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

Seyfarth Synopsis: We are once again pleased to offer our loyal blog readers a breakdown of the five most intriguing developments in EEOC litigation in 2017, in addition to a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. This year’s book, titled EEOC-Initiated Litigation: FY 2017, provides a comprehensive examination of the EEOC’s FY 2017 filings (from October 2016 through September 2017), and the major decisions handed down this year in pending EEOC litigation.

In our view, every employer should be monitoring EEOC activity – it is the surest way to avoid becoming the EEOC’s next target. That is why we conduct a thorough analysis of all EEOC activity every year to keep our readers up to date on current trends and, hopefully, provide a peek inside the EEOC’s decision-making process. Our annual report is targeted towards HR professionals, corporate counsel, and other corporate decision-makers. We hope that it proves useful as they attempt to steer clear of EEOC-initiated litigation in FY 2018.

This year, we have once again categorized our analysis of substantive developments in line with the EEOC’s strategic priorities. This year is the first year of the EEOC’s new Strategic Enforcement Plan, which covers Fiscal Year 2017 through 2021. The new SEP advances the same six strategic priorities as the previous strategic plan. It has been our experience that analyzing developments in EEOC litigation in light of the SEP priorities provides a better understanding of the EEOC’s focus and agenda.

The full publication will be offered for download as an eBook. To order a copy, please click here.

As always, we like to take a moment at the end of one year, and the beginning of the next, to look back at the most intriguing decisions and developments of the year.

Here is our list of the “top five” most intriguing developments of 2017.

A Year Of Transition: Litigation On Track Despite Changes On The Way

FY 2017 was a year of transition for the EEOC. It is still too early to tell how the changed political landscape will impact the future of EEOC litigation given the important positions that remain vacant for high-level agency personnel. But this did not stop the EEOC from charging full speed ahead. Total merits filings were up more than 100% over FY 2016. In fact, the EEOC filed more lawsuits in September than it did in all of FY 2016 combined. Although the 2017-2021 Strategic Enforcement Plan maintains its focus on the same six strategic enforcement priorities, it added two substantive areas as emerging issues, including complex employment relationships and “backlash discrimination” against Muslims, Sikhs, and other persons of Arab, Middle Eastern, or South Asian descent. Those are important issues to watch in FY 2018 and beyond. Our analysis of these issues can be found here.

A New Standard Of Review For EEOC Subpoena Enforcement Actions

In McLane Co. v. EEOC, the U.S. Supreme Court clarified the scope of review for appellate courts reviewing a lower court’s decision to enforce (or not) an EEOC administrative subpoena. In McLane, the Supreme Court held that such decisions are reviewable under the abuse-of-discretion standard, which is more akin to a hands-off type of review. The decision clarified that the District Courts should subject EEOC subpoenas to a searching, fact-intensive review, and that their judgment in this respect should be respected by the appellate courts. Although ostensibly a win for the EEOC, the decision makes it clear that the District Court cannot simply presume the relevance of information or documents the EEOC seeks with its administrative subpoenas. Instead, a District Court must give serious consideration to issues of relevancy and burden when deciding whether or not to enforce an EEOC subpoena. Our analysis of this trend can be found here.

Developments In Religious Discrimination Law: Accommodations May Be Required For Wide Swath Of Beliefs

In EEOC v. Consol Energy, Inc., the Fourth Circuit expanded the scope of religious accommodation requests employers must consider. In Consol, the EEOC alleged that the defendants refused to provide an employee with a religious accommodation by subjecting him to a biometric hand scanner to clock in and out of work. The employee believed a hand scanner was used to identify and collect personal information that would be used by the Christian Anti-Christ to identify followers with the “mark of the beast,” as described in the New Testament Book of Revelation. The Fourth Circuit affirmed the judgment of the District Court against the employer, finding that a religious accommodation was necessary. Our discussion of this development can be found here.

Sexual Harassment In The Workplace: Focus on “Manager”

Given all the recent news about sexual harassment in the workplace, and the fast developing #MeToo movement, we suspect that the EEOC is already preparing for an uptick in sexual harassment complaints in FY 2018. But recent decisions show that not all complaints alleging sexual harassment are a slam dunk for employees. In EEOC v. Autozone, Inc., the Sixth Circuit affirmed a U.S. District Court’s grant of an employer’s motion for summary judgment after finding that the harassing managerial employee was not a “supervisor” under Title VII. The employer was thus not liable for the employee’s actions. The Sixth Circuit held that just because someone is titled a “manager” does not necessarily mean that they are “supervisors” under Title VII. They must have the authority to take an employment action against the complaining employee. A further discussion on this development can be found here. We expect decisions in FY 2018 will dramatically reshape the landscape of harassment law, with the EEOC leading the way.

EEOC’s Penchant For Expanding Pattern Or Practice Cases

In FY 2017, the EEOC continued to try to expand its powers to prosecute large-scale pattern or practice cases. In EEOC v. Bass Pro Outdoor World, LLC, a District Court in Texas was willing to reign it in. In that case, the EEOC attempted to add claims on behalf of individuals who had not yet applied to work for Bass Pro at the time the EEOC tried to conciliate its claims against Bass Pro. Title VII requires the EEOC to attempt to resolve charges of discrimination against an employer through means of conciliation before it seeks redress in the courts. In this case, the District Court was unwilling to allow the EEOC to add claimants on behalf of whom it could not have conciliated prior to bringing its lawsuit. A closer look at this development can be found here.

Although we are almost a full year into the Trump Administration and Republican control of Congress, it is still unclear what those political developments will mean for the future of EEOC litigation. The enforcement priorities are the same as the past four years. But how the EEOC chooses to interpret those priorities will undoubtedly change as high-level positions are filled by the Trump Administration. This makes FY 2018 a year of uncertainty as we await those changes in EEOC leadership. We look forward to keeping our readers apprised of these changes as they occur!

