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

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 2018 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. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.

The 2018 Hellholes

The ATRA identified 9 jurisdictions on its 2018 hellholes list – which, in order, include: (1) California; (2) Florida (particularly in the Florida Supreme Court), (3) New York City (especially in its treatment of asbestos litigation and hedge fund investing in some of the most expensive litigation), (4) St. Louis, Missouri (focusing on “no-injury” consumer class actions), (5) Louisiana; (6) Philadelphia (especially in the Philadelphia Court of Common Pleas and with asbestos litigation), (7) New Jersey, (8) Illinois (especially St. Clair and Madison counties), and (9) the Twin Cities, Minnesota. As corporate counsel are undoubtedly aware, these are the “magnet” venues for Plaintiffs’ class action lawyers and less than optimal venues for corporate defendants in which to be sued.

The 2019 “Watch List”

The ATRA also included 7 jurisdictions on its “watch list,” including Colorado (principally the Colorado Supreme Court), Georgia (in the Georgia Supreme Court), Montana (particularly the Montana Supreme Court), Newport News, Virginia (especially in asbestos litigation), Ohio (notably in the Court of Appeals for the Eighth District), Pennsylvania (in the Pennsylvania Supreme Court), and West Virginia. Just a qualitative notch below the 9 hellholes, the “watch list” jurisdictions also present significant challenges for corporate defendants.

Implications For Employers

The Judicial Hellholes Report dovetails with the experience of employers in high-stakes workplace class actions, as California, Florida, New York, Missouri, Louisiana, Pittsburgh, New Jersey, Illinois, and Minnesota are among the leading states where Plaintiffs’ lawyers file a high number of employment discrimination and wage & hour class actions. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and by generous damages recoveries possibilities under state laws.

By Christopher M. Cascino And Gerald L. Maatman, Jr.

Seyfarth Synopsis: In a major end-of-the-year ruling, employers scored a significant victory in terms of the denial of class certification in a major gender discrimination case that has been closely watched by the media and the bar alike. It underscores the power of U.S. Supreme Court rulings as a bulwark for defending class action litigation.

Introduction

On November 30, 2018, Judge Lorna Schofield of the U.S. District Court for the Southern District Of New York denied certification of a proposed nationwide Title VII class action alleging discrimination on the basis of sex by KPMG. In the decision, Kassman v. KMPG LLP, No. 11 Civ. 3743 (S.D.N.Y. Nov. 30, 2018), the Court rejected Plaintiffs’ argument that KPMG established a framework for managers to exercise their discretion in making compensation and promotion decisions that led to discrimination on the basis of sex. This case represents a significant win for employers as the Court rebuffed a novel attempt to create commonality out of discretionary decision-making after the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). It also provides further guidance to employers about how to make pay and promotion decisions in a manner that avoids potential class action lawsuits.

Case Background

On June 2, 2011, Plaintiffs filed suit against KMPG, alleging that it discriminates against women in making pay and promotion decisions. Id. at 1. Shortly thereafter, the U.S. Supreme Court issued its landmark decision in Wal-Mart, which the Court characterized as “provid[ing] a roadmap to avoid class certification of a nationwide class asserting gender discrimination.” Id. 

After the Supreme Court decided Wal-Mart, KPMG utilized a decentralized system for determining pay and promotions. Id. at 2.  However, that decentralized system still had a structure. Id. Among other things, compensation decisions were made under the direction of a National Director of Compensation Strategies within a framework designed to pay KPMG employees at the appropriate market rate. Id. at 2, 5-6. Additionally, KPMG also conducted performance reviews within a framework containing standards for, among other things, years of experience necessary for particular promotions. Id. at 7-9.

Plaintiffs argued that the framework within which KPMG made decentralized compensation and promotion decisions led to discrimination against women on both a disparate impact and disparate treatment basis. They moved for certification of a nationwide class, a New York State class, and a collective action.

The Court’s Decision

The Court first analyzed Plaintiffs’ disparate impact claim.  Unsurprisingly, it began with an analysis of Wal-Mart.  It observed that, under Wal-Mart, discretionary pay and promotion procedures can only satisfy the commonality requirement of Rule 23 if decision-makers operate under “a common mode of exercising discretion that pervades the entire company, such that individual discretionary decisions nonetheless produce a common answer to the question ‘why was I disfavored.’”  Id. at 35 (quotation marks omitted).  The Court found that the appropriate way to analyze if such a common mode of exercising discretion was present is to analyze four factors, including: “(1) the nature of the purported class; (2) the process through which discretion is exercised; (3) the criteria governing the discretion and (4) the involvement of upper management.”  Id. at 36.

Applying the first factor, the Court opined that the large size of the putative class – at least 10,000 women – and the fact it was located across the country weighed against a finding of a common mode of exercising discretion. Id. at 36-37. The Court observed that it is much more difficult for a common mode of exercising discretion to exist when decisions are being made by large numbers of decision-makers across the country. Id. at 37.

Turning to the second factor, the Court considered whether the framework within which pay and promotion decisions were made weighed in favor of finding that a common mode of exercising discretion existed. The Court found that “KPMG’s pay and promotion procedures act more as a framework that dictates who will make discretionary decisions rather than how they will exercise their discretion.” Id. at 38. While finding that pay ranges were set at a company-wide level, the Court reasoned that the fact that compensation decisions were made within that range weighed against a finding that a common mode of exercising discretion existed. Id.

