The ruling in Fernandez v. Kerry doubles down on the Seventh Circuit’s refusal to litigate employee-initiated BIPA class actions where the issue of consent is covered by a collective bargaining agreement.  Accordingly, if sued under the BIPA, employers should consider this ruling to assess whether their employees’ claims are premised on a dispute that is covered by an applicable collective bargaining agreement.  Doing so could significantly limit an employer’s liability for damages, and provide another mechanism for seeking dismissal on the pleadings.

By Gerald L. Maatman, Jr., Thomas E. Ahlering, Alex W. Karasik, and Sarah Bauman

Seyfarth Synopsis: On September 17, 2021, the Illinois Appellate Court issued its highly-anticipated decision in Tims v. Black Horse Carriers, Inc., 2021 IL App (1st) 200563 (1st Dist. Sept. 17, 2021), on whether a one-year or five-year statute of limitations period applies to claims under the Biometric Information Privacy Act, 740 ILCS 14/15 (“the BIPA”) The Illinois Appellate Court’s holding was two-fold — a one-year limitations period governs actions brought under sections 15(c) and (d) of the BIPA, while claims under sections 15(a), (b), and (e) are subject to the catch-all five-year limitations period.

The ruling in Tims is sure to be appealed to the Illinois Supreme Court. That being said, it has the potential to be a game-changer for BIPA class action litigation, and likely the plaintiffs’ bar will aggressively push for the five-year statute of limitations when pursing class-wide relief.

Case Background

In March 2019, Plaintiff (“Plaintiff”) filed a class action complaint claiming that Black Horse Carriers, Inc.’s (“Defendant”) timekeeping practices, which involved the scanning and storing of employees’ fingerprints, violated the BIPA.  Id. at ¶ 5.  The first count of the complaint asserted that Defendant violated section 15(a) of the BIPA in failing to institute, maintain, and adhere to a retention schedule for biometric data.  Id. at ¶ 7.  The second and third counts alleged that Defendant violated sections 15(b) and (d), respectively, by obtaining their employees’ biometric data and disclosing it to third-parties without first obtaining their written, informed consent.  Id.  Although Plaintiff did not allege claims under sections 15(c) or (e), those provisions prohibit the sale of a person’s biometric data for a profit (740 ILCS 14/15(c)), and impose a duty of reasonable care in storing and protecting biometric data from disclosure (id. at 14/15(e)).

In June 2019, Defendant filed a motion to dismiss on the ground that Plaintiff filed the complaint outside of the applicable statute of limitations period.  Id. at ¶ 8.  Defendant argued that the one-year limitations period prescribed by 735 ILCS 5/13-201 applied to Plaintiff’s claims because the BIPA’s main concern is privacy protection.  Plaintiff countered that the five-year catch-all limitations period prescribed by 735 ILCS 5/13-205 covered Plaintiff’s claims, in that a “publication element” was required for a claim to be covered by section 13-205 — an element which, according to Plaintiff, the BIPA clearly lacked.  Id. ¶ 9.

In September 2019, the trial court denied the motion to dismiss.  Id. at ¶ 11.  It held that section 13-201 did not apply because Plaintiff alleged a violation of the Act itself, rather than a general violation of privacy.  Id.  As such, the trial court opined that a five-year limitations period applied to Plaintiff’s claims.  Id.  The trial court did not address the issue of when Plaintiff’s claims accrued — upon Plaintiff’s first finger scan vs. Plaintiff’s last finger scan — because the complaint was timely filed under either scenario.  Id. at ¶ 10.

Defendant then sought an appeal to the Illinois Appellate Court for the First District.

The Appellate Court’s Decision

At issue in the appeal was the question of whether a one or five-year statute of limitations period applies to the BIPA.  First, the Appellate Court noted the “sole concern” in determining which limitations period applies was the intent of the legislature.  Id. at ¶ 19.  Given the BIPA’s silence on the issue, the Appellate Court turned to the language of section 13-201, which establishes a one-year limitation period for “[a]ctions for slander, libel, or for publication of matter violating the right of privacy.”  Id. at ¶  20.  Relying on its decision in Benitez v. KFC National Management Co., 305 Ill. App. 3d 1027, 1033 (1999), the Appellate Court explained that Illinois trial courts have recognized two types of privacy interests in the right to privacy — secrecy and seclusion — and held that section 13-201 applies only to those claims premised on the right to secrecy, such as false-light publicity and the appropriation of the name or likeness of another.  Id. at ¶  21.  The Appellate Court also noted the language of section 13-205, which “provides for a five-year limitation period for, in relevant part, ‘all civil actions not otherwise provided for.’”  Id. at ¶ 22.

In addition, the Appellate Court highlighted the various “duties” enforced by the BIPA, citing the Illinois Supreme Court’s landmark decision in Rosenbach v. Six Flags Entertainment Corp., 2019 IL 123186, ¶ 1 (2019), which held in pertinent part that a violation of the BIPA causes an individual’s  “biometric privacy [to] vanish[] into thin air.”  Id. at ¶ 25 (citations and quotations omitted).  The Appellate Court reasoned that at this point, “[t]he precise harm the Illinois legislature sought to prevent is then realized.”  Id.

