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

Seyfarth Synopsis: For nearly a decade, the aftershocks of the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc.  v. Dukes have curtailed the success of plaintiffs attempting to certify class discrimination claims in situations where the alleged discriminatory policy is highly discretionary. But Zollicoffer, et al. v. Gold Standard Baking, Inc., et al., No. 13 CV 1524, 2020 WL 1527903, at *1 (N.D. Ill. Mar. 31, 2020), demonstrates that discretionary hiring policies and supervisor autonomy will not necessarily defeat class certification where there is an overarching policy of discrimination. Armed with compelling expert statistics and some ugly facts, Plaintiffs successfully navigated the commonality hurdles articulated in Wal-Mart and secured class certification.  The U.S. District Court for the Northern District of Illinois found that this statistical and anecdotal evidence was proof of a general policy of discrimination that caused a common injury to the class, and this ultimately drove the district court’s decision to grant class certification.

This case is important and is a must read for employers, particularly companies in the staffing industry, because it demonstrates the need to maintain and enforce anti-discrimination polices and the fundamental role that expert testimony plays in deciding whether class certification is appropriate.

Background

In Zollicoffer, et al. v. Gold Standard Baking, Inc., et al., No. 13 CV 1524, 2020 WL 1527903, at *1 (N.D. Ill. Mar. 31, 2020), Plaintiffs filed a class action complaint against Most Valuable Personnel (“MVP”), a staffing company, and its client, Gold Standard Bakery (“Gold Standard”), alleging race discrimination in violation of 42 U.S.C. § 1981. Plaintiffs claim that MVP acted on Gold Standard’s discriminatory preferences when it referred disproportionately few African-American applicants to temporary assignments at Gold Standard’s Chicago facility.

After discovery, Plaintiffs moved to certify a class of African-Americans who sought, but were denied, referrals to Gold Standard as a result of Defendants’ allegedly discriminatory policies. In support of their bid for class certification, Plaintiffs offered expert reports prepared by their labor economist, Dr. Marc Bendick.  Over Defendants’ opposition and objection, the Court found that Plaintiffs’ expert report satisfied the criteria for admissibility under Daubert and Federal Rule of Evidence 702, and that Plaintiffs carried their burden under Rule 23 to show that class certification is appropriate.

The Decision

As a threshold issue, the Court addressed the admissibility of Dr. Bendick’s expert reports, and ultimately, it was Dr. Bendick’s analyses that drove the decision to certify the class. Dr. Bendick compiled compelling statistics that found that non-Hispanic, African-American applicants were referred to Gold Standard at a rate far below the expected referral rate during the class period.

Defendants primarily challenged Dr. Bendick’s reports on the basis that he failed to properly vet the original data files on which he relied.  Defendants argued that this rendered his conclusions faulty and unreliable.  The Court rejected the defense position. It concluded that the “reliability of data . . . used in applying a methodology is tested by the adversarial process and determined by the jury.”  Id. at *15 (citation omitted). “[T]he court’s role,” it explained, “is generally limited to assessing the reliability of the methodology — the framework — of the expert’s analysis.” Id. Hence, the Court concluded that although Defendants raised “valid criticisms” of the data, those critiques went to the weight of Dr. Bendick’s analysis, not its admissibility. Id.  In fact, the Court concluded that essentially all of the Defendants’ challenges went to the weight, and not the admissibility of Dr. Bendick’s testimony. Accordingly, the Court found Dr. Bendick’s reports were sufficiently reliable to consider as part of Plaintiffs’ motion for class certification.

Next, the Court considered whether class certification was appropriate under Rule 23. As with most class cases, the battleground centered around Rule 23(a)’s commonality requirement and Rule 23(b)’s predominance requirement. The Court started its analysis by creating some distance from Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). There, it noted commonality was lacking because the alleged discriminatory policy was highly discretionary and the plaintiffs failed to identify a common way in which the defendants exercised that discretion. Id. at *20The Court noted that “commonality will exist where allegedly discriminatory general policies are enforced at the corporate level rather than by individual supervisors, even where there is some discretion in the policies’ execution.” Id.

Against this backdrop, the Court rejected the Defendants’ argument that the Plaintiffs did not provide proof of a general policy of discrimination because MVP’s supervisors and dispatchers had individual discretion to hire and refer workers based on a number of factors.

The Court explained that “Dr. Bendick’s analysis provides persuasive evidence that disparities in hiring can be explained by a general policy of discrimination, rather than individualized processes.” Id. at *21. Moreover, “the fact that MVP utilized a decentralized decision-making process and MVP supervisors and dispatchers had a degree of autonomy to make referral decisions does not preclude plaintiffs’ claim because they challenge defendants’ overarching policy against hiring African-Americans.” Id. Ultimately, the Court concluded that commonality was satisfied because “the statistical evidence and anecdotes together provide ‘significant proof’ of a ‘uniform employment practice’ that caused a common injury to the class.” Id.

The Court likewise found that Plaintiffs satisfied Rule 23(b)’s predominance requirement. Defendants attempted to raise a litany of individualized issues such as when the laborer sought work at MVP, what shifts they were willing to work, whether Gold Standard needed employees on those particular days, and whether the laborers even qualified for positions at Gold Standard. Id. at 28. The Court, however, opined that these “questions are actually secondary to plaintiffs’ common claims” because, if the trier of fact determines that Defendants had a discriminatory policy against hiring African-Americans,  those individualized questions will largely bear on damages. Id.