The Court next analyzed whether the criteria governing the discretion weighed in favor of finding that a common mode of exercising discretion existed.  Id. at 41.  It observed that “whether a set of criteria creates a common mode of exercising discretion depends on the rigidity of the criteria. Subjective criteria, prone to different interpretations, generally do not provide common direction.”  Id.  Finding that the criteria applied by KPMG, such as “‘professionalism,’ ‘integrity,’ ‘reputation’ and potential to be a ‘partner candidate’” were “amorphous” and thus weighed against a finding that a common mode of exercising discretion existed.  Id. at 42.

Finally, the Court analyzed the fourth factor of “the involvement of top management in the discretionary decision-making.” Id. The Court determined that Plaintiffs’ argument that all pay and promotion decisions must ultimately be approved by two individuals unpersuasive because there was no evidence that these two individuals were doing anything other than approving aggregate promotion and pay numbers rather than at an individual level. Id. at 43. Accordingly, the Court noted that the fourth factor also weighed against a finding that a common mode of discretion existed. Id. 

With all four factors weighing against such a finding, the Court concluded that Plaintiffs had not established commonality and denied class certification of Plaintiffs’ disparate impact claim. Id. at 43-44. 

Turning to Plaintiffs’ disparate treatment claim, the Court held that Plaintiffs did not show that their statistical evidence demonstrated disparate treatment because Plaintiffs had not shown that promotion policies and practices were uniform across KPMG as required to make statistical evidence relevant under Wal-Mart.  Id. at 46-47.  The Court further found that Plaintiffs’ argument that KPMG ignored evidence of gender discrimination did not comport with the record, and that their anecdotal evidence was insufficient to show intentional discrimination.  Id. at 48-50.  Accordingly, the Court denied certification of Plaintiffs’ disparate treatment claim. Id.

Finally, the Court denied certification of a New York state class because Plaintiffs did not provide any evidence of New York state-specific practices, and it denied certification of an Equal Pay Act collective action because Plaintiffs failed to prove the members of the putative collective action worked in a single establishment and that they were similarly-situated. Id. at 51-60.

Conclusion

This case represents a significant win for employers. After Wal-Mart, plaintiffs’ lawyers have tried to develop new theories to secure certification of classes even where decisions are made in a decentralized manner. In Kassman, the Court not only rebuffed the latest such attempt, but also provided employers with additional ways to structure their pay and promotion policies to avoid potential class actions.

 

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

Seyfarth Synopsis: Professional class settlement objectors can be a thorn-in-the-side for employers and class counsel attempting to settle class actions. Their M.O. is often the same — frivolously object, appeal its denial, settle out of court, and withdraw. It is already hard enough to obtain court approval of a class-based settlement without adding into the mix such tactics taken by objectors. But the good news for employers is that courts are closely reviewing conduct of objectors to determine if sanctions are appropriate.

That is exactly what happened in Clark v. Gannett Co., No. 1-17-2041 (Ill. App. Nov. 20, 2018). Clark is a good reminder for employers who are seeking class settlement approval to not lie down for serial objectors. Rather, employers should take the fight to objectors, who are increasingly being met with skepticism and ire from courts around the country,

Background

In Clark v. Gannett Co., No. 1-17-2041 (Ill. App. Nov. 20, 2018), the plaintiff alleged that Gannett Co. violated the Telephone Consumer Protection Act by making unsolicited phone calls. The parties reached a $13.8 million settlement, of which $5.4 million went to class counsel. Before final approval, however, Gary Stewart (the sole objector) filed an objection to the settlement, claiming that class counsel’s fees were excessive. The trial court overruled Stewart’s objections.

A month later, class counsel moved for sanctions against Stewart’s counsel, arguing that they filed Stewart’s objection for improper reasons — namely, to elicit attorneys’ fees. The trial court declined to grant class counsel’s motion for sanctions and found that the objection was not filed for an improper purpose. In the course of that ruling, the trial court excluded evidence of counsel’s pattern of conduct in representing objectors in other class action lawsuits. Class counsel appealed the trial court’s denial of sanctions to the Illinois Appellate Court.

The Decision Of The Illinois Appellate Court

On appeal, the Illinois Appellate Court reversed the trial court’s decision to exclude the pattern of conduct of Stewart’s counsel. The Illinois Appellate Court explained, “[t]he pattern of conduct engaged in by [Stewart’s counsel] is relevant to the objection’s possible improper purpose of seeking attorneys’ fees with the bare minimum of effort, expense, and time.” Id. at 17. In reaching that decision, the Illinois Appellate Court noted that Stewart’s counsel has used this strategy in multiple cases in different states and that various courts had admonished counsel’s conduct. In fact, as the Illinois Appellate Court emphasized, one federal judge described one of Stewart’s attorneys as ‘“a known vexatious appellant.’” Id. at 18. Based on these facts, the Illinois Appellate Court vacated the order denying sanctions and directed the trial court to conduct a new hearing with evidence of similar conduct in other cases to determine whether the objection was filed for an improper purpose.

But the Illinois Appellate Court did not stop there. Because one of Stewart’s attorney’s was an out-of-state attorney who used a local attorney for filing the objection, it considered whether the duo engaged in the unauthorized practice of law. There was evidence that Stewart’s local attorney did not review any of the objection papers, all of which were prepared solely by Stewart’s out-of-state counsel. The Illinois Appellate Court explained that by “not applying and appearing pro hac vice” Stewart’s out-of-state counsel sought to “escape responsibility by appearing not to practice law in this jurisdiction.” Id. at 21. “Both attorneys,” the Illinois Appellate Court concluded, “have engaged in fraud on the court.” Id. at 25. As a result, it then directed the clerk to forward a copy of the order to the ARDC to determine whether disciplinary action should be taken.