Applying these principles to the question at issue, the Appellate Court concluded that the section 13-201 one-year limitations period covers only privacy actions in which publication is an element or an “inherent part of the action.”  Id. at ¶ 29.  The Appellate Court did not address the legislative history of the BIPA, because it could answer the certified question “based on the relevant statutory language, which is ambiguous.”  Id. at ¶ 35.  Indeed, the Appellate Court reasoned that the legislature did not intend for section 13-201 to include all privacy actions, in that it “would have written something like ‘actions for slander, libel or privacy,’” or used “broad language rather than the narrower ‘for publication.’”  Id.

Accordingly, the Appellate Court found that the section 13-201 one-year statute of limitations governs only those actions brought under sections 15(c) and (d) of the BIPA.  Id. at ¶¶  30, 32.  It explained that the BIPA imposes various duties that are separate and distinct from one another.  Id. at ¶ 30.  While each of the duties set forth under sections (a)-(e) “concern privacy,” the Appellate Court reasoned that a private entity could violate sections (a), (b), or (e) “without having to allege or prove that the defendant . . . published or disclosed any biometric data.”  Id. at ¶  31.  Thus, any such action would not be one “‘for publication of matter violating the right of privacy.’”  Id. (quoting 735 ILCS 5/13-201).

Conversely, the Appellate Court held that the “publication or disclosure of biometric data is clearly an element of an action under” sections 15(c) and (d).  Id. at ¶ 32.  It opined that, to the extent (c) and (d) prohibit the disclosure or sale of biometric data, these sections “entail[] publication, conveyance, or dissemination of such data.”  Id. at ¶ 32.

In sum, the Appellate Court held that a one-year limitations period pursuant to 13-201 governs actions under sections 15(c) and (d) of the BIPA, while a five-year statute of limitations pursuant to section 13-205 applies to sections 15(a), (b), and (e).  Id. at ¶ 35.

Takeaways For Employers

While the ruling in Tims v. Black Horse Carrier has the potential to significantly limit Illinois employers’ liability under the BIPA in some respects, the plaintiffs’ bar will likely use this decision to continue to push for a five-year damages period relative to sections 15(a), (b), and (e).    At the same time, given the stakes at issue, a further appeal to the Illinois Supreme Court is virtually certain. Nonetheless, employers should be extra cautious in their compliance with those requirements that do concern “publicity” — i.e., sections 15(a), (b), and (e).  They should consider establishing policies that enable employees to  give their express, written consent before scanning their fingerprints or otherwise furnishing their biometric data to their employers.  Further, employers should ensure that such biometric data is destroyed upon an employee’s termination or resignation with the company; have a widely-accessible policy regarding the destruction and retention of biometric information; and exercise heightened caution when storing any biometric data within their possession.

 

 

 

By Gerald L. Maatman, Jr. and Sarah K. Bauman

Seyfarth Synopsis: On August 30, 2021, in Massone, et al. v. Washington, No. 20-CV-7906, 2021 WL 3863081(S.D.N.Y. Aug. 30, 2021), the U.S. District Court for the Southern District of New York dismissed a lawsuit brought by the U.S. Security Officers Union (the “Union”) on behalf of its members (“CSOs”) against the U.S. Marshals Service and contractor Centerra Group LLC (“Defendants”), alleging that Defendants failed to implement adequate COVID-19 precautions.  The Court held that the President of the Union lacked standing to sue because the complaint sought merely monetary damages — rather than equitable relief — on behalf of individual CSOs allegedly harmed by the protocol. The ruling exemplifies that monetary recovery for workplace COVID-19-related injuries is better suited for an individualized lawsuit, unless the relief is sought on behalf of the association itself and is equitable in nature.

Case Background

On September 25, 2020, on behalf of approximately 2,200 members, the President of the Union (“Plaintiff”) filed a lawsuit against Defendants, claiming that the COVID-19 precautions in place failed to protect Union members (“CSOs”) from infection. Id. at *1-2. Plaintiff alleged that Defendants failed to properly sterilize the working and common areas in federal courthouses and failed to provide adequate personal protective equipment, resulting in COVID-related deaths, sickness, and quarantines of certain CSOs. Id. at *1. Plaintiff also alleged that Defendants retaliated against various CSOs who complained, by making threats of disciplinary action, such as suspension and permanent termination. Id. The complaint sought monetary damages on behalf of the CSOs who suffered COVID-19-related injuries or were retaliated against by the Defendants. Id. at *4.  Defendants moved to dismiss for lack of standing and for failure to state a claim.  Id. at *1.

The Court’s Decision

The Court granted the Defendants’ motion to dismiss.  Id.  at *3.  The Court did not reach the merits of the case because it found that Plaintiff lacked both organizational and representative standing to sue.  Id.  The Court honed in on Plaintiff’s alleged injuries for alleged monetary damages suffered only by (1) those CSOs who were allegedly exposed to or contracted COVID-19, and (2) those CSOs who allegedly were retaliated against by Defendants.  Id. at *4.  According to the Court, “[n]either of these is an injury to the Union itself, and thus neither can support a finding that the Union” had standing.  Id.