Implications For Employers

This case is a reminder for employers that they are not necessarily immune from class discrimination claims simply because their employment-related policies require individualized discretion in executing them. Staffing companies, in particular, should ensure that their anti-discrimination polices address discriminatory directives or preferences of their clients.

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

Seyfarth Synopsis: In a first-of-its-kind ruling in Sandvig v. Barr, No. 16-1368, 2020 WL 1494065 (D.D.C. Mar. 27, 2020), the U.S. District Court for the District of Columbia held that private citizens investigating whether employment hiring websites discriminate based on race or gender by creating fake profiles and job postings would not violate the Computer Fraud and Abuse Act with their use of fake profiles. The ruling is an important warning for employers using these hiring channels to watch out for such “testers” and the potential discrimination claims that may follow.

Case Background

In Sandvig, academic researchers filed a pre-enforcement constitutional challenge with the District Court, requesting that it examine whether certain provisions of the Computer Fraud and Abuse Act (“CFAA”) – which imposes criminal liability for particular computer-related fraudulent activity – violated the researchers’ constitutional rights, as they believed that the CFAA would prohibit them from conducting research related to hiring discrimination. The plaintiffs hoped to investigate whether websites that facilitate job hiring, such as LinkedIn, Monster, Glassdoor, and Entelo, use algorithms that lead to discriminatory treatment of applicants based on protected characteristics.

To “test” the website algorithms, the plaintiffs informed the Court that they planned to submit fake applications and fake job postings in an effort to see where the fake applicants were ranked by the site’s algorithms when the applications were forwarded to the job poster. The plaintiffs would include in the fake job posting that the posting was not a real opportunity so that no real applicants believed they were applying to a legitimate posting. The plaintiffs also stated that they would comply with any payment-related requirements associated with the job sites; however, the creation of fake profiles and fake postings still ran afoul of the sites’ terms and conditions for use.

Because of the violation of the site terms and conditions necessitated by the research, which the plaintiffs assumed would violate the Access Provision of the CFAA, the plaintiffs asked the Court to find that the Access Provision violated their constitutional rights. In response, the Federal Government filed a motion to dismiss. The Court granted the motion to dismiss for the majority of the plaintiffs’ claims, leaving only a claim that the law violated the plaintiffs’ First Amendment rights. The parties then filed cross-motions for summary judgment.

The Court’s Decision

In their motion for summary judgment, the plaintiffs renewed their pre-enforcement challenge to the Access Provision of the CFAA, alleging that it unconstitutionally restricted their First Amendment rights by criminalizing their research plans involving the violation of websites’ terms of service. In its motion, the government argued that the plaintiffs did not have standing and that the First Amendment did not shield the plaintiffs from decisions of private websites about their own terms and conditions.

The Court first addressed the government’s standing argument. The plaintiffs argued that they had standing because they intended “to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, and there exists a credible threat of prosecution thereunder.” Id. at *2. The Court agreed. It found that the plaintiffs had concrete plans to engage in their proposed research, there was a credible threat of prosecution based on previous cases brought by the government under the Access Provision, and that the case was ripe for adjudication. Accordingly, the Court concluded that the plaintiffs had standing to bring their claim.

The Court thereafter examined whether the CFAA Access Provision actually prohibited the plaintiffs’ proposed research. The CFAA prohibits “intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing] … information from any protected computer.” 18 U.S.C. § 1030(a)(2). In its opinion, the Court assessed whether violating the terms of service of a website constituted unauthorized access such that the violation would become a criminal offense. The Court adopted the common theory of a “two-realm internet,” meaning that unauthorized access involves transitioning from a public area of the internet to a private, permission-restricted area that usually requires a form of authentication before an individual is granted access. Where an individual passes a “permission requirement” that the individual is not authorized to pass, the Access Provision of the CFAA is triggered.

The Court determined that violating the terms of service of a website does not constitute a CFAA violation under the “authorized access” provisions. In its determination, the Court expressed discomfort in allowing website owners to set terms that would eventually lead to criminal liability. Accordingly, the Court denied both motions for summary judgment as moot since the plaintiffs’ proposed conduct did not run afoul of the CFAA, though it expressly opined that the conduct “may have consequences for civil liability under other federal and state laws.”  Id. at *10.

Implications for Employers

While many employers may never deal with the CFAA, the Court’s decision should serve as a warning to employers utilizing hiring platforms to fill job postings.  The issue of online job advertising has been a hot topic for the EEOC in recent years, with the Commission looking specifically at job advertisements on Facebook for potential discrimination issues, but research indicating potential discrimination in hiring platform algorithms may similarly draw the EEOC’s attention. With the Court’s decision in Sandvig removing the threat of criminal liability for this kind of “testing” research into possible discrimination related to algorithms used by hiring platforms, such research could be used to bolster discriminatory impact claims filed by plaintiffs related to hiring practices. Employers should keep an eye out for research conducted or released in the wake of this opinion, and hiring platforms should be on alert for “fake” postings and applicants utilizing their websites.

By Gerald L. Maatman, Jr. Alex S. Oxyer, Christopher DeGroff, and Matthew J. Gagnon

Seyfarth Synopsis:  On March 27, 2020, the EEOC announced its views on the COVID-19 pandemic. In particular, the EEOC provided guidance on how laws under its jurisdiction, such as the ADA, Title VII, and GINA, should be applied in these challenging times. The EEOC’s announcements are a must read for all employers.