Implication For Employers:

This ruling in Clark demonstrates that now, more than ever, courts are scrutinizing the purpose behind an objection to a class-based settlement, particularly when the objector is represented by counsel with history of hijacking class settlements. Employers confronted with a hold-up by a professional objector should work with class counsel to aggressively oppose the objector’s extortionist bid for fees. This might mean some short term pain and associated costs, but in the long run hopefully objectors will get the message that gone are the days where parties will roll over and pay their fees.

 

 

 

 

By Gerald L. Maatman, Jr., Christopher J. DeGroff, Matthew J. Gagnon and Alex W. Karasik

Seyfarth Synopsis:  On November 15, 2018, the EEOC released its annual Performance and Accountability Report (‘PAR”) for Fiscal Year 2018 (here) – a year-end report card of sorts, and a critical publication for employers to consider as they analyze the EEOC’s activities over the past year, and its anticipated direction for the future.

In its first year under the Strategic Plan for Fiscal Years 2018 through 2022 (“Strategic Plan” or “Plan”) (blogged about here), the EEOC reported significant increases in its outreach efforts and enforcement actions, as it highlighted new intake procedures, extensive training programs, and aggressive litigation.  Particularly noteworthy was the EEOC’s track-record relative to workplace sexual harassment litigation, which has become a top priority as the #MeToo movement has spotlighted the issue. 

The 2018 PAR is a “must read” for corporate counsel, as it provides valuable insights into the agency’s mission, as well as warnings that employers should heed. 

Raking In Recoveries

In FY 2018, the EEOC recovered more than $505 million for alleged discrimination victims.  This represents a significant jump from $484 million in FY 2017 (see more here), and $482.1 million in FY 2016 (see more here).  But while the total monetary relief figure ballooned, the relief obtained through mediation, conciliation, and settlement declined from $355.6 million in FY 2017 to $354 million in FY 2018.  Conversely, litigation recoveries jumped to $53.6 million in FY 2018 from $42.4 million in FY 2017 (the FY 2016 and 2015 numbers were $52.2 million and $65.3 million respectively, more closely mirroring this year’s figures).

Firing Up The Filings

The EEOC reported filing 199 merits lawsuits in FY 2018, a slight uptick from the 184 merits lawsuits it filed in FY 2017.  This included 117 suits on behalf of individuals, 45 non-systemic suits with multiple victims, and 37 systemic suits.  The EEOC labels a case “systemic” if it “has a broad impact on an industry, company or geographic area.”

For employers, the 37 systemic lawsuits is a particularly noteworthy figure.  In FY 2017, the Commission filed 30; in FY 2016 it filed 18; and in FY 2015 it filed 16.  The acceleration in systemic lawsuits illustrates that the EEOC is not backing down on its agenda of aggressively litigating “bet-the-company” cases.  Given the heightened financial exposure in systemic litigation, this is one trend employers should certainly heed.

Making Its Mark In The #MeToo Movement

Workplace harassment has never been more in the forefront of the EEOC’s focus than it is today.  The EEOC’s PAR emphasized that it reconvened the Select Task Force on the Study of Harassment in the Workplace for a public meeting, “Transforming #MeToo into Harassment-Free Workplaces,” to examine difficult legal issues and to share innovative strategies to prevent harassment.  The Commission reported that it recovered a whopping $70 million for the victims of sexual harassment through administrative enforcement and litigation in FY 2018, up dramatically from $47.5 million in FY 2017.  Unquestionably, given the increased visibility of workplace sexual harassment based on various high-profile media coverages in 2018, the Commission has turned up the heat on investigations and litigation in this area.

Balancing The Backlog

For several years, the EEOC has been working through its significant backlog of pending charges.  As EEOC Acting Chair Victoria Lipnic noted in the PAR, “[s]oon after I became Acting Chair in 2017 I made addressing the backlog a priority, and as an agency, we began to share strategies that have been particularly effective in dealing with the pending inventory, while ensuring we are not missing charges with merit.”  Chair Lipnic has made good on her word, noting the EEOC dramatically reduced its pending inventory in FY 2018 to 49,607 charges, a decrease of 19.5% from FY 2017 and 34% from FY 2015.  One area that remains ripe for improvement, however, is the backlog of Freedom of Information Act requests, as the PAR reports that the EEOC’s FOIA backlog increased by 185% at the end of FY 2017, but only decreased by 7% in FY 2018.

Portal To The Future

As part of its mission to facilitate the intake process, the launch of a nationwide online inquiry and appointment system as part of the EEOC’s Public Portal resulted in a 30% increase in inquiries and over 40,000 intake interviews.  These figures come as a result of the Commission’s recent commitment to enhance its Digital Charge System and allow technological advances to ease the burden caused by an increased volume of activity.

The Commission additionally noted that its outreach programs reached more than 398,650 workers, employers, their representatives and advocacy groups this past fiscal year at more than 3,900 events conducted by the EEOC.  This reflects the EEOC’s commitment to preventing workplace harassment through proactive measures, while simultaneously increasing public awareness about the mission of the Commission.