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 ADEA action brought by the EEOC alleging that the New Mexico Department of Corrections failed to promote correctional officers over the age of 40, a federal district court in New Mexico denied the employer’s motion to dismiss but ordered the EEOC to file a supplemental pleading identifying previously unnamed aggrieved parties.

For employers facing EEOC age discrimination claims, this ruling provides insight into how to attack allegations relative to unidentified aggrieved individuals and to flush out the true size and scope of an EEOC systemic lawsuit.

***

In EEOC v. State of New Mexico, Dep’t of Corrections, No. 15-CV-879, 2017 U.S. Dist. LEXIS 198770 (D.N.Mex. Dec. 4, 2017), the EEOC alleged that from January 2009 to at least December 2014, the New Mexico Department of Corrections (“NMDC”) denied employment opportunities to three specific workers and a group of unidentified aggrieved individuals aged 40 and over on the basis of their age.  The NMDC moved to dismiss with respect to the unidentified aggrieved individuals, arguing those claims were insufficiently plead, and further, that the EEOC failed to provide sufficient notice about any additional aggrieved individuals during the pre-filing conciliation period. 

The EEOC moved to convert the motion to dismiss to a motion for summary judgment after the NMDC attached to its motion exhibits relating to the EEOC’s investigation and conciliation.  Judge Kenneth J. Gonzales of the U.S. District Court for the District of New Mexico denied both motions, but  ordered the EEOC to file a supplemental pleading listing the names of each aggrieved party.

Employers can use this decision in ADEA litigation to argue that the EEOC should identify any unnamed aggrieved individuals at the outset of litigation. In this respect, it is a key ruling for employers.

Case Background

The EEOC alleged that the NMDC failed to promote three correctional officers to various positions at the Central New Mexico Correctional Facility because they were over the age of 40.  The former warden allegedly told the officers that “while [two Claimants] were qualified for the [position], he selected a 31-year-old candidate because he was looking for someone with ‘longevity.’”  Id. at *2.  The EEOC also alleged that the warden: (1) made many of the decisions to deny employment opportunities to older workers; (2) used ageist comments about longevity, preferring younger workers, and not promoting employees near retirement; and (3) instilled a culture of age discrimination that continued to be applied by the NMDC.  As such, the EEOC sought an injunction requiring policy changes and money damages for any individual adversely impacted by the discrimination.

Arguing that the EEOC failed to provide sufficient notice about any additional aggrieved individuals during the pre-filing conciliation period, the NMDC moved to dismiss the amended complaint.  In support of its motion, NMDC sought to offer several exhibits, including: (1) requests for information propounded on the NMDC by the EEOC; (2) the EEOC’s letter to the NMDC’s employees soliciting information or claims; and (3) letters and e-mails between the parties relating to EEOC’s efforts at conference, conciliation, and investigation.  Id. at *5.  The EEOC argued that if the Court was willing to entertain evidence regarding pre-filing communications, then the motion to dismiss should be converted to a motion for summary judgment.  Id. at *3.

The Court’s Decision

The Court denied the NMDC’s motion to dismiss, denied the EEOC’s motion to convert the convert the motion to dismiss to a motion for summary judgment, and ordered the EEOC to file a supplemental pleading listing the names of each aggrieved party involved in this lawsuit.  First, the Court addressed the NMDC’s argument that the exhibits were “implicitly referenced” in the EEOC’s allegations regarding its pre-filing investigation.  Id. at *5.  The Court rejected this argument, opining that “implicit, subtle, or passing references to extraneous evidence” did not justify their inclusion.  Id.  As such, the Court excluded the NMDC’s exhibits, and therefore denied the EEOC’s motion to convert.

Second, the Court addressed the NMDC’s argument that the Court should consider the lack of actual pre-litigation notice as part of the notice pleading inquiry, including its knowledge about the potential number of claimants, facilities, and wrongdoers.  Id. at *6.  According to the NMDC, any potential recovery should be limited to the claimants the EEOC actually knew about when conciliation concluded in September of 2013.  The Court held that it would allow the parties to amend their pending summary judgment motions to supplement any evidence and arguments regarding actual pre-litigation notice and timeliness, but that “a motion to dismiss typically is not the correct vehicle for determining whether a claim is barred based on when it arises.”  Id. at *7.

Third, the Court addressed the NMDC’s argument that the EEOC failed to meet the pleading standards defined in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).  The Court opined that there is no binding case law addressing how much information the EEOC’s complaint must provide about unidentified parties.  Id. at *9.  Further, it instructed that courts are more permissive about the class-type allegations where the complaint is very specific about the charging parties.  Id. at *10 (citations omitted).  Applying these principles, the Court held that the complaint stated a plausible claim for relief on behalf of the unidentified aggrieved individuals since it described the types of discrimination at issue (age); the group of workers (NMDC workers over the age of 40); and the duration of the discriminatory conduct (since 2009 and ongoing).  Id.  Accordingly, the Court denied the NMDC’s motion to dismiss.

Finally, at oral argument, the EEOC offered to file an amended complaint to satisfy the party plaintiff rule, if the Court found it applied.  Id. at *12.  Instructing that the ADEA incorporated the requirements of 29 U.S.C. § 216(c), the Court ordered the EEOC to identify each aggrieved individual in the record by filing a supplemental pleading.  Id. at *11-12.  The Court also permitted the NMDC the option to file a response, but advised that the Court would prefer to address additional substantive arguments through the summary judgment proceedings.  Accordingly, the Court denied the NMDC’s motion to dismiss, denied the EEOC’s motion to convert the convert the motion to dismiss to a motion for summary judgment, and ordered the EEOC to file a supplemental pleading listing the names of each allegedly aggrieved worker on whose behalf the EEOC sought recovery.