The EEOC conducted a “town hall” style meeting in a webinar it hosted on March 27, 2020.  The meeting was conducted by Carol R. Miaskoff, the EEOC’s Associate Legal Counsel; Sharon Rennert, Senior Attorney Advisor; and Jeanne Goldberg, Acting Assistant General Counsel. The webinar focused primarily on various questions and considerations submitted to the Commission related to the Americans With Disabilities Act (“ADA”), but also addressed certain issues relative to Title VII, the Age Discrimination in Employment Act (“ADEA”), and even the Genetic Information Non-Discrimination Act (“GINA”). The following are key highlights from the presentation.

Medical Questionnaires And Examinations

In line with the EEOC’s COVID-19 Guidance issued March 19, 2020, the March 27 webinar emphasized that ADA rules and regulations should not prevent employers from following guidelines and suggestions made by the CDC or state/local public health authorities about steps employers should take regarding COVID-19. This flexibility extends to medical questionnaires and examinations in the workplace – specifically, the EEOC has explicitly opined that employers may take the temperatures of employees and may ask employees whether they have COVID-19 and whether they have symptoms of COVID-19, as long as they are doing so with all employees who would endanger others in the workplace if they contracted or were exposed to the virus. Further, the EEOC stated that it agreed that employers may bar employees from the workplace who have COVID-19, who have symptoms of COVID-19, or who refuse to have their temperatures taken or refuse to answer questions related to having symptoms of the virus.

But this flexibility is not without its limits. The EEOC emphasized that if employees do not come into contact with others in the workplace and would not put anyone at risk if they had the virus, employers cannot inquire about their symptoms and medical condition, nor may they take such an employee’s temperature. Further, employers may only single out an employee for taking their temperature or for medical questioning if they have objective evidence that the employee has symptoms of the virus or has had contact with someone with the virus. Finally, when inquiring about exposure to anyone with COVID-19, the EEOC stated that it is best practice to only ask if the employee has had contact with anyone with the virus or symptoms of the virus and to avoid asking about an employee’s family specifically, as GINA prohibits an employer from requesting the medical information or history of the employee’s family members.

Disclosure Of An Employee’s Exposure To The Virus

Other frequently asked questions to the EEOC relate to the disclosure obligations and limitations surrounding employee exposure to COVID-19. The EEOC stressed that although employers can inform their workforce that someone in the organization has or has been exposed to coronavirus, employers should still take care to not share the identity of the employee outside of a few key individuals within the company, as widespread disclosure of the employee’s identity could run afoul of the ADA. Further, employers are not obligated to share with the rest of the workforce that an employee is on medical leave or working from home due to coronavirus and should be careful not to do so unless there is a specific need for an individual to know the information. However, the ADA does not prevent employees from reporting coworkers exhibiting symptoms of the virus to supervisors or employers from reporting a diagnosis of COVID-19 to appropriate authorities (in fact, many states require such a disclosure).

Discrimination Considerations During The Pandemic

The Commission further addressed several questions regarding employer obligations in allowing employees to work from home and limitations in furloughing employees. Many employers asked if they are obligated to allow employees more at risk from the virus, such as employees over 65 or pregnant employees, to work from home. The EEOC concisely responded that employers are not obligated to allow such employees to work from home unless other, similarly situated employees outside of such groups were allowed to telework. The EEOC also reminded employers that, under federal law, they could not target employees over 65 or pregnant employees for furlough or layoff based on their “at risk” status. Finally, the EEOC again emphasized concerns about national origin discrimination and harassment related to coronavirus and reminded employers that such behavior should not be tolerated in the workplace, which is consistent with EEOC Chair Janet Dhillon’s message from earlier this week (posted here) expressing concerns about discrimination against Asian Americans and other people of Asian descent.

Reasonable Accommodations And The Interactive Process

The EEOC also focused on many questions related to reasonable accommodations and the interactive process during the pandemic. The EEOC first clarified that it does not yet have enough information to determine whether COVID-19 itself is a disability requiring reasonable accommodation. However, the virus creates other implications for employees with disabilities and their employers.

First, to the extent employees are at greater risk of COVID-19 due to preexisting disabilities, requests from those employees to take leave or work from home could be considered requests for reasonable accommodations. Employers may treat such requests as they normally would through the interactive process and are entitled to verify that the employee has a disability, that the disability would be exacerbated by COVID-19 or would put the employee at greater risk, or that the accommodation would address the issue. However, the EEOC requested that employers take into account that physicians and hospitals may not have the bandwidth to verify such requests and there are other ways to verify a disability, such as insurance paperwork or prescriptions.

Next, given the urgency of the pandemic, the EEOC asked that employers give requests for accommodation prompt attention. To the extent employers need to verify a disability or accommodation during the interactive process, the EEOC suggested several times that employees be granted accommodations on a temporary basis while the interactive process is moving forward. The Commission also emphasized that this is a time for flexibility and creativity when working through accommodation requests.

Finally, the EEOC addressed concerns that allowing work from home or telework during the pandemic would force employers to grant such accommodations after the pandemic is over. The EEOC reminded employers that if there is not a disability-related reason for working from home, or if there is another option that addresses the concern, employers are not obligated to grant working from home as an accommodation. Additionally, even if employers are waiving some essential functions of employee duties during the pandemic, they are not obligated to do so moving forward. However, the Commission did note that if an employee had previously been denied working from home due to concerns about productivity, allowing the employee to work from home during the pandemic could serve as a “trial run” that may obligate the employer to grant the accommodation request after the pandemic ends.

Implications For Employers

The EEOC’s presentation provided much-needed guidance to employers on how to navigate the challenging issues arising during the COVID-19 pandemic. As they are working through issues during these trying times, employers should pay close attention to which regulations have been relaxed by the EEOC and which are still of particular concern for the Commission.