Implications For Employers

There were those who believed the EEOC’s enforcement efforts would downshift under the current administration.  Our year end reports, and the EEOC’s own PAR report card, demonstrates quite the opposite.  The EEOC has made it clear that it is ramping up across the board, not slowing down.  This includes a significant increase in filings, recoveries, and outreach efforts.  The EEOC’s PAR is a helpful resource for employers to chart the danger areas in today’s tumultuous political and social environment.  We will continue to report on the EEOC’s enforcement trends.  Stay tuned.

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

Seyfarth Synopsis: As we approach the start of the holiday season, employers should be mindful of the inherent risk that accompanies holiday parties and other seasonal events. Notably, in light of the U.S. Equal Employment Opportunity Commission’s (“EEOC”) year-end filing numbers, employers must take extra caution to stay off the EEOC’s radar. In today’s video, Associate Alex Karasik and Partner Jerry Maatman analyze the EEOC’s 2018 fiscal year trends, and discuss how employers can avoid becoming the target of an EEOC-initiated lawsuit.

In its first full year under the Trump Administration, to the surprise of many observers who thought the EEOC’s filing numbers would decline after a busy FY 2017, the EEOC continued to increase its filing numbers. In fact, the Commission filed 15 more lawsuits in FY 2018 as compared to last year, and more than twice as many as the final year under the Obama Administration in FY 2016. Additionally, per a recent EEOC press release, the Commission announced it recovered $505 million for victims of workplace discrimination this year, an increase of over $20 million in comparison to FY 2017.

However, overshadowing the general increase in filing activity was the EEOC’s considerable surge in lawsuits alleging sexual harassment. This trend was well-chronicled not only by major news outlets, but also by the EEOC itself through the issuance of a rare press release just days after the end of its fiscal year. In this press release, the EEOC publicized its 41 sexual harassment filings, as well as a 12% increase in sexual harassment charges and approximately $70 million recovered for victims of workplace sexual harassment.

For a full breakdown of the EEOC’s 2018 filing activity, check out our annual blog post on this topic.

Tips For Employers During The Holiday Season

As the weather cools down and employer risk heats up with annual holiday parties, business leaders must be attentive to all activities within the workplace. It is important to remember that even though holiday parties often include festive accompaniments such as music and alcohol, these events are an extension of the workplace and should be treated as such. Put simply, employers are liable for any inappropriate behavior that occurs at a holiday party.

Therefore, clear reporting procedures are especially important for business during this time. This makes the holiday season a perfect time to redistribute written policies and conduct employee and bystander training on workplace harassment. Furthermore, managers and HR personnel must be diligent in immediately addressing, reporting, and documenting any incident that may be considered unlawful behavior in the workplace.

For a full overview of the EEOC’s FY 2018 trends and further advice for employers, be sure to watch Jerry and Alex’s explanation in the video above. Remember to stay tuned to our blog, as we will soon be publishing a full analysis of the EEOC’s Performance and Accountability Report (“PAR”) as soon as it is released.

By: Mark Wallin, Christopher DeGroff, and Gerald Maatman, Jr.

Seyfarth Synopsis:  The EEOC operates with limited resources, yet has the daunting responsibility of enforcing an alphabet soup of anti-discrimination laws.  The EEOC has become quite savvy at leveraging the press as a pulpit for publicizing its agenda, especially in litigation.  An employer need only visit the EEOC’s website to understand the role of media statement’s in the Commission’s enforcement process.

In the life-cycle of EEOC initiated litigation, the agency will almost invariably issue two media statements: one issued when the suit is filed, and another when the suit is resolved.  But not all media statements are the same.  Depending on the posture of the case, whether the case theories align with the EEOC’s strategic goals, and even how the EEOC views the employer, media statements can vary dramatically.  This post discusses what employers can expect from these releases, including typical language, elements, and timing.   

EEOC’s Publicity Philosophy

The EEOC has acknowledged that press coverage is part of its deterrent message and mission.  Notably, the Commission’s 2006 Systemic Task Force report provides that the “EEOC engage[s] in high impact litigation and publicity efforts that change the workforce status of affected groups and/or improve employment policies, practices, or procedures in affected workplaces.”  (See also opening statement of Sen. Alexander regarding the Commission’s apparent strategy, in filing certain lawsuits, to “achieve a maximum amount of publicity.”)

The EEOC’s litigation media statement is one of the tools in the Commission’s toolbox that it will wield with an aim to achieve its strategic enforcement goals.

Often Two Media Statements During The Course Of EEOC Initiated Litigation

In the life of a lawsuit initiated by the EEOC, there will ordinarily be two media statements. The first will be published when the suit is filed, and the second if the case is resolved.  Although all media statements published upon filing of a suit will have roughly the same cadence and tone, those published upon resolution can vary greatly.

Initial Media Statement

A media statement issued at the outset of the litigation tends to have a stern tone, regarding the alleged actions of the employer.  The statement will lead off with a general assertion of the legal claims lodged against employer, including the statute at issue.  For example, the statement may declare that a female employee suffered through a hostile work environment at the hands of her supervisor, in violation of Title VII.  The statement will then go on to recite the key allegations of discrimination, harassment, or retaliation proffered in the complaint.  These allegations are often delivered as fact, not issues that will be proven – or not – during the litigation.  Often times the statement will also describe the employer, perhaps sharing a website, states of operation, and a brief description of the work done by the business. Finally, the applicable District Director and/or one of the trial attorneys for the matter will offer a quote in the nature of a sound bite concerning the allegations, which will emphasize the Commission policy underlying its prosecution of the lawsuit.  In the most recent batch of EEOC filings, for instance, which occurred in September, combating sexual harassment and discrimination (“me too”) is the most common EEOC policy articulated. It is not surprising that many employers who have been the subject of the EEOC’s media statements have deemed the Commission’s tactics to be unfair and designed to apply extra-judicial pressure to settle litigation.