Implications For Employers

In its Strategic Enforcement Plan for Fiscal Years 2017-2021, the EEOC identified eliminating barriers in recruitment and hiring as one of its six priorities (as we blogged about here).  One of the prime areas where the EEOC has been targeting employers involves age discrimination.  This litigation should put employers on notice that promotional and hiring decisions will be closely scrutinized by the EEOC.

Further, although the Court did not reach the issue of whether the EEOC fulfilled its conciliation obligations with respect to the unnamed group of allegedly aggrieved individuals, this employer’s attack of the EEOC’s failure to fulfill its pre-suit obligations under Title VII resulted in the Court ordering the Commission to file a supplemental pleading identifying such individuals.  Although the employer’s motion to dismiss was denied, employers can cite to this ruling in ADEA litigation when arguing that the EEOC should “put its cards on the table” and disclose who exactly is part of the lawsuit.

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 ADA action alleging that a maker of train components discriminated against a group of applicants by regarding them as disabled, a federal district court in Illinois granted the EEOC’s partial motion for summary judgment, holding that the company’s decision to deny them work was based on improper tests concerning prospective injuries.

Employers should keep this ruling on their radar when considering medical testing in the job application process.

***

In EEOC v. Amsted Rail Co., No. 3:14-CV-1292, 2017 U.S. Dist. LEXIS 189713 (S.D. Ill. Nov. 16, 2017), Amsted made conditional job offers to thirty-nine applicants (the “Claimants”) for chipper positions, but placed them on medical hold because of abnormal results from a nerve conduction test (“NCT”).  Id. at *2-6.  The EEOC argued that Amsted violated the ADA by not hiring the Claimants on the basis of disability in regards to job application procedures and hiring.  Id. at *7-8.  Amsted justified its refusal to hire the Claimants by asserting there was a higher risk of developing carpal tunnel syndrome (“CTS”) for those with abnormal NCT results.  After both parties cross-moved for summary judgment, Judge J. Phil Gilbert of the U.S. District Court for the Southern District of Illinois granted in part the EEOC’s motion for partial summary judgment, holding that the NCT did not indicate the Claimants’ contemporaneous inability to perform the chipper job, but only a prospective, future threat to their health if they were to perform the job. 

This ruling illustrates that employers must be careful not to make hiring decisions based on the potential of future medical injuries.

Case Background

Amsted employs “chippers” to finish the surfaces of the steel side frames for railcar components.  Id. at *3.  Chippers use pneumatically powered tools, such as 12-pound sledgehammers, to perform their jobs.  The work requires intensive use of the hands and arms, and includes exposure to vibrations.  In 2010 and 2011, during a hiring surge, Amsted offered employment to applicants who had the necessary skills and experience, but the offers were contingent on their passing a medical examination and other tests.  Id.  The medical examination aimed, in part, to determine applicants who were at higher risk of developing CTS, one of the risks of jobs that require intensive use of the hands and exposure to vibrations.  Amsted contracted with an outside medical company to conduct on-site medical exams, which included a medical history questionnaire, measuring vital signs, vision and hearing assessments, a physical examination, and an NCT.

Applicants whose NCT was “abnormal” were put on “medical hold pending further data” regardless of any other information obtained in the examination.  Id. at *4.  This was done because the medical testing company believed abnormal NCT tests indicated that an applicant was “right on the verge of” developing CTS and losing the use of his hand.  Id.  Amsted was aware that applicants were being placed on hold because of an abnormal NCT result and authorized this use of the NCT results.  Applicants who did not return with normal NCT results were not hired.  Amsted did not hire any applicants who did not test normal on an NCT.

The EEOC alleged that Amsted violated the ADA when it denied the Claimants employment on the basis of their disability rather than an individualized assessment.  Id. at *7.  The EEOC argued that an abnormal NCT result was an inappropriate basis for making employment decisions.  It further alleged that Amsted was not concerned with worker safety, but rather with reducing workers’ compensation costs.  Amsted challenged the EEOC’s ability to prove all elements of its ADA case, including that the Claimants were qualified because they did not pose a direct threat.  Id. at *9.  As such, both parties cross-moved for summary judgment. 

The Court’s Decision

The Court granted in part the EEOC’s motion for partial summary judgment.  With the exception of one Claimant, Amsted did not challenge whether the EEOC had sufficient evidence to prove the Claimants were disabled.  Id. at *10.  The Court rejected Amsted’s challenge relative to the lone Claimant, noting that because Amsted conceded it refused to hire the Claimant because it feared he posed a safety risk in light of his prior CTS diagnosis and corrective surgery, no reasonable jury could fail to find that it regarded him as disabled  Id. at *11.  Regarding the element that the Claimants be qualified, the Court opined that the relevant case law established that the qualification question focuses on the individual’s condition at the time of the defendant’s employment decision, regardless of what may happen to the individual in the future.  Id. at *15.

In addition, the Court addressed the adverse employment action element.  Id. at *18.  Amsted argued that the Claimants were not subject to an adverse employment action because they were not rejected for employment but were simply put on medical hold pending receipt of further medical information.  The EEOC argued that Amsted’s placement of Claimants on medical hold was an adverse employment action because it effectively foreclosed future employment as a chipper.  Agreeing with the EEOC, the Court held that “[t]he evidence show[ed] that the Claimants’ placement on medical hold due to an abnormal NCT result was an adverse employment action because it effectively precluded them from being hired.”  Id. at *19. 