By Gerald L. Maatman, Jr. and Matthew Gagnon

Seyfarth Synopsis: In the past 24 hours, the EEOC released a statement: What You Should Know About the ADA, the Rehabilitation Act, and COVID-19, which gives employers some guidance on how they can navigate the safety concerns associated with COVID-19 while staying in compliance with the federal disability discrimination laws. The EEOC was careful to explain that although those laws are still very much in effect, they do not interfere or prevent employers from following the guidelines or suggestions made by the CDC or state and local public health authorities regarding COVID-19. The Commission’s statement is a must read for corporate counsel.

The EEOC’s statement builds on its earlier guidance, issued during the H1N1 pandemic, Pandemic Preparedness in the Workplace and the Americans With Disabilities Act. That publication, which is far more in depth than what was just released, provides important guidance for employers trying to navigate the disability discrimination laws during a pandemic, including: how much and what kinds of information an employer may request from an employee who calls in sick, when employers may take the temperature of employees, when the ADA allows employers to require employees to stay home from work, and what employers can require in terms of doctors’ notes or other certifications of fitness for duty.

Those issues are also addressed briefly in the EEOC’s recent statement. These are the key points that the EEOC wants all employers to keep in mind:

  • During a pandemic, employers may ask employees if they are experiencing symptoms of the pandemic virus. For COVID-19, these include fever, chills, cough, shortness of breath, or sore throat. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA.
  • The EEOC reminded employers that measuring an employee’s body temperature is a medical examination. But because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature. However, employers should be aware that some people with COVID-19 do not have a fever.
  • The CDC has stated that employees who become ill with symptoms of COVID-19 should leave the workplace. The EEOC wants employers to know that the ADA does not and should not interfere with that advice.
  • The ADA allows employers to require doctors’ notes certifying fitness for duty because such notes would not be disability-related or, if the pandemic were truly severe, they would be justified under the ADA’s standards for disability-related inquiries of employees. The EEOC also acknowledges that doctors and other health care professionals may be too busy to provide such documentation and that new approaches may be necessary, such as a form, a stamp, or an email to certify that an individual does not have the pandemic virus.

Implications For Employers

This is an incredibly fast-moving situation and no single set of guidelines can possibly cover all of the diverse situations that employers are likely to face with unprecedented urgency over the next days, weeks, and months. But the new guidelines issued today, and especially the more detailed document that was issued in 2009, are a good place to start for employers who are looking for quick, practical guidance as they start crafting and implementing critical workplace policies on the fly.

We encourage all employers to review Seyfarth Shaw’s COVID-19 Resource Center for additional guidance and information. The Resource Center was designed to provide employers up-to-the-minute guidance on the diverse and growing list of legal considerations and risks employers are facing. Seyfarth Shaw also has a response team standing by to assist however we can.

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

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

Seyfarth Synopsis: In Rusis, et al. v. Int’l Bus. Machines Corp., No. 18 Civ. 8434, 2020 WL 1151322, at *2 (S.D.N.Y. Mar. 10, 2020), the U.S. District Court for the Southern District of New York recently declined to conditionally certify a nationwide collective action brought against IBM on behalf of all employees over the age of 40, and in the process cast doubt of the availability of nationwide collective actions as a whole in this context. The Court ultimately found that the plaintiffs had failed to demonstrate the existence of any glue that bound the putative collective class together.  The ruling is an important guidepost for employers facing these types of lawsuit.

Case Background

In Rusis, four former employees filed a collective action alleging violations of the Age Discrimination in Employment Act (“ADEA”). Plaintiffs asserted that IBM implemented a “company-wide effort to replace older employees with younger hires” that discriminated against all IBM employees over 40 and forced them to depart because of their age. Id. at *3. According to the plaintiffs, IBM used several methods to reduce its older worker population, including terminating older employees for pretextual reasons, constructively discharging employees over 40, or imposing unreasonable conditions on their continued employment, all the while shielding younger employees in the company from similar conditions.  The plaintiffs also pointed to efforts by the company to compete in emerging technology spaces and the company’s encouragement for employees to “embrace the Millennial mindset” as further evidence of age discrimination. Id. Critically, the named plaintiffs all worked in different positions at separate IBM locations in four different states, including California, North Carolina, Georgia, and New Jersey. Id. at *4.

The Court’s Decision

In its opinion, the Court considered the plaintiffs’ motion for the issuance of notice to members of the putative collective action. At the notice stage in a putative ADEA collective action, a plaintiff needs to make a “make a modest factual showing that the plaintiffs and potential opt-in plaintiffs together were victims of a common policy or plan that violated the law.”  Id. The Court held that while the burden at this stage is modest, “it is not non-existent” and “generally cannot be satisfied by unsupported assertions.”  Id..  In an ADEA case, when the court has a more developed record “the named plaintiffs must prove that the plaintiffs who have opted in are, in fact, similarly situated to the named plaintiffs and were all subject to the same illegal employment practice such that their cases can all be tried together.”  Id.

The Court opined that the Plaintiffs failed to meet their burden of tying all former employees over the age of 40 to a common policy or plan.  The District Court evaluated the plaintiffs’ proposed collective action in terms of “whether the plaintiffs are employed in the same corporate department, division and location; whether they advanced similar claims of age discrimination; [and whether they] had similar salaries and circumstances of employment.”  Id. The Court concluded that that plaintiffs’ motion failed under all of these factors.