Media Statement Upon Resolution

When a suit is resolved, typically through an agreed upon consent decree (but occasionally after a rare trial win), the EEOC will publish yet another media statement.  The tone and content of this statement, however, can vary from highly aggressive to fairly measured, and can even verge on “friendly.”  The direction taken by the EEOC in this statement will depend largely on the resources devoted to the litigation, how contentious the litigation was, as well as whether the claims and allegations at issue align with the Commission’s strategic goals.  Some insight into the Commission’s process can be found in the Regional Attorney’s manual, published here. Notably, before the resolution of “significant litigation” a Regional Attorney is required to advise the Office of the General Counsel.  The Commission defines “significant” to mean a lawsuit “expected to involve significant monetary or injunctive relief”; “a favorable jury verdict or court decision”; or resolution which “is likely to receive national or significant local attention due to the notoriety of the defendant, ongoing media interest in the lawsuit and/or issues involved, or other factors that may have spurred significant media scrutiny.”  Whether or not the litigation is deemed “significant” may well play a role in the tone of the media release as well.

The more resources expended, and the more closely aligned the claims are with the Commission’s strategic goals, the more likely the EEOC will publish an aggressive media statement.  The hallmarks of such a statement will be not only the recitation of the most salacious of the allegations, but also a detailed description of the monetary and programmatic relief obtained in the consent decree.  For example, in a recent matter involving an Illinois restaurant, the EEOC’s media statement set forth that “numerous employees … were routinely sexually harassed by coworkers and managers, including offensive sexual comments, groping, physical threats, and, in one instance, attempted forced oral sex with a management employee.” The statement went on to detail the programmatic relief, followed by harsh admonishments from a Regional Attorney and District Director, specifically:

“Employers are responsible for preventing workplace harassment – and their failure to do so hurts both their employees and their bottom line,” said Andrea G. Baran, Regional Attorney for the EEOC’s St. Louis District. “Business owners and CEOs must be proactive and involved in making sure all managers and employees understand that harassment will not be tolerated, harassers will be punished, and those who report harassment will be protected from retaliation. Prevention starts at the top.”

Moving down the spectrum, the Commission may take a more measured tone where the litigation is less protracted and the claims are not necessarily consistent with its strategic goals. For instance, in a recent ADA case settled by the EEOC concerning an employer’s alleged discriminatory termination of a disabled employee, which had been pending less than a year, the media statement provided scant details concerning the claims brought. Further, after a short description of the programmatic relief contained in the lone statement of a Regional Attorney was far more benign:

“This settlement is both strong and just,” said Rudy Sustaita, regional attorney for the EEOC’s Houston District Office. “[The employer] has given us every indication that it intends to comply with the ADA in the future.”

And on occasion, it will even boarder on “friendly” — including a statement of appreciation to the employer for its cooperation in resolving the litigation. In a suit brought in Wisconsin, filed and settled within five months, the Commission was quoted as stating:

“We thank [the employer] for its commitment to settle this case before the sides incurred significant costs and its willingness to ensure a level playing field for its pregnant employees seeking job modifications, including light duty work, otherwise available to non-pregnant employees,” said EEOC Chicago Regional Attorney Gregory M. Gochanour. “The EEOC will continue to enforce the federal laws so that all pregnant employees have the same opportunities as non-pregnant employees to contribute to our thriving economy,” said Julianne Bowman, the EEOC’s District Director for the Chicago District Office.

Although “friendly” media statements are the exception, not the rule, the EEOC is more likely to publish such a statement to incentivize other employers to similarly resolve enforcement actions.

A Word On Conciliation Media Statements

Historically, the EEOC has generally issued media statements for lawsuits only, as conciliation is intended to be a confidential process.  Indeed, one of the chief reasons for employers to engage in pre-suit conciliation is the carrot of confidential resolution.  Interestingly, however, we have seen a trend of the EEOC issuing presumably agreed-upon media statement for matters settled in conciliation.  Accordingly, the employer has a degree of leverage in negotiating these publications.  As one might imagine, conciliation media statements are, thus, more positive in tone. Further, on occasion, the employer may also make a statement, which at minimum disclaims any liability — something rarely, if ever, allowed in a litigation media statement.

Elements Of A Media Statement

Regardless of the tone, EEOC media statements are consistent in their basic elements and structure.

First, there will be a headline crafted to be eye-catching, such as “Paramount Mailing Company Punished Female Employees for Complaining About Abuse, Federal Agency Charges.”  Below is a word cloud, highlighting the most common words and phrases employed by the EEOC in its 2018 headlines.  Not surprisingly, in the current environment, “Sexual” and “Harassment” play prominently.

Second, the media statement will include a statement of claims, describing the complained of discrimination, harassment, and/or retaliation, including factual and legal allegations.  The more aggressive press releases will set forth the most sensational and detailed allegations, whereas the measured versions may state the allegations in more bland terms, which can sometimes be so vague that it is difficult to divine what the claims were based upon in the first place.