In making this determination, the Court recognized that Plaintiff brought suit in his capacity as President of the Union.  Id. at *3.  Accordingly, the Court held that Plaintiff was required to demonstrate that the Union had either organizational (also referred to as associational) standing to sue in its own right or representative standing to sue on behalf of its members.  Id.  Recognizing that an association must meet the same standing test that applies to individuals, the Court concluded that Plaintiff failed to demonstrate associational standing.  Id. at *3-4.  The Court agreed with the Defendants’ argument that the injuries alleged were sustained by individual CSOs, not the union itself.  Id. at *3.  The Court reasoned that, contrary to the Plaintiff’s contention, it was “not enough that the defendant allegedly [] engage[] in a wrong that affects each union member individually and equally.”  Id. at *4.  Rather, Plaintiff was required to an allege an injury sustained by the Union as a whole, and it failed to do so.  Id. 

The Court also analyzed whether Plaintiff sufficiently asserted representative standing on behalf of the Union.  Id.  The Defendants argued that Plaintiff could not satisfy the test for organizational standing because the Complaint exclusively sought monetary damages for injuries allegedly suffered by “unidentified, individual CSOs.”  Id.  The Court agreed with Defendants’ position.  Id.  at *5.  Relying on U.S. Supreme Court authority and a number of decisions from within the Second Circuit, the Court recognized the widely-accepted jurisprudential routine of “declin[ing] to find representative standing when a plaintiff brings a claim on behalf of its members for monetary damages.”  Id.  Since Plaintiff merely sought damages for particular CSOs, rather than “a declaration, injunction, or some form of prospective relief,” the Court found the Plaintiff also lacked representative standing and granted the Defendants’ motion to dismiss.  Id. at *4-5.  The Court reasoned that any injures the CSOs suffered were “peculiar to the individual member concerned, and both the fact and extent of injury would require individualized proof.”  Id. at *5.

Finally, the Court also denied Plaintiff’s request to amend the lawsuit to address the standing issues, but held that Plaintiff could refile the request so long as it attached an amended complaint that cured the deficiencies of the original.  Id. 

Takeaways For Employers

The ruling in Massone v. Washington, demonstrates that unions (and other organizations) will have a difficult time suing employers in federal court for monetary damages allegedly suffered by their individual members/employees.  As the COVID-19 pandemic continues, it is important for employers to be aware of the standing limitations address in Massone, when faced with similar lawsuits.  This holds true not only for New York employers, but also all employers located within the United States, as emphasized by the Court’s reliance on several U.S. Supreme Court decisions in dismissing the case for lack of standing.

Seyfarth Synopsis: Jerry Maatman, Seyfarth’s chair of the firm’s class action defense group, discusses an EEOC-initiated pregnancy discrimination lawsuit in which a federal district court in granted in part and denied in part the employer’s motion for summary judgment, finding there were several genuine issues of material fact surrounding an employee’s return to work from pregnancy leave, but holding that her constructive discharge claim lacked merit. Jerry analyzes the ruling and what it means for employers involved in EEOC litigation.

Thanks for tuning in!

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

Seyfarth Synopsis:  Following a jury trial in a federal court in Mississippi in an EEOC-initiated lawsuit alleging that Black adult club dancers were subjected to race discrimination, where their employer was found liable of wrongdoing, the Court granted the EEOC’s motion for injunctive relief, ordering the employer to comply with all seven of the non-monetary terms sought by the EEOC. See EEOC v. Danny’s Restaurant, LLC, No. 3:16-CV-00769, 2021 U.S. Dist. LEXIS 153633 (S.D. Miss. Aug. 16, 2021).

This ruling exemplifies that once a court reaches a finding of liability in an EEOC-initiated lawsuit, the Commission will be emboldened to seek and secure wide-ranging injunctive relief. Likewise, it shows the scope of injunctive relief that courts are apt to enter following a determination of liability.

Case Background

On September 20, 2016, on behalf of current and former adult club dancers (“Claimants”), the EEOC filed a lawsuit against Danny’s Downtown Cabaret location in Jackson, Mississippi, alleging it discriminated against them on the basis of their race. Id at *2. On October 1, 2018, the Court found Defendant subjected various Claimants to disparate terms and conditions of employment in violation of Title VII of the Civil Rights Act of 1964, as amended. The remaining issue of damages proceeded to a jury trial, which took place from May 6-13, 2019. At trial, the EEOC sought relief for the Claimants’ emotional pain, mental anguish, and lost wages. In addition, the EEOC sought punitive damages for Defendant’s alleged reckless or callous indifference to Claimants’ federally protected rights. The jury returned a verdict as to damages and awarded back pay, compensatory damages, and punitive damages. Thereafter, the EEOC moved for injunctive relief.

The Court’s Decision

The Court granted the EEOC’s motion for injunctive relief.  As a preliminary matter, after noting that the EEOC acts in the public interest and seeks remedies to vindicate the underlying policies of Title VII, the Court explained that the issuance of an injunction rests primarily in the informed discretion of a judge. Id. at *3 (citations and quotations omitted).  Defendant argued that injunctive relief was not warranted because the EEOC had offered no proof of the “likelihood of future violations” and that the “totality of the circumstances should be considered when evaluating the likelihood of future violations.” Id. at *4 (citations omitted).