Finally, the Court explained that the EEOC must show but-for causation in order to prevail.  Id. at *20.  Amsted argued that the EEOC could not establish a discriminatory intent because the company relied in good faith on medical judgments that the Claimants were unable to safely perform the essential functions of the chipper job or had certain medical restrictions.  The Court rejected this argument, holding that Amsted took the Claimants out of the applicant pool because of its perception that they were disabled.  Accordingly, the Court granted in part the EEOC’s motion for partial summary judgment.

Implications For Employers

In its Strategic Enforcement Plan for Fiscal Years 2017-2021, the EEOC identified eliminating barriers in recruitment and hiring as one of its six enforcement priorities (as we blogged about here).  For employers in industries where an applicant’s medical background may be important, it is crucial for those employers to keep the EEOC’s strategic priorities in mind.  When employers make hiring decisions based on the potential for future injuries, such as the employer here, they significantly increase their likelihood of facing EEOC-initiated ADA litigation.  As such, employers should be exercise caution when implementing medical testing procedures for applicants, and ensure such procedures are lawfully conducted.

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

 

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

Seyfarth Synopsis:  In E.E.O.C. v. Scott Medical Health Center, P.C. No. CV 16-225, 2017 WL 5493975, at *2 (W.D. Pa. Nov. 16, 2017), a default judgement of liability was entered against the defendant company for sex-based harassment, and the Court awarded the EEOC back pay, prejudgment interest, and compensatory and punitive damages. Although the Court found that an award of compensatory damages above $50,000 would be consistent with cases with comparable emotional distress, the Court determined that it was not authorized by statute to award more than this statutory cap.

This is case is  important as a continuation of one of the first decisions to conclude that discrimination based on sexual orientation is prohibited by Title VII. We blogged about it here.

Although the EEOC’s recovery was not what it might have been due to the statutory cap, this decision is nonetheless an important reminder for employers that compensatory and punitive damages could easily add up, even in cases involving sex-based discrimination and murky areas of Title VII.

Case Background

In E.E.O.C. v. Scott Medical Health Center, P.C. No. CV 16-225, 2017 WL 5493975, at *1 (W.D. Pa. Nov. 16, 2017), a default judgment on liability was entered against the defendant Scott Medical for sex-based harassment. The Court found that Dale Massaro, an employee of Scott Medical, was subjected to sex-based harassment in the form of anti-gay slurs and comments  directed at him by his supervisor, Robert McClendon. Id. Massaro reported the harassment to Gary Hieronimus, Scott Medical’s owner and CEO. Id. Rather than take action to stop the harassment, however, Hieronimus simply said that McClendon “was just doing his job.” Id.  After complaining to Hieronimus, the harassment continued, and Massaro quit his job. Id. at *2. Massaro then became depressed and suffered emotional distress for which he was treated by his family physician. Id.

The Decision

Scott Medical accepted a default judgment against it on liability but tried the issue of damages. After a trial on damages, the Court concluded that the EEOC proved by a preponderance of evidence that Massaro was entitled to a back pay award and prejudgment interest in the amount of $5,500.43. Id at *3. “Prejudgment interest on back pay awards,” the Court explained, “is appropriate to ensure that victims of discrimination are made whole.” Id.

The Court then calculated compensatory and punitive damages. Because Scott Medical had fewer than 101 employees, the applicable statutory limit on compensatory and/or punitive damages was $50,000. Id. at *5. Thus, although the Court concluded that the EEOC had proved that Massaro was entitled to at least $125,000 in compensatory and punitive damages, the EEOC’s recovery for Massaro was capped at $50,000. Id. at *5-6.

Critical to the Court’s damages award was that Scott Medical neither plead a “good faith efforts” affirmative defense to punitive damages nor presented any evidence to support such a defense. Id. at *5. The Court held that the evidence showed that Scott Medical made no efforts to comply with Title VII. Id. The Court concluded that Scott Medical’s CEO not only failed to take corrective action in response to Massaro’s complaint of harassment, but also actually ratified the harasser’s conduct by allowing the harassment to continue. Id. A good faith defense, the Court explained, is “unavailable for discriminatory acts committed by company officials who are of sufficient authority within the organization that they are deemed alter egos or proxies of the organization . . . .” Id.

Implication For Employers

Whether Title VII protects sex-based discrimination is an unsettled question and is likely hurtling towards the U.S. Supreme Court. Nonetheless, this case demonstrates that employers could face punitive damages for such violations. In other words, a “good faith efforts” affirmative defense might be unavailable even though the law to which the employer must make a good faith effort to comply with is unsettled.

While this areas remains hazy, employers should review their anti-harassment policies, and consider adding sexual orientation and gender identity as protected classes. In addition, employers will need to respond appropriately in the event of a complaint alleging harassment based on sexual orientation.

 

 

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

Seyfarth Synopsis: On November 15, 2017, the EEOC released its annual Performance and Accountability Report for Fiscal Year 2017 – its internal “report card” for its fiscal year 2017. The report touts the EEOC’s progress in reducing charge inventory, as well as the increased number of merits lawsuits that were filed by the EEOC over last fiscal year. The report notes that those filings more than doubled over FY 2016.

On November 15, 2017, the EEOC released its annual Performance and Accountability Report (“PAR”). (The PAR is available on the EEOC’s website — here.) The PAR reports on the agency’s progress during FY 2017 – from October 1, 2016 through September 30, 2017 – in meeting the goals and enforcing the strategic priorities outlined in its Strategic Enforcement Plan. The major takeaways from this year’s PAR are the substantial reduction in the EEOC’s charge inventory, as well as the considerable increase in the number of lawsuits that the Commission filed against private employers. The PAR also reports notable increases in systemic investigations and monetary recovery from resolutions of systemic investigations.