Third, the Commission will include quotes from the relevant District Director and possibly a Regional Attorney involved in the litigation.  The tone of the EEOC’s quotes can vary greatly, depending on, among other things, the importance of the issue to the Commission’s strategic goals, the duration of the litigation, and resources expended.  Excluding conciliation media statements, on very rare occasions, the EEOC may allow a quote from the employer on the resolution of the lawsuit.  Although it is unlikely the Commission will agree to such a statement, if the litigation and settlement proceed amicably, it is certainly worth attempting to negotiate the point.

Finally, the media statement will conclude with a statement of the EEOC’s mission (e.g. “The EEOC advances opportunity in the workplace by enforcing federal laws prohibiting employment discrimination”).  Additionally, where applicable, the statement will indicate where the resolved litigation is among the EEOC’s strategic goals — “[p]reventing workplace harassment through systemic litigation and investigation is one of the six national priorities identified by the Commission’s Strategic Enforcement Plan (SEP).”  Media statements that make note of the SEP are more likely to be among the more aggressive.

Emerging Issues With Media Statements

As the Commission media strategy has evolved, it has made continued efforts to increase its audience and distribution of these statements for maximum effect. The EEOC has also been known to conduct press conferences announcing a new suit or trumpeting an EEOC victory. But now the EEOC also publishes many of its media statements on social media, like Twitter.  It has also taken to issuing relevant media statements in multiple languages depending upon the employees and employer at issue. For as long as the EEOC places a priority on publicity, it will no doubt continue to search for new ways to increase their audience.

Implications for Employers

For employers who find themselves involved in an EEOC enforcement action, it is important not to lose sight of the Commission’s use of its media statement as both carrot and stick.  The EEOC places considerable value on shining a spotlight on its enforcement efforts, especially those which advance its strategic goals.  While it is unlikely that the Commission will allow the employer too much say in the issued statement, when negotiating resolution with the EEOC, where possible, employers should use the Commission’s goal of publicity as a possible bargaining chip to achieve the best possible outcome for the inevitable media statement.  Moreover, by understanding the Commission’s strategic goals, employers will gain a greater awareness of what tone and tenor the EEOC’s statement will take upon resolution, and can prepare accordingly.

 

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

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

Seyfarth Synopsis: The government’s anti-discrimination watchdog can be extremely aggressive in pursuing discrimination claims, including pursuing those claims after an employer files for bankruptcy. Normally, after a bankruptcy petition is filed, the Bankruptcy Code’s automatic stay enjoins other actions against the debtor. But in EEOC v. Tim Shepard M.D., PA d/b/a Shepherd Healthcare, 17-CV-02569 (N.D. Tex. Oct. 11, 2018), the U.S. District Court for the Northern District of Texas sided with the EEOC and concluded that the EEOC’s Title VII lawsuit fell within an exception to the Bankruptcy Code’s automatic stay. This case is a good reminder that the Bankruptcy Code’s protections do not necessarily stave off an EEOC action. Importantly, the EEOC often will not back down from a fight simply because its target filed a bankruptcy petition, and depending on the nature of the EEOC action, it may fall within an exception to the automatic stay.  

The Decision

In EEOC v. Tim Shepard M.D., PA d/b/a Shepherd Healthcare, 17-CV-02569 (N.D. Tex. Oct. 11, 2018), the EEOC filed suit in the U.S. District Court for the Northern District of Texas for alleged violations of Title VII of the Civil Rights Act of 1964. After a year of litigation, the defendant filed a voluntary petition under Chapter 7 of the Bankruptcy Code. As a result of the bankruptcy proceeding, the court entered an automatic stay under 11 U.S.C. § 362 and administratively closed the EEOC’s action.

The Bankruptcy Code’s automatic stay provides fundamental protection to a debtor in a bankruptcy by automatically enjoining certain actions against the debtor. The purpose of the automatic stay is to preserve the bankruptcy estate so that it can be orderly distributed to creditors.

Although the court stayed and administratively closed the EEOC’s enforcement action, the EEOC filed a motion to reopen the case, arguing that its discrimination lawsuit fell within the governmental unit or police and regulatory exception to the automatic stay found in 11 U.S.C. § 362(b)(4). Section 362(b)(4) provides that the filing of a bankruptcy petition “does not operate as a stay” of:

the commencement or continuation of an action or proceeding by a governmental unit . . . to enforce such governmental unit’s . . . police and regulatory power, including the enforcement of a judgment other than a money judgment, obtained in an action or proceeding by the governmental unit to enforce such governmental unit’s . . . police or regulatory power.

11 U.S.C. § 362(b)(4).

Because Fifth Circuit has not addressed whether an EEOC enforcement action under Title VII falls within Section 362(b)(4)’s exception to the automatic stay, the court explained that it “must assess whether the EEOC’s primary purpose for bringing this action is to protect public policy and welfare as opposed to adjudicating private rights or represents an attempt to recover property from [the defendant’s] bankruptcy estate.” Id. at 2. The court then analyzed the nature of the lawsuit and the relief sought to make this determination.

Specifically, the court found that the EEOC was primarily seeking a permanent injunction and that there was no indication that it was protecting a pecuniary interest in the bankruptcy estate. In addition, the court highlighted that the EEOC was vindicating the public interest by seeking to prevent discrimination in the workplace. Based on these findings, the court concluded that the EEOC’s primary purpose for bringing the action was to protect public policy and welfare. Thus, the court held that the EEOC’s action was not subject to the Bankruptcy Code’s automatic stay.