In support of their motion, the plaintiffs submitted 15 affidavits from former employees.  Each affidavit described a particular incident of alleged age discrimination at different locations, divisions, seniority levels, and job functions.  The Court rejected this proof. It determined that each alleged case of age discrimination had a different decision-maker.

The Court ruled that the various allegations between the different affidavits, on their face, did not preclude Plaintiffs’ from proceeding as a collective action.  Rather, the affidavits, taken as a whole, did not meet the minimal showing that a common plan or policy existed to replace older workers with younger workers.  Read together, the Court found that the affidavits contained very little evidence connecting one act of alleged discrimination to another. The Court also discounted a blanket, copy-and-paste assertion from affiants that “[b]ased on [their] conversations with other current and former IBM employees, [they] expect that there are many other employees over the age of forty (40) who have lost or will shortly lose their jobs at IBM, who would be interested in joining the case if notified of their right to do so.”   Id. at *3-4. The Court held that “vague allusions to conversations with co-workers do not support conditional certification.” Id. at *4.

The Court also rejected other tangential evidence provided by the plaintiffs.  To support their motion, the plaintiffs submitted an article by ProPublica and two documents referenced in that article that reported that IBM believed emerging technologies are “driven by Millennial traits” and that IBM “sought to sharply increase hiring of people born after 1980.” Id. at *5.  The Court declined to rely on the article because it was not based on sworn testimony of an affiant, but rather based on “subjective synthesis of various statistics, IBM documents, and employee statements by individuals whose journalistic credentials are unknown to the Court.” Id.  The Court also rejected an internal IBM document from 2006 that used the terms “gray hairs” and “old heads,” as well as a presentation document entitled “Reinvention in the Age of the Millennial.”  Id. The Court found that none of these documents contained any evidence of an actual plan to replace older workers with younger ones.

Ultimately, the Court denied the plaintiffs’ motion to issue notice to the members of the putative collective action on a nationwide basis because they failed to show that the putative collective action members were alike in “ways that matter to the disposition of their claims.” Id. at *6.

Implications for Employers

Rusis provides strong support for any employer seeking to defeat certification for a nationwide ADEA collective action.  While the Court did not shut the door on ever certifying a nationwide collective action, it is incumbent on plaintiffs to show more evidence and support to prosecute a nationwide common policy or practice than just a few company documents and conclusory testimony.

 

Seyfarth Synopsis: Jerry Maatman, Seyfarth’s chair of the firm’s class action defense group, discusses top Supreme Court cases on the docket for 2020 relating to the scope of Title VII of the Civil Rights Act of 1964.

In this video blog, Jerry discusses the differing views of the EEOC and the Department of Justice on interpretation of the reach of Title VII, the impact of Justice Kavanagh and Justice Gorsuch in relation to the outcome of these cases, and what this all means for employers.

Thanks for tuning in!

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

Seyfarth Synopsis:  On March 10, 2020, the EEOC released information about an internal resolution that may drastically change how high-stakes litigation decisions are made at the EEOC. The resolution reverses some long-standing practices that had delegated much of the authority over the direction of EEOC litigation enforcement activities to the General Counsel of the Commission. Much of that authority will now rest firmly in the hands of the Commissioners themselves.

On March 10, 2020, the EEOC released its Resolution Concerning the Commission’s Authority to Commence or Intervene in Litigation and the Commission’s Interest in Information Concerning Appeals.

The purpose of the resolution appears to be an effort to rein in many of the powers previously held by the EEOC’s General Counsel, and in turn the Regional Attorneys, who historically have wielded considerable discretion over the types of lawsuits that would be filed and the legal positions the EEOC would advance.

The resolution notes that the Commission had originally delegated significant authority to the General Counsel in the EEOC’s National Enforcement Plan of 1995. That delegation was reaffirmed with some slight changes in the Strategic Enforcement Plans that became effective in 2012 and 2017. According to the most recent iteration of the Strategic Enforcement Plan, the General Counsel’s office was given authority to decide to commence or intervene in litigation in all cases except those: (1) that involve a major expenditure of agency resources, which would include many systemic, pattern or practice, or Commissioner charge cases; (2) which present issues in developing areas of law where the Commission has not yet or only recently adopted an official position; (3) that the General Counsel reasonably believes to be appropriate for submission for Commission consideration (e.g., due to the likelihood of public controversy); and (4) which involve recommendations to participate in a case as amicus curiae.

The new resolution makes it clear that it is now the Commissioners, and not the General Counsel, that will make the decisions to commence or intervene in litigation. According to the resolution, the Commission now has exclusive authority over the following:

-Cases involving an allegation of systemic discrimination or a pattern or practice of discrimination;

-Cases expected to involve a major expenditure of agency resources, including staffing and staff time, or expenses associated with extensive discovery or expert witnesses;

-Cases presenting issues on which the Commission has taken a position contrary to precedent in the Circuit in which the case will be filed;

-Cases presenting issues on which the General Counsel proposes to take a position contrary to precedent in the Circuit in which the case will be filed;

-Other cases reasonably believed to be appropriate for Commission approval in the judgment of the General Counsel. This category includes, but is not limited to, cases that implicate areas of the law that are not settled and cases that are likely to generate public controversy;

-All recommendations in favor of Commission participation as amicus curiae;

-A minimum of one litigation recommendation from each District Office each fiscal year, including litigation recommendations based on the above criteria.

Even with respect to those cases that do not raise the issues enumerated above, the new resolution goes on to state that the General Counsel is obligated to communicate about more garden variety cases with the Chair, and at the Chair’s request, shall consult with the Chair to decide whether even those cases should be brought before the Commission for a vote. It is only if the Chair does not advise the General Counsel within five business days – as to whether a particular case must be submitted to the Commission for a vote – that the General Counsel retains authority to proceed with a lawsuit on her own initiative.