Huge Increases In Merits And Systemic Lawsuits

The EEOC filed 184 merits lawsuits in FY 2017. This is more than double the 86 merits lawsuits that were filed in FY 2016. The PAR reports that 124 of those lawsuits were on behalf of individuals, 30 were non-systemic suits with multiple victims, and another 30 were systemic claims. The EEOC labels a case “systemic” if it “has a broad impact on an industry, company or geographic area.” The EEOC also filed 18 subpoena enforcement actions in FY 2017.

The 30 systemic lawsuits represent a sizeable jump over prior years (30 in FY 2017, compared to just 18 in FY 2016 and 16 in FY 2015). Although this may seem like an alarming increase, compared to the total number of filings, systemic lawsuits actually account for a smaller percentage of filings compared to last year (16% of all merits lawsuits in FY 2017 vs. 20% in FY 2016).

The PAR notes that the EEOC’s field offices resolved 329 systemic investigations and collected $38.4 million in remedies (compared to 273 and $20.5 million in FY 2016). This is a near record for monetary relief for systemic cases. The EEOC also issued cause determinations finding discrimination in 167 systemic investigations (compared to 113 in FY 2016). Consequently, not only did the EEOC resolve markedly more systemic investigations compared to FY 2016, but also it also made considerably more cause determinations that it converted to beefed-up recoveries for claimants compared to last year.

Whether the Commission continues on this pace in 2018 is an open question. Change is coming, as two new Commissioners appointed by President Trump are waiting in the wings for Senate confirmation. Presumably, the EEOC also will get a new general counsel by 2018, and the impact these changes may have on the pace of litigation and the types of cases brought by the EEOC are open questions.

Bulldozing The Backlog Of Pending Charges

The EEOC also pats itself on the back for reducing the large charge backload that has bogged down the agency for years. The current EEOC Acting Chair, Victoria Lipnic, stated: “[t]he pending inventory of private sector charges (the backlog) has been a longstanding issue for the EEOC and the public it serves. Early in the calendar year, we made addressing the backlog a priority.” The PAR shows that the EEOC did so.

In FY 2017, the EEOC resolved 99,109 charges, a marked increase over the past two years. In fiscal years 2016 and 2015, the EEOC resolved 97,443 and 91,503 charges respectively. As a result, the EEOC decreased its charge inventory by 16.2%, to 61,621. This is the lowest level of inventory in 10 years and represents a significant reduction compared to FY 2016, where the EEOC only reduced its outstanding charges by 3.8%. The PAR credits the EEOC’s renewed emphasis on inventory reduction strategies and priority charge handling procedures, technological enhancement, and front-line staff hired in FY 2016. The EEOC also noted that it responded to over 540,000 calls to its toll-free number and 155,000 inquiries to field offices – on par with last year’s numbers of 585,000 and 160,000 respectively.

Settlements: Keeping It Consistent

The EEOC secured approximately $484 million in total relief in FY 2017. This tracks close last year’s total relief of $482.1 million. It also includes $355.6 million obtained through mediation, conciliation, and settlement for victims of discrimination in private, state and local government, and federal workplaces. That number is marginally up from last year, which saw $347.9 million in recoveries.

Litigation recoveries, on the other hand, have been steadily declining in the past few years, hitting only $42.4 million in 2017. This is markedly lower than FY 2016 and FY 2015, which saw the EEOC obtain $52.2 million and $65.3 million in litigation recovery respectively.

Implications For Employers

In her opening remarks in this year’s PAR, Acting Chair Victoria Lipnic called FY 2017 “a year of transition” due to the change in administration. The PAR gives few other clues as to what that transition looks like from inside the agency, or how the EEOC is adapting to its new political environment. About the only thing U.S. employers can be sure of is that the EEOC is not laying down its enforcement weapons. It may be no coincidence that litigation activity is increasing at the same time that litigation recoveries are going down. The EEOC may be trying to boost its recovery numbers for FY 2018, and it may be mining its backlog of charges to help it do so. Clearly the EEOC is trying to make its mark by doubling the number of lawsuits it filed over last year. Whether those lawsuits will be successful or not remains to be seen.

Seyfarth Synopsis: Blog readers will recall our Vlog in early October recapping the EEOC’s 2017 Fiscal Year.  Today, Jerry Maatman of Seyfarth Shaw, LLP discusses recent developments from the EEOC that ought to be “required reading” for employers.  Specifically, Jerry analyzes the agency’s new technological initiatives, end-of-year litigation statistics, and the line of high-ranking officials awaiting appointment.  Lastly, he gives his predictions for the EEOC’s priorities during FY 2018.

Summary

As we detailed in our September 30 blog post, the EEOC filed 184 merit lawsuits in FY 2017, more than doubling last year’s total.  According to the Commission’s press release on November 9, 2017, an increase in filings was not the only highlight of this Fiscal Year.  The EEOC also recovered $484 million for workers in FY 2017, as well as decreased its number of pending cases to the agency’s lowest backlog in 10 years (see here).

Since the end of the Fiscal Year, the EEOC also rolled out an online portal allowing individuals to take the first steps in filing a charge of workplace discrimination.  In the words of Acting Chair Vicki Lipnic, “It’s a giant leap forward for the EEOC in providing online services.”  Other important news coming out of the Commission regards newly appointed high-level employees, as well as the upcoming Senate vote on Trump’s two appointees to lead the EEOC.

For those interested in a complete analysis of 2017 EEOC Fiscal Year, stay tuned for the publication of Seyfarth Shaw’s annual EEOC-Initiated Litigation Report coming out at the end of December.  In terms of the future, as Jerry states in the video, “put on your seat belts…I think it will be a very interesting next 12 months for the EEOC.”

