By Gerald L. Maatman Jr. and Howard M. Wexler

In an opinion issued on September 3, 2013, in EEOC v. Abercrombie & Fitch Stores, Inc., Case No. 11-CV-03162 (N.D. Cal. Sept. 3, 2013), Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California granted the EEOC’s motion for summary judgment, finding Abercrombie & Fitch failed to reasonably accommodate a Muslim employee who sought to wear a head scarf at work despite Abercrombie’s “Look” Policy. In addition to granting the EEOC’s motion for summary judgment on liability (and conversely denying Abercrombie’s cross-motion as to liability), Judge Rogers granted the EEOC’s motion for summary judgment as to several of Abercrombie’s affirmative defenses, including that the EEOC failed to conciliate in good faith; that Abercrombie’s Look Policy is protected under the U.S. Constitution as commercial free speech; and that punitive damages and injunctive relief are not warranted. 

The Charge Of Discrimination

The EEOC filed suit against Abercrombie on behalf of a former employee who, after working for Abercrombie for fourth months without incident, was told that despite her religious beliefs she could not wear her head scarf as it violated Abercrombie’s Look Policy. Id. at 5. Among other restrictions, Abercrombie’s Look Policy prohibited employees from wearing headwear. Id. As the employee refused to remove her head scarf, Abercrombie terminated her employment. Id. Several days later the employee filed a charge of discrimination with the EEOC. Id. at 6. Several days after the charge was filed, Abercrombie offered the employee full reinstatement and the accommodation of wearing her head scarf while at work. Id. at 5. The employee refused this offer and wished to proceed with her Charge. Id. at 6.

Subsequently, the EEOC found probable cause that Abercrombie discriminated against the employee based on her religious beliefs. Id. At the same time it issued this determination, the EEOC was already in the midst of litigating two other cases against Abercrombie – one in the Central District of California and one in the Northern District of Oklahoma – that also were based on Abercrombie’s failure to allow employees to wear head scarfs for religious reasons based on its Look Policy. Id. During conciliation, the EEOC proposed a revised Look Policy which Abercrombie rejected as it would require it “to do more than is required under the law and in the EEOC’s own guidance…” Id. at 7. As negotiations broke down, the EEOC alerted the Charging Party’s attorney that it was prepared to issue a notice of “fail conciliation” and file suit against Abercrombie, which it eventually did.  Id. at 7-8.

The Court’s Opinion

Prior to assessing the merits of the EEOC’s case, Judge Rogers first determined that the EEOC met its conciliation obligations prior to filing suit. Id. at 11. Judge Rogers noted that there is a split amongst the Circuit Courts of Appeals as to proper standard for evaluating whether the EEOC conciliated in good faith, with the Sixth Circuit applying a “highly differential” standard and the Second, Fifth and Eleventh Circuits applying a stricter approach that requires the EEOC to: (1) outline to the employer the reasonable cause for its belief that the [statute] has been violated; (2) offer an opportunity for voluntary compliance; and (3) respond in a reasonable and flexible manner to the reasonable attitude of the employer. Id. at 10. Judge Rogers held that under either standard, the EEOC met its conciliation obligation as it engaged in “extensive discussions” with Abercrombie over the course of several months before filing suit. Id. Notably, Judge Rogers rejected Abercrombie’s argument that the EEOC’s “all or nothing approach” as to its revisions to the Look Policy constituted bad faith, instead finding that the EEOC’s tactics merely demonstrated “that the parties took different positions on the scope of appropriate relief” during pre-suit negotiations. Id. at 11.

Finding that the EEOC satisfied its pre-suit obligations, Judge Rogers held that the EEOC was entitled to summary judgment as to liability since Abercrombie failed to demonstrate that it could not reasonably accommodate the employee’s request to wear a head scarf without suffering undue hardship. Id. at 19. Judge Rogers held that in the Ninth Circuit, “heightened proof” of the purported “undue hardship” is required for an employer to state a cognizable defense to a claim of discrimination. Id. at 15. Here, Judge Rogers found all of Abercrombie’s evidence to be based on the “personal experiences” of various corporate representatives who did not come forward with the “specific admissible evidence” necessary to show how exempting the employee from the Look Policy “affects store performance or brand image, or causes financial hardship.” Id. at 15-17. Given that all Abercrombie relied upon in support of its “undue hardship” defense was the “unsubstantiated testimony of its own employees” Judge Rogers found that the EEOC was entitled to summary judgment as “a reasonable jury could not conclude that Abercrombie would be unduly burdened by allowing Khan to continuing wearing her hijab [head scarf]…” Id. at 18-19.

As an affirmative defense, Abercrombie alleged that it was shielded from liability as the Look Policy constitutes commercial free speech. Id. at 19. Abercrombie argued that its in-store employees should be classified as “living advertisements” for its brand, and therefore, their appearance is protected as commercial speech under the Constitution. Id. Judge Rogers rejected this defense, finding that Abercrombie’s Look Policy does not constitute commercial speech under both the applicable case law and facts of the case given that the at-issue employee completed her tasks primarily in the stock room – outside of the public’s view. Id. at 20.-21.

Finally, Judge Rogers rejected Abercrombie’s argument that both injunctive relief and punitive damages were not warranted. Judge Rogers rejected Abercrombie’s claim that injunctive relief is not appropriate in light of its revisions to the Look Policy since “a triable issue exists as to whether the recent changes in Abercrombie’s policies have completely and irremovably eradicated the efforts of the alleged violation.” Id. at 23. Similarly, Judge Rogers rejected Abercrombie’s claim that punitive damages are not warranted, since “a jury could find that punitive and exemplary damages are appropriate” and that Abercrombie acted with malice or reckless indifference when it demanded that the employee remove her hijab despite her religious beliefs. Id. at 26.

Implications for Employers

As we have previously blogged several times – most recently here and here – the EEOC is actively pursuing the position that courts have no authority to review its investigations or conciliations. That clearly was the EEOC’s position in this case where it openly admitted that it intended to issue a notice of a “failed” conciliation and made a “take it or leave it” proposal to Abercrombie regarding its Look Policy as part of its “conciliation” effort. While Judge Rogers held that such behavior was sufficient pre-suit conciliation, it nonetheless behooves employers to pursue this defense in cases where the EEOC engages in “sue first, ask questions later” litigation tactics and “conciliates” pre-suit in a wholly perfunctory manner.

This decision also should serve as a reminder for all employers as to what is required to defeat a reasonable accommodation claim. As with reasonable accommodation cases brought under the Americans with Disabilities Act, employers faced with a claim of religious discrimination under Title VII who refuse an accommodation request must be prepared to come forward with specific evidence demonstrating the “undue burden” that granting the request would cause. Conjecture and speculative “evidence” of the purported undue burden – which Judge Rogers held Abercrombie relied upon on this case – is not enough to establish a cognizable defense.

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