The delegation of authority contained in the EEOC’s most recent Strategic Enforcement Plan allowed the General Counsel the authority to re-delegate to Regional Attorneys the authority to commence litigation and, in fact, strongly encouraged such re-delegation of litigation authority. Under the new resolution, that authority is also revoked; instead, it explicitly states that for any cases that are not brought to the Commission for a vote as described above, “the Commission delegates to the General Counsel the authority to determine whether to commence such cases.” (emphasis added).

Finally, in an apparent nod to some of the recent difficulties the agency has had in terms of maintaining a quorum of Commissioners to make critical litigation decisions (see our discussion of this here in previous blog postings), the resolution states that in the event that the Commission loses its quorum, the General Counsel may file only those cases that do not directly implicate the seven categories that are the exclusive authority of the Commission. But even then, that authority ceases when the Commission regains its quorum.

Implications For Employers

For those of us who pay close attention to the goings-on at the EEOC, this is a stunning and dramatic revocation of the General Counsel’s litigation authority. For many years now, we have been struck by the extent to which the General Counsel and the attorneys in the field appeared to exercise broad discretion over the types of cases the EEOC would file, the theories of law that it would pursue, and the litigation tactics that it would employ. Moreover, since the General Counsel was also encouraged to delegate that authority to Regional Attorneys across the country, the result was a sometimes fragmented, district-by-district approaches to EEOC enforcement litigation.

It is no coincidence that this revocation of authority comes just as the EEOC has finally reclaimed its quorum of Commissioners under the leadership of a new chair appointed by the Trump administration. Many employers are likely to greet this development as an indication of a fundamental change in direction and welcome news given some of the litigation and legal positions the EEOC has taken in recent years. To add to that sense of relief, it should be noted that Commissioners’ terms are staggered so that they survive across political administrations. In other words, the Commissioners that the current administration puts in place could continue to influence the direction of the agency even after that administration ends. But as with so many things, what goes around comes around, and, of course, the same will be true if and when a new Administration has a chance to pick its own set of Commissioners.

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

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

Seyfarth Synopsis:  In an EEOC-initiated religious discrimination suit involving an employer’s alleged imposition of “Onionhead” religious practices, a federal district court in New York recently denied the employer’s motion for a new trial after it reduced a jury award from $5.1 million to $1.8 million.

In peeling back the onion-skin in EEOC v. United Health Programs of America, Case No. 14-CV-3673 (E.D.N.Y. Mar. 6, 2020), there are some important takeaways for employers underneath a bizarre set of facts. This ruling is instructive in terms of how the EEOC can use an expansive definition of what constitutes a “religious belief” for purposes of Title VII discrimination, and how expanded EEOC investigations can lead to substantial multi-claimant damage awards.

Case Background

As we previously blogged about here, in EEOC v. United Health Programs of America, the EEOC brought an action alleging that defendants discriminated against a group of former employees on the basis of religion based on concepts known as “Onionhead” and “Harnessing Happiness.”  Around 2007, to address corporate culture issues, defendants hired their CEO’s aunt, who had developed a program called Onionhead.  They described Onionhead as a multi-purpose conflict resolution tool, while employees characterized it as a system of religious beliefs and practices.  Although Onionhead was initially geared towards children, the program was expanded  to apply to adults, and it further became known as “Harnessing Happiness.”

The employees claimed that Onionhead and Harnessing Happiness required them to do things like use candles instead of lights to prevent demons from entering the workplace; conduct chants and prayers in the workplace; and respond to emails relating to God, spirituality, demons, Satan, and divine destinies.  The claimants asserted they were terminated either because they rejected Onionhead’s beliefs or because of their own non-Onionhead religious beliefs, while other employees who followed Onionhead were given less harsh discipline.

After three former employees filed charges of discrimination in 2011 and 2012, the EEOC issued a letter of determination on March 13, 2014.  After unsuccessful conciliation efforts, the EEOC filed suit on October 9, 2014 on behalf the three employees who filed charges of discrimination and an additional seven employees that it discovered during its investigation.  The EEOC subsequently moved for summary judgment as to the specific issue of whether Onionhead was a religion for purposes of Title VII.  The defendants cross-moved for summary judgment as to several other claims involving religious discrimination.  The Court granted the EEOC’s motion for partial summary judgment as to the discrete issue of whether the Onionhead beliefs constituted a religion.  Thereafter, in a mixed verdict, a jury initially awarded $5.1 million in compensatory and punitive damages to the workers at the center of the suit, but that amount was later reduced to $1.8 million.  Defendants thereafter moved for judgment as a matter of law and for a new trial or, in the alternative, for remittitur.

The Court’s Decision

The Court denied defendants’ motions.  First, the Court held there was abundant evidence in the trial record supporting the jury’s finding that defendants created an objectively hostile or abusive work environment on the basis of religion.  Id. at 14.  The Court further opined that the record was “replete with examples of the severity and pervasiveness of Onionhead’s religious practices and imagery, in the workplace, the unreasonable interference with the employees’ work and the alteration of work conditions for the worse.”  Id. at 15.

As to damages, defendants argued that in “garden variety” cases, emotional distress damages in excess of $35,000 are inappropriate based on New York federal case law.  Id. at *39.  The Court rejected this argument. It reasoned that it would not cap garden variety emotional distress damages based on outlier cases.  In support of upholding the emotional damages award, the Court identified voluminous examples of evidence that supported the hostile work environment claims, including hand-holding prayers, forced hugging, visual Onionhead paraphernalia and literature, incense, and an out of state retreat for a “spa weekend.”  Id at 49.  Accordingly, the Court declined to overturn the employees’ compensatory damages awards.