Seyfarth Synopsis: With the EEOC’s Fiscal Year ending on September 30, 2017, loyal blog readers know that our firm has been busy analyzing the major trends of FY 2017 on the EEOC litigation front. In this video, Jerry Maatman of Seyfarth Shaw, LLP provides an overview of the highlights from the EEOC’s “litigation scorecard” for the 2017 Fiscal Year. Jerry touches on this year’s overall filing trends, tracks the importance of Equal Pay claims filed, and lastly, gives our readers some ideas on possible implications for the future of the EEOC. Remember, if you are interested in the filing trends of the EEOC or in complex discrimination law in general, stay tuned for our full analysis of the 2017 EEOC Fiscal Year that comes out in late December.

Summary

2017 was a very interesting Fiscal Year for the EEOC. Though many predicted that EEOC filings would decrease in 2017 with the arrival of the Trump Administration, numbers were up by more than 50 filings in comparison to 2016. In fact, the month of September saw 88 filings alone, including 21 in the final 48 hours. Equal Pay claims were no exception to this trend. As Acting EEOC Chair Vicki Lipnic predicted during her presentation at Seyfarth Shaw in February 2017, the EEOC committed to focusing on Equal Pay Act filings. 11 of this year’s 184 merit filings involved Equal Pay claims, which nearly doubled last year’s total.

In terms of the future, the changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. As is emphasized above, EEOC filing numbers climbed back to numbers from past years. Changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda – although exactly what that impact will be remains to be seen.

Loyal blog readers should stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

 

 

By Matthew J. GagnonChristopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With uncertain times and profound changes anticipated for the EEOC, employers anxiously await what enforcement litigation the EEOC has in store. Although 2016 showed a marked decline in filings, fiscal year 2017 shows a return to vigorous enforcement filings, with a substantial number of filings in the waning days of the fiscal year.

Employers are living in uncertain times. The impact of a Trump Administration and the EEOC’s new Strategic Enforcement Plan (SEP) for fiscal years 2017-2021 are still working themselves out in the FY 2017 filing trends. Nonetheless, one trend has reemerged: a vigorous number of EEOC case filings. It looks like the anemic numbers of FY 2016 were just a bump in the road, as FY 2017 has revealed an increase in total filings, even eclipsing the numbers from FY 2015 and 2014. (Compare here to here and here.) This year, the EEOC filed 202 actions, 184 merits lawsuits and 18 subpoena enforcement actions.

The September filing frenzy is still an EEOC way-of-life, as this past month yet again holds the title for most filings compared to any other month. At the time of publication, 88 lawsuits were filed in September, including 21 in the last two days alone. In fact, the EEOC filed more cases in the last three months of FY 2017 than it did during all of FY 2016. The total number of filings for the remaining months remains consistent with prior years, including a noticeable ramp up period boasting double digit numbers through the summer.

Filings out of the Chicago district office were back up in FY 2017 after an uncharacteristic decline to just 7 total filings in 2016. This year, Chicago hit 21 filings, an enormous increase from last year. This is closer to the total number of Chicago filings in FY 2015 and 2014 (26 in each year). The Los Angeles district office also increased its filings, hitting a high of 22, a substantial jump compared to previous years and the most of any district office in FY 2017. On the other end of the spectrum, the Phoenix district office has seen a notable drop, with only 7 filings compared to 17 in FY 2016.

New SEP, Same Focus

Every year we analyze what the EEOC says about its substantive focus as a way to understand what conduct it is targeting. This year, Title VII takes center stage. Although Title VII has consistently been the largest category of filings, last year showed a dip in the percentage of filings alleging Title VII violations, at only 41%. Nonetheless, this year Title VII has regained its previous proportion, accounting for 53% of all filings. This is on par with FY 2015 and 2014, showing once again that FY 2016 seems to have been an outlier.

Although the 2017-2021 SEP outlined the same general enforcement priorities as the previous version of the SEP (covering FY 2012 to 2016), the new SEP added “backlash discrimination” towards individuals of Muslin/Sikh/Arab/Middle Eastern/South Asian communities as an additional focus. One would expect this focus might increase the number of Title VII claims alleging either religious, racial, or national origin discrimination. However, those filings stayed relatively even, and were even a bit down from previous years. Religious, national origin, and race discrimination claims made up 42% of all Title VII claims, compared to 50% in 2016 and 46% in 2015.

Uncertainty For Equal Pay Claims

With a new administration came a new Acting Chair for the EEOC. President Trump appointed Victoria Lipnic as Acting Chair on January 25, 2017. Employers expected the EEOC’s new leader to steer the EEOC’s agenda in a different direction. Some believed Lipnic was foreshadowing future trends when she made it clear at her first public appearance – hosted by none other than Seyfarth Shaw – that she is “very interested in equal pay issues.” (See here.) And indeed, we have seen a slight uptick in the number of EPA claims filed in FY 2017. In FY 2017, The EEOC filed 11 EPA claims, compared to 6 in 2016, 5 in 2015, and 2 in 2014.

However, on June 28, 2017, President Trump tapped Janet Dhillon as Chair of the EEOC. Dhillon would come to the EEOC with extensive experience in a big law firm and as the lead lawyer at three large corporations, US Airways, J.C. Penney, and Burlington Stores Inc. Although it is too early to know how she could change the direction of the agency if confirmed, it is entirely possible that she could back away from previous goals to pursue equal pay claims more aggressively.

The Trump Administration has also made other moves that may indicate a change in direction with respect to equal pay initiatives. On February 1, 2016, the EEOC proposed changes to the EEO-1 report that would require all employers with more than 100 employees to submit more detailed compensation data to the EEOC, including information regarding total compensation and total hours worked by race, ethnicity, and gender. This was a change from the previous EEO-1 report, which only required employers to report on employee gender and ethnicity in relation to job titles. However, on August 29, 2017, the new EEO-1 reporting requirements were indefinitely suspended. We will have to wait and see whether the slight uptick in EPA claims in FY 2017 was a one-year anomaly.