After considering the trial evidence, the Court held that Defendant failed to meet its burden that recurring violations were unlikely. The Court noted that after one Claimant filed an EEOC charge, Defendant continued to discriminate against its Black dancers by implementing a Black dancer quota. Id. Managers were informed that when checking in dancers, they needed to include the race of the dancer. Finally, Defendant would limit the number of Black dancers who could work on a shift and inform managers that there were, “too many [B]lack girls,” which would result in Black dancers being sent home. Id. Accordingly, the Court held that the EEOC was entitled to injunctive relief.

The Court granted all seven of the components of injunctive relief sought by the EEOC. First, the Court held that the five-year term of the injunctive relief proposed by the EEOC was appropriate. Id. at *8. Second, the Court held that because Defendant did not object to the appointment of an Injunctive Relief Manager, and had over a year to identify and retain an HR consultant, a time period of 60 days to appoint or retain an Injunctive Relief Manager was reasonable.  Third, the Court ordered the Injunctive Relief Manager to review, revise, and post anti-discrimination policies on bulletin boards and locker rooms. Id. at *10-11. Fourth, the Court held that Defendant must provide EEO training for all employees, which is to be completed by the Injunctive Relief Manager or a third-party entity experienced in conducting EEO anti-discrimination trainings. Fifth, the Court held that the injunctive relief is binding on any purchaser of Defendant’s business. Sixth, the Court ordered Defendant to maintain a confidential, toll-free, employee hotline number for reporting concerns about discrimination, harassment or retaliation. Seventh, the Court required: (i) the Injunctive Relief Manager to submit reports to the EEOC relating to Defendant’s compliance with the Court’s Judgment of Injunctive Relief; and (ii) permission for the EEOC to review and/or request information related to compliance.  Accordingly, the Court granted the EEOC’s motion to implement all seven facets of injunctive relief.

Takeaways For Employers

The ruling in EEOC v. Danny’s Restaurant, LLC, demonstrates that the Commission will aggressively pursue expansive injunctive relief in the event it obtains a finding of liability from a court or jury.  Employers facing motions for injunctive relief brought by the EEOC can expect the Commission to use this ruling and others like it to persuade courts to exercise their authorized discretion in this area.  Accordingly, when appropriate, employers would be prudent to negotiate injunctive relief terms as early as possible, so as to avoid potentially onerous court-ordered non-monetary relief.

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

Seyfarth SynopsisIn an EEOC-initiated pregnancy discrimination lawsuit, a federal district court in Florida granted in part and denied in part the employer’s motion for summary judgment, finding there were several genuine issues of material fact surrounding an employee’s return to work from pregnancy leave, but holding that her constructive discharge claim lacked merit.  EEOC v. NICE Systems, Inc., No. 20-CV-81021, 2021 U.S. Dist. LEXIS 146834 (S.D. Fla. Aug. 5, 2021).

The ruling is instructive for employers in terms of both reintegrating pregnant employees into the workforce, and potential litigation strategies for subsequent EEOC pregnancy discrimination litigation.

Case Background

The Intervenor Plaintiff worked for Defendant from August 2015 to March 2018 as a Sales Executive.  In April 2017, she informed her direct supervisor that she was pregnant.  Thereafter, the Intervenor Plaintiff complained of the discriminatory treatment to her employer’s Director of Human Resources, Vice President of Solution Sales, and Regional Vice President.  She also requested transfer to a different department, but the company was not able to accommodate that request.  On March 2, 2018, the Intervenor Plaintiff resigned.  Id. at *4.

The EEOC brought a lawsuit on behalf of the Intervenor Plaintiff alleging claims of pregnancy discrimination, retaliation, and constructive discharge in violation of Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978.  It alleged that the Intervenor Plaintiff’s employer discriminated against her on the basis of her pregnancy by undertaking four actions, including: (1) transferring her existing sales accounts to a newly hired employee on a different team; (2) refusing to assign a new sales lead in her territory; (3) invoking the “windfall” provision of her employment contract to cap the amount of commission she could receive on an audit/settlement that she contributed to before she went on maternity leave; and (4) upon her return from maternity leave, reassigning her Canada territory to a male colleague, and assigning to her a different territory.  Id. at *2-3.  Following discovery, Defendant moved for summary judgment as to all three claims.

The Court’s Decision

The Court granted Defendant’s motion for summary judgment as to the constructive discharge claim, but denied summary judgment as to the pregnancy discrimination and retaliation claims. First, the Court explained that to establish a Title VII disparate treatment discrimination claim, the EEOC must prove that the discrimination the claimant suffered constituted an adverse employment action, and that Defendant acted with discriminatory intent.  Id. at *7 (citations omitted).  Further, proof of discriminatory intent may be shown by either direct or circumstantial evidence.  Id. at *8.