Implication For Employers:

This case is a valuable reminder for employers that the EEOC will not be deterred by the threat, or filing of, a bankruptcy petition. Employer’s facing bankruptcy and enforcement actions should assess whether the EEOC’s action will likely be an exception to the automatic stay. As this case makes clear, if the EEOC is primarily seeking injunctive relief, there is a good chance that the Bankruptcy Code’s automatic stay will not enjoin the EEOC’s enforcement action.

 

By Christopher J. DeGroff, Matthew J. Gagnon,  Gerald L. Maatman, Jr., and Kyla J. Miller

Seyfarth Synopsis: The uncertainty of a new administration’s impact on the EEOC that plagued FY 2017 is fading, but the results are not what some would expect. Not only has the EEOC brought a mountain of filings compared to the last four years, but also the agency has demonstrated a clear focus on sex-based discrimination and sexual harassment in the workplace in light of #MeToo, even surpassing FY 2017 numbers.

With a full fiscal year under its belt, the Trump Administration’s impact on EEOC-initiated litigation is still uncertain. With two Republican Commissioners and the General Counsel position still unconfirmed, it is difficult to discern if things will truly be “business as usual” under Trump or if those appointments, once confirmed, will change agency course. One thing is certain: the EEOC’s litigation program is not slowing down any time soon. Just as the waning months of FY 2017 showed a marked increase in filings, FY 2018 turned up the heat even more. Filings are up more than ever, with sex discrimination filings and #MeToo filings – i.e., complaints of sexual harassment – eclipsing previous years.

The total number of filings in FY 2018 demolished FY 2015 and 2016, and even surpassed FY 2017. (Compare here to here and here). This year, the EEOC filed 217 actions, 197 merits lawsuits and 20 subpoena enforcement actions.

Predictably, the EEOC waited until the last minute to push filings, with this past month showing the most filings compared to any other month this fiscal year. At the time of publication, 84 lawsuits were filed in September, including 45 in the last 3 days alone.  Notable this year, however, was the “ramp up” period in June, July and August, which accounted for 63 of the total filings. Almost half of those cases were brought in August. The total filings for the remaining months remain low, with the number of filings in October through February failing to hit double digits.

Filings in Chicago, Philadelphia and Los Angeles continue to top the charts, with 21, 21, and 17 total filings, respectively. These numbers remain relatively consistent to FY 2017, which showed 21 filings in Chicago, 19 in Philadelphia, and 22 in Los Angeles. On the lower end, the St. Louis and Memphis numbers were modest, with only 7 filings in St. Louis and 8 filings in Memphis. Of the remaining districts, the Phoenix and New York district offices rebounded after a slow FY 2017, each filing 6 more lawsuits in FY 2018 as compared to last year.

Sex Discrimination Takes Center Stage

Each fiscal year we analyze what substantive theories the EEOC is targeting. This year, Title VII claims remained the largest category of filings, on par with FY 2017, which boasted 53% of all filings. In FY 2018, Title VII filings accounted for 55% of all filings. Although FY 2016 showed a dip in Title VII filings at 41%, this year’s Title VII filings beat out FY 2015 and FY 2014 as well.

With a new Strategic Enforcement Plan in place to guide litigation activity for FY 2018-2022, many expected some shift in focus based on two notable changes from the old plan. Specifically, the new plan pledged to address discriminatory practices against those who are Muslim or Sikh, or individuals of Arab, Middle Eastern, or South Asian descent. Additionally, the new plan aims to expand the EEOC’s equal pay priority to include compensation discrepancies for race, ethnicity, age, and disability – moving beyond the EEOC’s focus on sex-based pay disparities. In fact, we have actually seen a decrease in Equal Pay Act filings, which could reflect the EEOC’s renewed focus on equal pay issues that affect other protected groups, which would not fall under the jurisdiction of the Equal Pay Act.

One trend has emerged this year – compared to FY 2017, race filings have decreased by 6 filings – with 18 filings in FY 2018 compared to 24 filings in FY 2017.

Perhaps the most striking trend of all is the substantial increase in sex-based discrimination filings, primarily the number of sexual harassment filings. As predicted, #MeToo added fuel to this area of the EEOC’s agenda, with 74% of the EEOC’s Title VII filings this year targeting sex-based discrimination. Compare this to FY 2017, where sex based discrimination accounted for 65% of Title VII filings. Of the FY 2018 sex discrimination filings, 41 filings included claims of sexual harassment. 11 of those filings were brought in the last three days of the fiscal year alone. The total number of sexual harassment filings was notably more than FY 2017, where sexual harassment claims accounted for 33 filings.

EEOC’s #MeToo Harassment Filing Surge

Implications For Employers

The dramatic increase in filings should be an eye-opener for employers in an era when many thought the EEOC might be hitting the brakes. Instead, the EEOC is increasing its enforcement activity, with a particular focus on sex discrimination and sexual harassment. The EEOC still strongly advises employers should update and aggressively enforce their EEO Policies. Now, more than ever, employers need to be on top of their game to avoid becoming the next target of EEOC-initiated litigation.

As most of our loyal readers know, this blog is merely a preview of the more extensive analysis of EEOC trends and developments affecting EEOC litigation that we publish at the end of the calendar year. Stay tuned for our in-depth analysis of FY 2018 filings, and particular danger areas for employers in this shifting political climate.

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

By Gerald L. Maatman, Jr., Michael L. DeMarino and Rebecca S. Bjork

Seyfarth Synopsis: Although back pay has been awarded in Age Discrimination in Employment Act (ADEA) cases for quite some time, few courts have specifically addressed whether these damages are discretionary or mandatory.  In EEOC v. Baltimore County., No. 16-2216, 2018 WL 4472062, at *1 (4th Cir. Sept. 19, 2018), the Fourth Circuit answered this straightforward question and held that retroactive monetary awards, such as back pay, are mandatory legal remedies under the ADEA. Because the ADEA incorporates the provisions of the Fair Labor Standards Act (FLSA) that make back pay mandatory, the Fourth Circuit concluded that district courts lack discretion to deny back pay once ADEA liability is established. The key takeaway from this decision is that now more than ever, employers should take steps to minimize exposure to ADEA violations and, if ADEA liability is established, to explore available set offs to back pay awards.

Background

In EEOC v. Baltimore County, the EEOC brought a lawsuit on behalf of two retired corrections officers and a group of similarly-situated employees at least 40 years of age. The EEOC alleged that the County’s pension plan, known as the Employee Retirement System (“ERS”), required older employees to pay more toward their retirement than younger employees, for the same retirement benefits.

The district court granted summary judgment in favor of the EEOC, finding that because the different contribution rates charged to different employees is explained by age rather than pension status, age is the “but-for” cause of the disparate treatment, and the ERS violated the ADEA. On appeal, the Fourth Circuit affirmed and remanded the case to the district court for consideration of damages. We previously blogged about the district court’s decision here and the Fourth Circuit’s decision here.

On remand, the district court considered the EEOC’s claims for retroactive monetary relief –  which was in the form of back pay. Ultimately, the district court rejected the EEOC’s bid for these damages, concluding that it had the discretion under the enforcement provision of the ADEA, 29 U.S.C. § 626(b), to wholly deny back pay. Thereafter, the EEOC appealed.

The Fourth Circuit’s  Decision

On appeal, the County argued that the district court properly exercised its discretion under the ADEA, 28 U.S.C. § 626(b), to deny the EEOC an award of back pay. The Fourth Circuit rejected this contention. Instead, the Fourth Circuit agreed with the EEOC that because back pay is a mandatory legal remedy under the FLSA, and because the ADEA incorporates the FLSA’s liability provisions, the district court lacked the discretion to decline to award back pay.

Specifically, the Fourth Circuit reasoned that “[b]ecause Congress adopted the enforcement procedures and remedies of the FLSA into the ADEA, we construe the ADEA consistent with the cited statutory language in and judicial interpretations of the FLSA.” Id. at *3.  “Back pay,” the Fourth Circuit continued, “is, and was at the time Congress passed the ADEA, a mandatory legal remedy under the FLSA.” Id. The Fourth Circuit reinforced this conclusion, noting that the ADEA’s “legislative history further suggests that Congress consciously chose to incorporate the powers, remedies, and procedures of the FLSA into the ADEA.” Id.

Implication For Employers:

This long-running case demonstrates the complexities and potential pitfalls employers face while trying to navigate the ADEA. Employers should take care to review and consider their justifications for retirement plans that have variable contribution rates for employees based on age.  More broadly, this decision demonstrates that damages for ADEA violations can quickly add up if back pay awards are permanently on the table.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In its recent article on leading content creators in the legal industry, Attorney at Work cited Seyfarth’s Annual Workplace Class Action Litigation Report, calling it a “best-in-show report that makes the firm synonymous with class action litigation.”

Attorney at Work, a popular legal blog named in the ABA Journal’s “Blawg 100 Hall of Fame,” provides commentary with the “inspiration and information” necessary to support outstanding leading work. In a recent article highlighting industry leaders in legal content creation, Attorney at Work said:

“Seyfarth Shaw’s annual Workplace Class Action Litigation Report, now in its 14th year, is a best-in-show report that makes the firm synonymous with class action litigation. At 800 pages, it is a giant publication and is consistently referred to as the source for countless media stories. Not coincidently, this year Seyfarth Shaw was again named a Law360 top employment ‘Practice Group of the Year.’ It has won the accolade for seven consecutive years.”

We are humbled and honored by Attorney at Work’s commentary on our Annual Workplace Class Action Litigation Report. The full article can be found HERE.

The process to compile our Annual Workplace Class Action Litigation Report is a considerable undertaking, and we are grateful that the Report can be seen as a model in the legal industry.

We are particularly proud of Attorney at Work’s words regarding the Report’s reflection on Seyfarth Shaw. After all, our class action practitioners work relentlessly to track, collect, and analyze each and every ruling on class action issues and Rule 23 topics.

Through publishing the Report for 14 years, we have found that the process results in not only a unique compendium of class action decisions, but also in a distinct analytical ability among our team of attorneys. We are pleased that this knowledge is useful to employers and class action practitioners throughout the country.

Many thanks to Attorney at Work — we sincerely appreciate the kudos.

Now that we are getting closer to year’s end, we have tracked and analyzed over 1,500 rulings. At this pace, we predict that the 2019 Report will be our most comprehensive publication to date. Stay tuned for our full analysis of the year’s workplace class action activity in January of 2019.