Implications For Employers

The changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. The EEOC is no exception. Despite all of the unrest and uncertainty about where the EEOC may be headed, the FY 2017 filing trends largely show a return to previous years, albeit with a slight uptick in EPA claims. Certainly, changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda. Exactly what that impact will be remains to be seen.

Loyal readers know that this post is merely a prelude to our full analysis of trends and developments affecting EEOC litigation, which will be published at the end of the calendar year. Stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

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

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

Seyfarth Synopsis:  In the latest chapter of the ongoing legal battle between the EEOC and delivery company CRST Van Expedited regarding the agency’s sexual harassment claims, a federal district court ordered the EEOC to pay $1.9 million in attorneys’ fees to the company for pursuing claims that it knew or should have known were frivolous.

Employers should have this ruling handy when challenging whether the EEOC fulfilled its pre-suit obligations under Title VII. It is undoubtedly a signal ruling relative to the agency’s missteps in “suing now and aiming later…”

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In a long and winding legal journey that made a pit stop at the U.S. Supreme Court, the EEOC v. v. CRST Van Expedited, Inc., No. 07-CV-95, 2017 LEXIS 155134 (N.D. Iowa Sept. 22, 2017),  litigation involves the largest fee sanction award ever levied against the EEOC – nearly $4.7 million. In August 2013, after the U.S. District Court for the Northern District of Iowa imposed the nearly $4.7 million award, the EEOC appealed, and the Eighth Circuit reversed and remanded several fee issues for further proceedings.  Id. at *2.  Following CRST’s appeal, the U.S. Supreme Court reversed and remanded the Eighth Circuit’s ruling.  On remand, the Eighth Circuit vacated its prior judgment and remanded back to the District Court.  Thereafter, CRST moved for a supplemental fee award in the amount of approximately $975,000, consisting of attorneys’ fees for work performed in the case following the District Court’s August 1, 2013 Order.  Judge Linda R. Reade of the U.S. District Court for the Northern District of Iowa ordered the EEOC to pay approximately $1.9 million in attorneys’ fees, out-of-pocket expenses and taxable costs to CRST, but denied CRST’s motion for a supplemental fee award.

For employers embroiled in EEOC litigation, the $1.9 million fee award is an exceedingly important example of a court holding the Commission accountable when it fails to satisfy its pre-suit investigation duties under Title VII.

Case Background

As we discussed in our blog post here, Section 706(k) authorizes district courts to award attorneys’ fees to the “prevailing party” in a Title VII case.  In relevant part, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978) held that fee awards to a prevailing defendant are permissible only if the plaintiff’s lawsuit was “frivolous, unreasonable, or without foundation.”  After CRST successfully obtained the dismissal of the EEOC’s Title VII claims for sexual harassment, the District Court granted CRST’s motion for an award of attorneys’ fees and costs and directed the EEOC to pay CRST nearly $4.7 million, finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on both CRST and the District Court.

After the EEOC appealed, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that the District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations did not constitute a ruling on the merits, and that therefore, CRST was not a prevailing party as to these claims.  The Eighth Circuit also held that CRST could not satisfy the Christianburg standard for the same reason: “[P]roof that a plaintiff’s case is frivolous, unreasonable, or groundless is not possible without a judicial determination of the plaintiff’s case on the merits.”  Thereafter, following CRST’s petition for certiorari, the U.S. Supreme Court accepted the case for review.

The U.S. Supreme Court reversed the Eighth Circuit and remanded the case for further proceedings.  Id. at *5.  On June 28, 2016, the Eighth Circuit entered a judgment vacating its prior panel opinion and remanding to the District Court for further proceedings.  The District Court ordered briefing on the issues remanded by the U.S. Supreme Court, where CRST requested an additional a supplemental fee award in the amount of approximately $975,000, consisting of attorneys’ fees for work performed in the case following the District Court’s August 1, 2013 Order.

The Court’s Decision

On September 22, 2017, the District Court awarded nearly $1.9 million in attorneys’ fees, out-of-pocket expenses and taxable costs to CRST, but denied CRST’s motion for a supplemental fee award.  In ordering the $1.9 million award, the District Court found that CRST was the prevailing party as to the sixty-seven claims at issue, that the sixty-seven claims met the standard announced in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), and made individualized findings as to seventy-eight of the individual claimants for which the court granted CRST summary judgment.  Id. at *5-6.

CRST had moved for a supplemental fee award of $975,000 for the following work it performed: (1) briefs, oral argument, and rehearing petition in the EEOC’s appeal to the Eighth Circuit from the August 1, 2013 Order; (2) CRST’s petition for certiorari, briefs, and oral argument in the Supreme Court resulting in reversal of the Eighth Circuit’s opinion vacating the August 1, 2013 fee award; (3) CRST’s brief  resisting the Rule 60(b) Motion; and (4) CRST’s briefs on remand as required by the Eighth Circuit’s now vacated decision with respect to the fees awarded for claims dismissed on summary judgment.  Id. at *6-7.  The EEOC argued that CRST’s application for fees was untimely and that CRST could not demonstrate that any of the actions that the EEOC took with respect to the requested categories of fees were frivolous, unreasonable or groundless.  The EEOC further argued that the fees sought by CRST were unreasonable.

Regarding timeliness, the District Court accepted the EEOC’s argument and held that CRST’s motion for a supplemental fee award was filed more than 120 days after the latest final judgment for which CRST requests attorneys’ fees.  Regarding the EEOC’s argument that the fees sought by CRST were unreasonable, the District Court similarly found in favor of the EEOC, noting that neither its appeal of the District Court’s fee award to the Eighth Circuit nor CRST’s appeal to the Supreme Court were amenable to fees.  Id. at *12-13.  Accordingly, the District Court denied CRST’s motion for a supplemental fee award.