Applied here, the Court noted that despite requesting a sales lead for approximately a month and a half prior to her maternity leave, the Intervenor Plaintiff’s supervisor did not assign one to her territory until almost two months after she returned from leave.  As such, the Court held that a reasonable jury could find that the loss of this income-producing opportunity constituted an adverse employment action.  Further, the Court found there was direct evidence of intentional discrimination when the supervisor announced on a conference call that he would not be assigning the Intervenor Plaintiff’s new sales leads because of her “condition,” in reference to her pregnancy.  Id. at *11.  Accordingly, the Court held that Defendant was not entitled to summary judgment on the EEOC’s discrimination claim.

Turning to the second claim asserting retaliation, the Court opined that the EEOC must prove that: (1) the claimant participated in an activity protected by Title VII; (2) she suffered from an action that might well have dissuaded a reasonable worker from making or supporting a charge of discrimination; and (3) there is a causal connection between the participation in the protected activity and the action. Id. at *12 (citations omitted).  Here, the EEOC alleged, in part, that Defendant retaliated against the Intervenor Plaintiff by paying her less commission on a deal than she should have received as a result of her maternity leave.  Defendant argued that the Intervenor Plaintiff did not originate the deal and participated minimally, and therefore she was not entitled to the sales commission.  The Court concluded that summary judgment on the retaliation claim would be improper, since there was a question of fact as to whether she was entitled to the commission bonus.

Finally, the Court granted Defendant’s motion for summary judgment regarding the constructive discharge claim.  The Court explained that to establish a claim for constructive discharge, the EEOC must demonstrate that the employer deliberately imposed conditions that were, “so intolerable that a reasonable person in [the employee’s position] would have been compelled to resign.” Id. at *18 (internal quotation marks and citation omitted).  Defendant argued that, based on the evidentiary record, no reasonable jury could find that the Intervenor Plaintiff’s work environment deteriorated to the point of becoming “intolerable.”  Id. at *19.  Viewing the totality of the evidence in Plaintiffs’ favor, the Court opined that the EEOC’s best theory for establishing the constructive discharge claim was that from the time that the Intervenor Plaintiff disclosed to her supervisor that she was pregnant, he took steps to siphon off income-producing opportunities from her sales pipeline, until her commission prospects were so diminished that she would have no choice but to resign.  However, the Court held that even this scenario was not enough to meet the, “intolerable  work environment,” standard.  Id. at *20-21. Therefore, the Court granted Defendant’s motion for summary judgment on the constructive discharge claim.

Implications For Employers

From a factual perspective, this ruling illustrates potential pitfalls for employers who elect to modify the working conditions of pregnant employees upon their return to work, as well as issues relative to non-streamlined compensation structures such as commissions and bonuses.

From a legal perspective, this ruling demonstrates that pregnancy discrimination lawsuits often contain complex factual considerations, resulting in courts’ hesitancy to grant summary judgment where, as here, a jury could find both parties’ positions to be meritorious.

Accordingly, prudent employers should establish thorough pregnancy leave policies that account for pre-leave and post-leave circumstances that may impact working conditions in their sectors.

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

By Gerald L. Maatman, Jr., Pamela Q. Devata, and John Drury

Seyfarth Synopsis:  On June 25, 2021, the U.S. Supreme Court reversed the Court of Appeals for the Ninth Circuit in TransUnion LLC v. Ramirez, No. 20-297 (U.S. June 25, 2021).  The Supreme Court held that the vast majority of class members did not suffer any “concrete harm” from TransUnion’s alleged violations of the federal Fair Credit Reporting Act (“FCRA”), and therefore did not have Article III standing.  While the decision is helpful to employers in that it restricts “no-harm” class actions in federal court, the practical impact may be an increase in similar claims filed in state courts with less demanding standing requirements.

Case Background

Defendant TransUnion prepared a credit report on Plaintiff.  An alert on the report inaccurately indicated that Plaintiff was on the terrorist watch list.  Plaintiff then requested a copy of his credit file from TransUnion, which responded in two separate mailings.  The first mailing included his credit file and summary of rights under the FCRA, but it did not mention the alert on his report.  The second mailing included the alert, but did not include a separate summary of rights.

Ramirez asserted multiple claims in a class action he filed against TransUnion under the FCRA.  First, he alleged that TransUnion violated the FCRA by failing to follow “reasonable procedures” to assure maximum possible accuracy of the class members’ credit files.  Second, he alleged that TransUnion violated the “full file” disclosure requirements of the FCRA by not providing class members with copies of their complete credit files and not providing the required summary of rights.

The district court certified a class of 8,185 and awarded over $60 million in damages.  Only 1,853 class members actually had their reports sent to a third party.  The Ninth Circuit subsequently affirmed in relevant part, holding that all class members had standing, but reducing the total award to about $40 million.

The Supreme Court’s Decision

The U.S. Supreme Court reversed the Ninth Circuit.  In a 5-4 decision, it held that only plaintiffs concretely harmed by a defendant’s statutory violation have Article III standing to seek damages against a private defendant in federal court.  In short, the majority opinion stated  “[n]o concrete harm, no standing.” Id. at 1.

The Supreme Court reinforced prior precedent that Article III standing requires a “concrete harm” even when there is a statutory violation and that “an injury in law is not an injury in fact.” Id. at 11. Applying the “concrete harm” requirement to the facts on appeal, the Supreme Court held that every class member must have Article III standing in order to recover individual damages, and that every class member bears the burden of establishing Article III standing with respect to each claim asserted.

