By Christopher DeGroff, Gerald L. Maatman, Jr., and Laura J. Maechtlen

The EEOC secured approval of its largest settlement in 2012 this past week in EEOC v. Yellow Transportation, Inc. and YRC, Inc., No. 09-7693 (N.D. Ill. June 28, 2012), a pattern or practice lawsuit involving allegations of systemic race discrimination. Approved by Magistrate Judge Susan E. Cox of the U.S. District Court for the Northern District of Illinois, the consent decree resolved two lawsuits (including a private plaintiff class action brought by 14 workers who also intervened in the EEOC’s lawsuit) that had been consolidated for purposes of settlement negotiations. The EEOC and a class of African-American workers employed by Yellow Transportation, Inc. and YRC, Inc. alleged that the companies discriminated against employees at their Chicago Ridge facility because of their race, and subjected them to a racially hostile work environment. The EEOC asserted that the workers were subjected to multiple incidents of hangman’s nooses and racist graffiti, comments, and cartoons. The EEOC also claimed that Yellow Transportation and YRC subjected African-American employees to harsher discipline and scrutiny than their white counterparts and gave them more difficult and time-consuming work assignments.

As is its custom, the EEOC issued a press release after the approval order touting the settlement. The settlement in EEOC v. Yellow Transportation, Inc. and YRC, Inc. comes on the heels of other multi-million dollar settlements that the Commission concluded earlier this year, including the $5.4 million settlement in EEOC v. BP Amoco, the $3.3 million settlement in EEOC v. Pepsi (which we blogged about here), and the $1 million settlement in EEOC v. Whirlpool.

Background Of The Consent Decree

Two years ago, the EEOC secured a $10 million consent decree with YRC and Roadway Express stemming from the case of EEOC v. Roadway Express, Inc., et al., Case Nos. 06-CV-4805, 08-CV-5555 & 10-CV-5305 (N.D. Ill.). That previous litigation named both companies because Yellow Transportation operated the facilities until its merger with Roadway Express in 2008 to form YRC, the nation’s largest freight hauling company. 

The previous consent decree resolved the EEOC’s claims that African-American employees at the companies’ Chicago Heights and Elk Grove Village, Illinois facilities were subjected to a racially hostile working environment and racial discrimination in violation of the Civil Rights Act of 1964. In addition to $10 million in monetary relief, the consent decree enjoined YRC from engaging in future racial discrimination at the company’s facilities and required YRC to appoint a monitor to oversee the company’s response to discrimination complaints. 

The consent decree, however, did not end the litigation in store for YRC. Although it resolved the EEOC’s discrimination charges at the Chicago Heights and Elk Grove facilities, the settlement did not address pending charges against the company’s Chicago Ridge facility. 

The $11 million consent decree approved by Magistrate Judge Cox this past week resolved the separate litigation involving the Chicago Ridge facility.

The Contents Of The Consent Decree

Magistrate Judge Cox entered a joint motion for preliminarily approval of the $11 million consent decree, which provides significant monetary relief to the class of allegedly aggrieved victims of race discrimination, and payment of $1.1 million in attorneys’ fees and costs to private class counsel.  The monetary payments to the class of alleged victims are to be distributed per the EEOC’s determinations and discretion, with the intervening plaintiffs receiving incentive awards of $15,000 to $35,000. Any surplus funds left over after the class distribution shall be given to the Urban League in the Aurora/Quad City County area of Illinois.

In terms of equitable relief, the consent decree recognized that the Chicago Ridge facility closed in 2009, and that a number of the class members are still employed by YRC and now work at its Chicago Heights facility. Specifically, Magistrate Judge Cox found that 51 class members were still on active status and 53 class members were on lay-off status at the Chicago Heights facility. The Court found that the class members were protected by the previous 2010 consent decree that emerged out of litigation with the company’s Chicago Heights and Elk Grove facilities, and therefore no additional injunctive relief was necessary. 

Implications For Employers

The EEOC’s $11 million settlement – or looking at it in context, the $21 million settlement with the defendants involving its three Illinois facilities – underscores the Commission’s goals for prosecution large-scale systemic litigation, a topic on which we have blogged previously here and here. The defendants’ pay out of $21 million in the last two years reminds employers not to tread lightly on the EEOC’s focus on large-scale, high-impact and high-profile cases (similarly discussed here).