Implications For Employers

Although the formerly $4.7 million fee sanction against the EEOC was reduced to $1.9 million, this is nonetheless a major victory for employers.  This ruling will serve as a cautionary tale for the EEOC when it attempts to speed through its mandatory pre-suit duties in rushes to the courthouse to litigate claims.  For employers who are blindsided by such EEOC tactics, this ruling can be used as precedent to hold the Commission accountable when it abandons its pre-suit duties required under Title VII.

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

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

Seyfarth SynopsisAfter a federal district court dismissed the EEOC’s unlawful-interference claim against a private college that had sued a former employee for allegedly breaching a settlement agreement by filing an EEOC charge, the Tenth Circuit reversed the dismissal of the EEOC’s unlawful-interference claim, citing the employer’s introduction of a new case theory relative to the EEOC’s still-pending retaliation claim.

This ruling serves a cautionary tale for employers regarding the timing of their assertion of new case theories in EEOC litigation involving multiple claims.

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After CollegeAmerica resolved a dispute with a former employee by entering into a settlement agreement, upon belief that the employee breached the settlement agreement, CollegeAmerica sued the employee in state court.  Id. at *1-2.  Thereafter, the EEOC sued CollegeAmerica in federal court alleging that CollegeAmerica’s interpretation and enforcement of the settlement agreement was unlawfully interfering with statutory rights of the former employee and the EEOC.  Following the U.S. District Court for the District of Colorado’s dismissal of the EEOC’s claim for unlawful-interference with statutory rights, on appeal in EEOC v. CollegeAmerica Denver Inc., No. 16-1340, 2017 U.S. App. LEXIS 17094 (10th Cir. Sept. 5, 2017), the Tenth Circuit reversed the dismissal, holding that the EEOC’s unlawful-interference claim should not have been dismissed as moot in light of a new theory asserted by CollegeAmerica prior to its trial regarding the EEOC’s pending retaliation claim.

Employers should keep this ruling in mind when preparing trial theories that may have implications on claims that had previously been dismissed as moot.

Case Background

The EEOC brought a claim for unlawful-interference with statutory rights, which the District Court ultimately dismissed as moot.  Regarding the EEOC’s retaliation claim, which remained for trial, CollegeAmerica presented a new theory against the employee: that she had breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica.  In response, the EEOC argued that by presenting this new theory, CollegeAmerica was continuing to interfere with the statutory rights of the former employee and the EEOC.  As such, the EEOC appealed the dismissal of its unlawful-interference claim, arguing that the claim was no longer moot in light of CollegeAmerica’s new theory.

The Tenth Circuit’s Decision

The Tenth Circuit reversed the dismissal of the of the EEOC’s unlawful-interference claim.  First, the Court instructed that in determining whether a claim is moot, a special rule applies when the defendant voluntarily stops the challenged conduct.  Id. at *4-5.  When the conduct stops, the claim will be deemed moot only if two conditions exist: (1) it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur, and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.  In arguing that the case was moot, CollegeAmerica submitted two declarations from its general counsel assuring that CollegeAmerica would not take the “positions known to trouble the EEOC.”  Id. at *6.  In response, the EEOC argued that the declarations should not be relied upon since CollegeAmerica presented a new theory after the filing of the declarations–that the employee had breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica–an argument that continued CollegeAmerica’s unlawful interference with statutory rights.  The Tenth Circuit held that because CollegeAmerica planned to present its new theory in its state court suit, the potential for CollegeAmerica to repeat its allegedly wrongful behavior remained, and CollegeAmerica thus did not satisfy its burden of demonstrating the absence of a potential for reoccurrence.  Id.

Next, the Tenth Circuit rejected CollegeAmerica’s argument that the case was moot because the outcome “would not affect anything in the real world.”   Id. at *7.  The Tenth Circuit noted that in its state court suit, CollegeAmerica planned to argue that the employee breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica. The EEOC alleged that this argument would constitute unlawful-interference with the employee’s rights, and thus sought a permanent injunction prohibiting CollegeAmerica from unlawfully interfering with the statutory rights of the employee and the EEOC.  The Tenth Circuit accepted the EEOC’s argument, holding that if the EEOC prevailed on the merits and obtained an injunction, CollegeAmerica could not present its new theory in the state court suit against the employee, which “would constitute an effect in the real world.”  Id.

Finally, the Tenth Circuit declined to consider CollegeAmerica’s argument that the EEOC’s unlawful-interference claim brought under 29 U.S.C § 626(f)(4) failed as a matter of law since it could not be used as an affirmative cause of action, noting the District Court had not yet ruled on the issue and therefore it was to consider that issue on remand.  Id. at *7-8.  The Tenth Circuit also refused to consider CollegeAmerica’s argument that the EEOC sought overly broad, unauthorized injunctive and declaratory relief, explaining it would not consider this issue since it was raised on appeal for the first time.  Accordingly, the Tenth Circuit reversed and remanded the District Court’s dismissal of the EEOC’s unlawful-interference claim.

Implications For Employers

For employers facing litigation, this ruling provides an important lesson: when considering the defense of one claim, it is imperative to be cognizant of how that argument can impact the defense of another claim, even if the other claim has been dismissed.  Further, this decision illustrates the EEOC’s willingness to combat employers who bring causes of action against former employees who may have breached settlement agreements by asserting discrimination claims.  As such, employers should be cautious when suing former employees who later file EEOC charges, and must exercise further caution when considering how their strategies to defend one claim may affect another.

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