The Supreme Court also addressed standing with respect to the “reasonable procedures” claim.  The Supreme Court indicated that it had “no trouble” concluding that the 1,853 class members whose credit reports actually were disseminated to third parties showed a concrete harm and had Article III standing.  Id. at 17. However, it was a “different story” for the remaining 6,332 class members, whose credit files were never sent to a third party. Id. at 18. The Supreme Court held that the “mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm” and fails to confer Article III standing. Id. at 19.  The Supreme Court also rejected the argument that the “risk of future harm” was enough to satisfy Article III’s concrete harm requirement for the remaining 6,332 class members.  Id. at 20-23.

Finally, the Supreme Court addressed standing with respect to the “full file” claims. Id. at 24-27. Applying the “concrete harm” standard, the Supreme Court held that no one in the class (except Ramirez) had standing to recover for what it concluded was a “formatting” violation. Id. In so holding, the Supreme Court also rejected the argument that an actionable “informational injury” existed because the “plaintiffs did not allege that they failed to receive any required information,” but instead “argued only that they received it in the wrong format.” Id. at 26.

Implications for Employers

This Ramirez decision has the potential to significantly limit “no-harm” class actions in federal court.  In the last several years, employers have faced a significant increase in class actions under the FCRA, with many claims directed at technical statutory violations that arguably cause no harm to anyone, much less a “concrete harm.”  Beyond the FCRA or the specific claims at issue in Ramirez, many other consumer protection statutes involve, at most, allegations of intangible “informational” or “privacy” injuries that may now fail to confer Article III standing.

That being said, the Supreme Court’s opinion is not a panacea against “no-harm” class actions based on statutory violations.  Ramirez only addressed federal court standing under Article III.  Many state courts have more lenient standing requirements – in particular, California, Illinois, and New York.  There already had been a steady increase in class actions filed in state courts with concurrent jurisdiction over federal statutes such as the FCRA.  As a result, employers should expect Ramirez to result in more class actions being filed in state court.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex Oxyer

Seyfarth Synopsis: In a recent case out of the U.S. District Court for the Southern District of Texas, the Court dismissed wrongful termination and violation of public policy claims brought by employees refusing an employer’s mandate to receive the COVID-19 vaccine. The case is Bridges v. Houston Methodist Hosp., No. 21- CIV-211774, 2021 WL 2399994, at *1 (S.D. Tex. June 12, 2021). It is the first court ruling of its kind, and is a must-read for all employers navigating the return-to-work and COVID-19 vaccine landscapes.

Case Background

Beginning in April 2021, Defendant Houston Methodist Hospital announced a policy requiring its employees to be vaccinated against the COVID-19 pandemic at its own expense. Following the announcement of the vaccine requirement, 117 employees, comprising a small minority of Houston Methodist’s workforce, filed suit to block the vaccine requirement, alleging that the Hospital was unlawfully requiring its employees to receive vaccines, that any terminations as a result of such mandate would be wrongful, and that the Hospital was violating federal law. The Hospital moved to dismiss the case.

The Court’s Opinion

The Court granted the Hospital’s motion and dismissed the plaintiffs’ claims in their entirety.

As to plaintiffs’ claims of wrongful termination under Texas law, the Court opined that Texas only protects employees from termination if they refuse to commit a criminal act. The Court reasoned that receiving the COVID-19 vaccine is not an illegal act and emphasized that the Equal Employment Opportunity Commission (“EEOC”) has declared that employers can require employees to be vaccinated against COVID-19 as long as they allow for reasonable accommodations for employees with disabilities or sincerely held religious beliefs. Based on these considerations, the Court summarily dismissed the plaintiffs’ wrongful termination claims.

The Court then addressed the plaintiffs’ request for the Court to declare the vaccine mandate invalid because it violated federal law. The plaintiffs argued that individuals cannot be required to receive “unapproved” medicine and that no available COVID-19 vaccines have been fully approved by the Food and Drug Administration. The plaintiffs further argued that the vaccine requirement forced the Hospital’s employees to become “human subjects” in a trial of the vaccine and likened the vaccine policy to the forced medical experimentation during the Holocaust.

Calling the plaintiffs’ comparison “reprehensible,” the Court rejected the plaintiffs’ arguments, holding that they misapplied the federal laws relative to human trials for medications, misconstrued facts in the case, and were in no way forced or coerced to receive the vaccine. Ultimately, the Court concluded that, if the employees did not want to receive the vaccine, they “simply need to work somewhere else.” Id. at *2. For these reasons, the Court dismissed the remainder of the plaintiffs’ claims.

Implications

The Court’s decision in Bridges is notable as the first to uphold an employer’s policy of requiring its employees to receive the COVID-19 vaccine.  Although the EEOC has opined that employers may require the vaccine, Bridges provides some additional clarification on the issue.

Nonetheless, there are still several considerations surrounding this issue, and private employers should identify the extent to which they might require COVID-19 vaccines and how they will approach difficult issues where individuals are hesitant or unwilling to participate.