Finally, after the jury originally awarded two claimants a combined $560,000, the Court reduced these amounts to $10,000 each in accordance with Title VII’s statutory maximum.  Id. at *66.  In response to defendants’ argument that “[p]unitive damages are reserved for egregious cases,” the Court explained that the Second Circuit has held that Title VII’s statutory damages cap is not reserved for the most egregious cases of employment discrimination, and that “Defendants’ own policies and inaction demonstrate their knowledge of the unlawfully discriminatory hostile work environment that they created and implemented in the face of a perceived legal risk.”  Id. at 71.  Accordingly, considering the evidence in the light most favorable to the EEOC, the Court concluded that a reasonable jury would not have been compelled to find in defendants’ favor regarding punitive damages.  As such, the Court denied defendants’ motions for judgment as a matter of law and for a new trial, or, in the alternative, for remittitur.

Implications For Employers

Beyond the unparalleled facts of this case, there are some key takeaways for employers in this ruling.  First, employers who implement wellness programs or other measures to improve corporate culture should carefully monitor these programs to ensure they do not impose any spiritual or religious beliefs on employees.  The Court’s opinion has some useful things to say about when such practices reach a level of “severity and pervasiveness” such that they create an objectively hostile or abusive work environment. Second, this ruling demonstrates that courts will consider belief systems such as Onionhead to be a religion for purposes of Title VII, and therefore employers should keep that in mind when employees request accommodations.  Finally, this matter started as an EEOC investigation with three claimants, but grew into a lawsuit with ten claimants after seven additional claimants were discovered during the EEOC’s investigation.  As such, employers are well-served to pay attention to the scope of EEOC investigations and mount early and aggressive defense strategies should the Commission overreach

By Gerald L. Maatman, Jr. and Jennifer Riley

Seyfarth Synopsis: In the wake of the U.S. Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773, 1780 (2017), numerous district courts across the country have ruled that they cannot exercise specific personal jurisdiction over defendant corporations to resolve the claims of out-of-state class members, leaving Plaintiffs with the option of limiting their classes to state residents or filing suit in courts that can exercise general personal jurisdiction – typically only courts in the state of incorporation or corporate headquarters.  Whereas some California district courts have attempted to tread a path around this precedent, on March 2, 2020, Judge Bencivengo of the U.S. District Court for the Southern District of California offered a well-reasoned reality check in Carpenter v. PetSmart, Inc., No. 3:19-CV-01731 (S.D. Cal.), holding that the procedural requirements for a class action do not supply any reasoned basis for distinguishing Bristol-Myers and striking claims related to a nationwide class action. In this respect, it is a good read for employers facing nationwide class actions where jurisdictional defenses may be part of their defense strategies.

Background:

Plaintiff brought suit against PetSmart claiming that he purchased four defective pet habitats (artificial cages for pet hamsters, gerbils, and mice) that allowed rodents to chew through connectors and escape.  Id. at 1-2.  He asserted claims on behalf of a nationwide class of pet habitat purchasers defined as “all citizens of the United States who, within the relevant statute of limitations periods, purchased Defendant’s Tiny Tales Homes.”  He also defined a California sub-class consisting of “all citizens of California who, within four years prior to filing of this Complaint, purchased Defendant’s Tiny Tales Homes.”  Id. at 2.

Plaintiff asserted three claims under California consumer protection laws on behalf of the California sub-class, three common law claims for fraud by omission, breach of implied warranty, and unjust enrichment on behalf of both the nationwide class and California sub-class, and a claim under the Magnuson-Moss Warranty Act, on behalf of the nationwide class and California sub-class.  Plaintiff sought damages as well as injunctive relief, punitive damages, and attorneys’ fees.

Based on Bristol-Myers Squibb, PetSmart moved to strike the nationwide class claims arguing, among other things, that the Court lacked personal jurisdiction over PetSmart to adjudicate the claims of non-California class members. The Court agreed.

The Court’s Analysis:

Although framed as a motion to strike under Rule 12(f), the Court noted that the motion was akin to a motion to dismiss claims asserted on behalf of the non-California class members for lack of personal jurisdiction under Rule 12(b)(2) and it analyzed the motion as such.  Id. at 3-4.  The Court explained that, under the Due Process Clause of the Fourteenth Amendment, to exercise personal jurisdiction over an out-of-state defendant, the defendant must have “certain minimum contacts with [the State],” such as to form a basis for general (or “all purpose”) jurisdiction or specific (or “case linked”) jurisdiction.  Id. at 4-5.

As to general jurisdiction, a corporation typically is subject to general jurisdiction in the locations of its incorporation and principle place of business.  In this case, those locations included Delaware and Arizona; therefore, the Court held that it could not exercise general jurisdiction over PetSmart and “the only issue is whether the Court can exercise specific personal jurisdiction over PetSmart for the claims of unnamed putative class members arising out of sales of Tiny Tales Homes that occurred outside of California.”  Id. at 5.

As to specific jurisdiction, the Court noted that, in Bristol-Myers Squibb, 137 S. Ct. 1773, 1780, the U.S. Supreme Court rejected the “sliding scale” approach and held that a California court could not exercise specific jurisdiction over Bristol-Myers relative to the claims of non-California plaintiffs who were not injured in California; the mere fact that they allegedly suffered the same injuries as individuals who were prescribed, obtained, and ingested Plavix in California “does not allow the State to assert specific jurisdiction over the nonresidents’ claims.”  Id. at 6.  The U.S. Supreme Court, however, did not decide whether its holding applied to class claims, and no federal Circuit has yet decided that issue.