By Gerald L. Maatman, Jr., Alex S. Oxyer, and Paul M. Waldera

Seyfarth Synopsis: The U.S. District Court for the District of Kansas recently reaffirmed the lenient standard courts utilize when deciding a motion for conditional certification of a collective action brought under the Age Discrimination in Employment Act (“ADEA”).  In Wood et al., v. Learjet et al., No. 18-262, 2021 WL 2351040, at *1 (D. Kan. June 9, 2021), the Court conditionally certified a collective action of former employees over 40 years old by relying on alleged statements from Defendants’ managers and executives expressing their desire for a younger workforce.  The case is a must read for all employers as well as a reminder that executives and managers need to exercise caution when they communicate with employees about their future workforce plans.

Case Background

Plaintiffs, two former aerospace engineers employed with Learjet, filed a collective action lawsuit under the ADEA alleging that Defendants had engaged in a pattern or practice of age discrimination by systematically terminating older workers to reduce the age of the workforce.

The crux of Plaintiffs’ allegations was that Defendants “developed a plan or program to reduce the average age” of the workforce.  Id. at *2.  Specifically, Plaintiffs alleged that, in 2015, Defendants began openly discussing that the average age of the workforce was over 50 and that Defendants “would work hard to reduce the average age.”  Id.  Plaintiffs, as well as the individuals who provided declarations in support of Plaintiffs’ motion for conditional certification, also asserted that Defendants’ executives discussed how Defendants needed more “younger, inexperienced” employees and contractors and fewer older, experienced employees and contractors.

From there, Plaintiffs argued that Defendants started methodically terminating or demoting older employees and replacing them with substantially younger employees.  In most cases, Plaintiffs alleged that Defendants informed the affected employees that the decision was not based on job performance and, in many cases, the removed employees were replaced by significantly younger employees whom the removed employees had previously trained.  Plaintiffs further alleged that some older employees were also placed on arduous Performance Improvement Plans (“PIPs”) with subjective requirements that led to their demotion or termination.

After the parties conducted some initial discovery on Plaintiffs’ claims, Plaintiffs moved for conditional certification of a collective action under the ADEA, which adopts the collective opt-in mechanism of § 216(b) of the Fair Labor Standards Act (“FLSA”).

The Court’s Decision

In determining whether to certify a collective action under the FLSA, the Tenth Circuit has approved a two-step approach.  First, in the initial “notice stage,” the court “determines whether a collective action should be certified for purposes of sending notice of the action to potential class members.”  Id. at *6 (internal citations omitted).  The initial notice stage requires nothing more than substantial allegations that the putative collective action members “were together the victims of a single decision, policy, or plan.”  Id.  The notice stage standard is very lenient and very often results in conditional certification of the collective class.

In response to Plaintiffs’ motion to conditionally certify the collective action, Defendants argued that Plaintiffs’ motion should be reviewed under a more stringent standard of review because the parties had completed some “pre-certification” discovery.  However, neither the Court nor Defendants could cite any pertinent case law authority in Kansas employing a heightened scrutiny in such a context, and the Court rejected Defendants’ argument and applied the lenient notice standard.

Despite the standard applied, Defendants argued that Plaintiffs had not alleged a common plan or scheme of age discrimination such that conditional certification would be appropriate.  Instead, they argued that Plaintiffs simply described separate, independent employment decisions not bound together by a single decision, policy, or plan.  The Court disagreed.

The Court found that Defendants’ repeated statements about wanting to reduce the age of its workforce, in conjunction with its subsequent terminations and demotions of older employees, sufficiently indicated a common plan or scheme for purposes of conditional certification.  In support of their complaint and motion, Plaintiffs submitted six declarations from older workers previously employed by Defendants.  All six testified about the comments regarding the age of the workforce and the subsequent employment actions involving older workers.  For example, four of the declarants were placed on a PIP with what was described as subjective criteria, and all four were eventually terminated for failing to meet the requirements of the PIP.  In response, Defendants argued these terminations each had individual factual differences that prevented conditional certification, but the Court rejected these arguments at the initial notice stage.  Taking all of the Plaintiffs’ evidence into account, the Court conditionally certified the collective action and ordered notice to be sent to all potential collective action members.

Finally, Defendants argued that Plaintiffs could not represent all individuals over the age of 40 at the time their employment ended, because there were factual differences between why each potential collective action member was terminated.  Defendants argued there were employees in the proposed collective action definition that were terminated for performance reasons, and those people should be excluded.  While the Court acknowledged Defendants’ argument may have merit, it refused to narrow the collective action definition at this early stage, again punting a ruling until the second stage of certification.

Implications for Employers

This case is another in a long line of examples of the leniency with which courts will evaluate conditional certification.  The default for many courts is to conditionally approve a collective action and deal with any real issues at the second stage of certification.  In light of this leniency, companies should make sure to prepare robust defenses to oppose conditional certification but also establish a detailed path to supporting such defenses at the second stage of certification.

Additionally, this case is a reminder that all executives should be aware of the impact their words may have on future lawsuits. Indeed, Plaintiffs’ reliance on Defendants’ own words and presentations about the need for a younger workforce in this case pushed the Court towards conditional certification.  Accordingly, detailed training on these issues is a must for all executives and managers.

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

Seyfarth SynopsisIn EEOC v. Konos, Inc., Case No. 1:20-CV-973 (W.D. Mich. June 3, 2021), the EEOC filed a lawsuit on behalf of a claimant against her employer, alleging it subjected to her to a hostile work environment and retaliation after she was sent home for complaining about a supervisor’s sexual harassment.  The Court denied the employer Defendant’s motion to dismiss both claims, holding that when taking all factual allegations as true, the EEOC’s complaint sufficiently plead violations of Title VII of the Civil Rights Act of 1964.

This ruling exemplifies that based on the low notice pleading threshold under Rule 8(a)(2), it is very difficult for employers to dispose of EEOC-initiated lawsuits at the responsive pleading stage.

Factual Background

The claimant started working for Defendant on or about April 12, 2017 as an egg inspector at its facility in Martin, Michigan.  Id. at 1.  Shortly thereafter, a supervisor allegedly began sexually harassing the claimant.  The harassment included text messages soliciting an intimate relationship, which she rejected.  In addition, he sexually assaulted her on three separate occasions, including forced kissing, groping, and vaginal penetration.  The claimant reported the assault to Defendant and the police, and obtained a personal protection order against him.  The supervisor was prosecuted and pled no contest to fourth degree criminal sexual conduct.  After the claimant complained about the alleged sexual harassment, Defendant the sent the claimant home, and she never returned to work.

On October 9, 2020, the EEOC filed a lawsuit on behalf of the claimant alleging that: (1) the Defendant violated Title VII of the Civil rights Act of 1964 by subjecting the claimant to a hostile work environment, and (2) that it violated Title VII by retaliating against her for objecting to and complaining about a sexually hostile work environment.  Id. at 2.  Defendant moved to dismiss both claims, arguing that the EEOC failed to allege specific facts demonstrating a hostile work environment based on sexual harassment, and failed to allege specific facts to establish a claim for retaliation under Title VII.

The Court’s Decision

The court denied Defendant’s motion to dismiss.  First, the Court explained that to succeed on a hostile work environment claim, a plaintiff must show that (1) he or she was a member of a protected class; (2) he or she was subjected to unwelcome sexual harassment; (3) the harassment complained of was based on sex; (4) the charged sexual harassment created a hostile work environment; and (5) the employer is liable.  Id. at 4 (citation omitted).

Defendant argued that the EEOC did not sufficiently plead the fourth and fifth elements of a hostile work environment claim.  In regards to the fourth element, the Court explained that a hostile work environment occurs, “when the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”  Id. at 4 (citation omitted).  Applied here, the Court noted that the EEOC alleged that the claimant was subjected to unwanted text messages, forced kissing, groping, and vaginal penetration by a supervisor.  Rejecting Defendant’s argument, the Court held that while these instances of sexual harassment varied in their severity, when viewed in their totality, they were sufficient to state a claim for relief under Title VII.

Turning to the fifth element of a hostile work environment claim, Defendant argued that in order to establish this element, the EEOC must prove either a supervisor participated in the harassment that created the hostile work environment, or that the employer was negligent in discovering or remedying the harassment.  The Court explained that although the EEOC did not specify in its complaint whether the supervisor was claimant’s actual supervisor, employer liability may still be established if the employer knew or should have known of a non-supervisor’s charged sexual harassment, and failed to implement prompt and appropriate corrective action.  Id. at 5.  The EEOC alleged that after the claimant complained about the harassment, she was sent home.  Accordingly, this employer response (taken as true for Rule 12(b)(6) purposes) manifested indifference in light of the alleged harassment regardless of whether he was claimant’s direct supervisor, and thus satisfied the fifth element. The Court therefore denied Defendant’s motion to dismiss the hostile work environment claim.

The Court also rejected Defendant’s argument that the complaint failed to allege specific facts to establish a claim for retaliation under Title VII.   Id. at  6.  To establish a claim for retaliation under Title VII, a plaintiff must establish (1) an individual has engaged in protected activity; (2) the individual suffered a materially adverse employment action; and (3) a causal link between the protected activity and the adverse employment action.  Id. (citation omitted).  Defendant argued that the EEOC failed to establish any of these elements.

In regards to the first element, the Court noted that a protected activity includes “complaining to anyone (management, unions, other employees, or newspapers) about allegedly unlawful practices.”  Id. at 6 (citation omitted).  Since the EEOC alleged that the claimant reported the sexual harassment to Defendant, the Court held that the first element was established.  Second, the Court held that the EEOC properly plead a materially adverse employment action since the claimant was sent home.  Third, the Court held that the EEOC sufficiently plead that a causal link existed between the protected activity (complaining about harassment) and the adverse employment action (being sent home).  Accordingly, the Court denied Defendant’s motion to dismiss the retaliation claim.

Implications For Employer

For employers facing EEOC-initiated litigation, this ruling illustrates that at the pleading stage, courts will not wade into the merits of whether each element of a claim are proven, but rather will analyze whether they were sufficiently alleged.  Accordingly, when preparing a responsive pleading strategy, employers should consider this ruling to assess whether filing a motion to dismiss will be a cost effective defense tactic.