The Court recognized that case law authorities have taken different approaches.  First, some courts in the Ninth Circuit have distinguished Bristol-Myers because it involved a “mass action” rather than a “class action,” but many of those opinions lack “any analysis of why a class action is so materially different that it warrants a different result than a mass action.”  Id. at 6-7.  Second, courts in other jurisdictions, including the Northern District of Illinois and the Northern District of New York, have held that the same due process concerns that animated Bristol-Myers necessarily apply to nationwide class actions in federal courts.  Id. at 6-8.

The Court agreed with the latter cases and concluded that Bristol-Myers Squib applies in the nationwide class action context. It opined that “. . . the Supreme Court did not consider whether its holding . . . would apply to class actions is hardly supportive of a holding that it does not apply to class actions.  On the other hand, the rationale for the holding in Bristol-Myers Squibb indicates that if and when the Supreme Court is presented with the question, it will also hold that a state cannot assert specific personal jurisdiction over a defendant for the claims of unnamed class members that would not be subject to specific personal jurisdiction if asserted as individual claims.”  Id. at 8.

The Court reasoned the specific personal jurisdiction inquiry is “defendant-focused, with an emphasis ‘on the relationship among the defendant, the forum, and the litigation” and “must arise out of contacts that the defendant himself creates with the forum State.”  Id. at 9 (quoting Walden v. Fiore, 571 U.S. 277, 284 (2014)). The “claims in question” here are those related to purchases that occurred outside of California.  “That PetSmart sold some Tiny Tales Homes in California does not create a sufficient relationship between PetSmart and California such that it should be subject to specific personal jurisdiction in California for the claims of a nationwide class with no connection to California.”  Id.

The Court rejected plaintiff’s argument that the “procedural requirements for a class action” warrant a different analysis, reasoning that Rule 23 does not provide a basis for distinguishing the rationale set forth in Bristol-Myers.  Id. at 10.  “The procedural safeguards of Rule 23 are meant primarily to protect the absent class members and create criteria for binding the absent class members to whatever settlement or judgment results from a class action.”  Thus, whether the individuals who made out-of-state purchases are named plaintiffs as part of a mass action, named as representatives for out-of-state class members, or unnamed members of a putative nationwide class “is a distinction without a difference.”  Id. at 11.

Finally, the Court rejected plaintiff’s argument that its ruling might alter the “landscape of class action jurisprudence,” noting that it would be more accurate to say that other courts’ holdings that a court has personal jurisdiction over claims where there would not be personal jurisdiction if the claims were brought individually, for no other reason that that those same claims were brought as part of a class action “would fundamentally alter the existing landscape of personal jurisdiction jurisprudence.”  Id. at 12.

Implications

The Supreme Court’s Bristol-Myers Squib ruling continues to have far reaching implications on class action litigation as courts around the country continue to stake out ground and mold the landscape of personal jurisdiction in the class action context.  Judge Bencivengo’s well-reasoned and thorough opinion is the latest addition to a series of rulings restricting plaintiffs’ ability to file nationwide class actions in the forum of their choosing irrespective of their targets’ contacts.  This issue will continue to percolate through courts around the country as three Circuits are poised to render rulings on this issue in 2020.  Stay tuned.

Seyfarth Synopsis: EEOC-Initiated Litigation: FY 2019, examines the EEOC’s filings in 2019, and analyzes the significant legal decisions and trends impacting EEOC litigation in 2020. It is a definitive source of information that focuses exclusively on EEOC-related litigation. Our webinar will provide a comprehensive review of these workplace litigation trends and provide attendees with updates on 2019 rulings and trends developing thus far in 2020. Click here to register!

The book’s Co-Authors Gerald L. Maatman, Jr., Christopher J. DeGroff, and Matthew Gagnon will lead this interactive discussion.

This past year again demonstrated that the EEOC is not isolated from the turmoil in Washington, nor the broader shifting political climate nationally. Between a political stalemate surrounding the re-confirmation of a former Commissioner, the government shutdown, and a general political swirl of issues, the EEOC ran on less than a full complement of executive leadership for roughly one-third of the fiscal year. Meanwhile, the continuing acceleration of the #MeToo movement, and ongoing national discussions regarding race and national origin continue to impact the workplace. Despite these external challenges and the constraints the Commission experienced in 2019, it remained committed to pursuing the objectives of its 2017-2021 Strategic Enforcement Plan.

Substantive trends to be discussed are:

  • Eliminating barriers in recruitment and hiring: A new focus on age discrimination: Artificial Intelligence and other forms of digital bias
  • Protecting vulnerable workers: A potential new enforcement trend: Heightened awareness of national origin discrimination
  • Addressing emerging issues: Supreme Court set to decide whether LGBT discrimination is prohibited by Title VII
  • Ensuring equal pay protections: Changes to the collection of EEO-1 data
  • Preserving access to the legal system: Recent EEOC amicus briefs highlight agency priorities
  • Preventing systemic harassment: EEOC operating in the #MeToo era

Speakers

Gerald L. Maatman, Jr., Partner, Seyfarth Shaw LLP
Christopher J. DeGroff, Partner, Seyfarth Shaw LLP
Matthew Gagnon, Partner, Seyfarth Shaw LLP

Thursday, March 5th
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific