By Gerald L. Maatman, Jr. and Jennifer A. Riley

Seyfarth Synopsis: As employers begin laying the groundwork for reopening and returning their businesses to “normal,” a large threat of a different form looms on the horizon.  The Plaintiffs’ bar is poised for – and has been discussing preparation of – class actions over denied wage, discrimination during furloughs and lay-offs, and exposure to unsafe working conditions. As part of the return to normal process, employers should take steps to avoid and position themselves to defend a wave of workplace class action litigation. 

The Background & Context

As state and local governments responded to the COVID-19 threat, many employers moved their employees to tele-work or work-from-home arrangements, or laid off or furloughed workers, and many businesses and courts shut down or postponed critical operations.  The pace of court filings, however, did not match this trend as the Plaintiffs’ bar has filed more than 100 COVID-19-related class actions over the past 30 days.

As the pandemic took hold, the plaintiffs’ bar retooled their class action theories to match, and sued companies for laying off workers, as well as for maintaining allegedly inadequate leave or benefit policies.

We anticipate that the tide of workplace class action litigation will continue to rise in several key areas such as discrimination and workplace bias, wage & hour, as well as on the health & safety front.  Employers are apt to see these workplace class actions expand and morph as businesses restart operations in the wake of COVID-19.

Employers are thus well-served to take pro-active steps to avoid and position themselves to defend these suits.

Discrimination And Workplace Bias

Employers should be wary of a growing tide of class actions on the discrimination front.  These actions are likely to take several forms, including class actions for alleged discrimination or bias against Asian-Americans and other protected groups.

On March 27, 2020, the FBI issued a report warning of a potential surge in hate crimes against Asian-Americans across the United States due to the spread of COVID-19.  Shortly thereafter, on March 30, 2020, EEOC Chair Janet Dhillon issued a statement warning employers to keep an eye out for mistreatment or harassment against Asian-Americans in the workplace amid the Coronavirus outbreak.  On April 22, 2020, the advocacy group STOP AAPI HATE issued a report noting that it had received almost 1,500 reports of Coronavirus discrimination from Asian-Americans across the country.

These issues are not likely to disappear in the near term.  As employers prepare to reopen, they should take care to position themselves so as to squelch such threats with solid HR fundaments and effective leadership.  Workplace due process and administration of effective complaint procedures are a must.  Employers should look for avenues to roll out and refresh these policies for newly-hired or newly re-hired workers and should take prompt steps to respond to potential issues.

Disparate Impact Theories Of Discrimination & WARN Violations

In addition to harassment theories, mass lay-offs and mass re-hirings are apt to draw scrutiny from the Plaintiffs’ bar.  As businesses scrambled to confront the realities of stay-at-home orders, their actions have drawn claims that, for instance, lay-offs caused an unintended disparate impact on protected groups or failed to comply with WARN Act requirements.

On the other side, mass re-hirings are apt to draw similar scrutiny as employers make decisions regarding which workers to re-hire and which to bring back to work.  For instance, bringing a disproportionate number of younger workers back to work under a theory that older workers might be more susceptible to COVID-19 could walk an employer into an immediate discrimination claim, and efforts to target re-hiring efforts toward a protected group could bring the same result.

As employers bring workers back, they should take care to approach rehire efforts in a thoughtful, reasoned, and neutral manner.

Wage & Hour Issues

It is unlikely that wage & hour claims will lose popularity with the Plaintiffs’ bar, and we anticipate that COVID-19 will provide more fuel for familiar claims such as failure to pay minimum wage and failure to pay overtime.  The pandemic did not bring about a slowdown in wage & hour suits as class and collective action filings continued on the unpaid wage as well as the misclassification front.

Well-intended efforts to keep employees working during the pandemic are also apt to fuel misclassification and off-the-clock claims.  For instance, employers that cut wages or shuffled work to exempt employees could face claims that they failed to comply with notice requirements or impacted exempt status, and employers who moved their workforces to work-from-home arrangements are likely face claims that they failed to appropriately track or compensate all work hours.

These risks are likely to continue as employers move people back into the workplace, including as they impose new requirements relative to borrowing or returning necessary equipment, participating in health screenings, or modifying schedules.

Employers should take care to ensure compliance with wage & hour requirements, particularly when it comes to tracking compensable time, ensuring sign off and acknowledgement of remote work hours, and strictly complying with the technicalities of state and local laws.

Health & Safety Claims

When it comes to maintaining health and safety in the workplace, employers can garner lessons from a slew of lawsuits and protests against cruise ship lines that employers failed to take appropriate actions to address safety concerns and ensure the health of employees and customers. Those claims are likely to be the start of wide-spread class actions against employers in all industries.

Return to work protocols that fail to account for workplace safety or allow for reasonable accommodations are apt to face scrutiny.  Employers should plan ahead, including by considering bringing employees back in phases or allowing workers the option to return as they become comfortable.

To ensure the safety of the workplace, employers should take care to ensure compliance with directives from the CDC and OSHA, as well as state and local authorities.  Employers also should develop a plan for maintaining social distancing or similar mandates, such as by adding screens, staggering shifts, or modifying schedules, and should stand ready with a plan for managing an illness in the workplace.

The Bottom Line For Employers

Class action litigation is not stagnant and will continue to evolve to meet the realities of the workplace. The economic dislocations fueled by the COVID-19 pandemic are also likely to spark a surge of workplace class actions.

Employers should prepare to respond to this exposure as they restart operations in the wake of COVID-19 by taking pro-active steps to avoid those risks and position themselves to protect their businesses.

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

Seyfarth Synopsis:  In its latest update to guidance for employers in the COVID-19 pandemic, the EEOC has now clarified that employers can test employees for COVID-19 without running afoul of the Americans With Disabilities Act (“ADA”). This new update provides a much-awaited opinion from the Commission on the use of medical testing to screen employees entering the workplace and is a must-read for employers. For employers currently crafting their return-to-work contingency plans, the EEOC latest announcement is a “must read.”

As we have reported here and here, the EEOC has updated its enforcement guidance memoranda for employers trying to navigate discrimination laws in the COVID-19 era, particularly the ADA and the Rehabilitation Act. On April 23, 2020, the EEOC released its latest update that specifically addresses whether an employer may administer a COVID-19 test before permitting employees to enter the workplace.

COVID-19 Testing Guidance

The EEOC’s updated guidance analyzes whether employers can administer a test that detects the presence of COVID-19 before allowing employees to come to work.

The EEOC’s guidance definitively advises employers that they may take steps to screen employees for COVID-19 because an individual with coronavirus poses a direct threat to the health of others, which means that an employer can administer COVID-19 testing to employees before they enter the workplace to determine if they have the virus.

Though the EEOC gives employers the go-ahead to move forward with testing, the guidance also issues a few notes of caution. First, the Commission reminds employers that they should ensure that the tests are accurate and reliable, which can be accomplished by reviewing guidance from the U.S. Food and Drug Administration, the CDC, or other public health authorities about what tests may be considered safe and accurate. Second, the EEOC cautions that some tests may cause false-positives or false-negatives. Finally, the Commission warns that a negative test does not mean the employee will not acquire the virus later, so employers should continue to implement and follow social distancing and safety protocols.

Implications For Employers

The EEOC’s latest guidance provides employers latitude to implement COVID-19 testing before employees enter the workplace, guidance that will prove valuable as employers start exploring possible methods to bring employees back to work. Before implementing any testing, however, employers should seek to confirm that any tests used are safe and accurate and, if necessary, seek assistance from public health authorities or medical professionals to verify and interpret test results.

We encourage all employers to review in detail the entirety of the EEOC’s guidance here, and to review Seyfarth Shaw’s COVID-19 Resource Center for additional guidance and information. Seyfarth Shaw also has a response team standing by to assist however we can.

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

Seyfarth Synopsis: The U.S. District Court for the Western District of Wisconsin recently cast doubt on employers’ ability to strike the class allegations in a complaint early in litigation.  In Gilbert, et al. v. Lands’ End, Inc., No. 19-CV-1066, 2020 WL 1912003 (W.D. Wis. Apr. 20, 2020), the Court denied the defendant’s motion to strike the class allegations because the plaintiffs had not yet had the opportunity to develop the record in discovery. The decision is a good read for corporate counsel on the timing of defense motions attacking the viability of class claims.

Case Background

In Gilbert, Plaintiffs asserted that their employer, Delta Airlines, launched a new line of uniforms in 2018, manufactured by Defendant Lands’ End, Inc. (“Lands’ End”), for flight attendants and gate and ramp agents. Id. at 2. Delta advertised the new uniforms as stretch, wrinkle, and stain resistant, waterproof, anti-static and deodorizing, features made possible by applying “[v]arious chemical additives and finishes.”  Id.  Plaintiffs alleged the uniforms caused a variety of adverse health effects, including “rashes, headaches, fatigue, breathing difficulties, hair loss, low white blood cell count, nausea, heart palpitations, body aches, sore throats, and scarring.”  Plaintiffs also alleged the uniforms crocked, bled, and stained the wearers and their possessions purple.

On the basis of these allegations, Plaintiffs brought a proposed class action against Lands’ End asserting claims for negligence, design defect, manufacturing defect, failure to warn, breach of express and implied warranty, and violation of the Magnuson-Moss Warranty Act.  Plaintiffs’ putative class consisted of “[a]ll flight attendants, gate agents and ramp agents employed by Delta in the United States who were required to wear Passport Plum and red-colored uniforms manufactured by Defendant.”  Lands’ End, in turn, filed a motion to strike the class allegations, arguing the proposed class was impossible to certify under the class action requirements of Rule 23.

The Court’s Decision

In its motion, Lands’ End maintained that the putative class could not be certified because it included Delta employees who suffered no injury and did not have standing to bring claims.  In support of its argument, Lands’ End pointed to numerous instances within the complaint where Plaintiffs pled that only a small sub-set of the proposed class members actually suffered the alleged harms. For example, none of the named Plaintiffs alleged that they experienced the uniforms crocking and bleeding. Further, Plaintiffs alleged that “some female flight attendants” reported illness; “hundreds of flight attendants” complained about illness on a private Facebook page with several thousand members; “some flight attendants” were told they could request disability job accommodation; and “1,900” employees complained to Delta about the uniforms.  Id. at 3.  Lands’ End argued these statements, in effect, constituted an admission that “the vast majority of the putative class is uninjured” and the class allegations should be stricken.  Id.  

The Court rejected Lands’ End’s argument for three reasons.  First, the Court reasoned that Plaintiffs’ allegations would be further developed through discovery, so the Plaintiffs should be given time to conduct discovery to determine the actual number of injured Delta employees.  Second, the Court held that Plaintiffs were not required to plead a proposed class definition in their complaint, so even if the definition provided was overbroad, a denial of class certification- or a striking of the class claims – at an early stage was unwarranted. Third, the Court held even if only a small sub-set of putative class members were harmed, class certification may still be possible.  The Court determined that even if a class definition is overbroad, the issue may result in the Court granting class certification but later entering a judgment largely exonerating Lands’ End.  Ultimately, because Plaintiffs’ class definition included individuals who could have been harmed by the uniforms, the Court held that the proposed class was not overbroad at this point in the litigation.

Lands’ End additionally argued that the class claims should be stricken because individual issues of fact and law predominated over common ones, making class treatment impossible. The company asserted that each clothing item had different “chemical treatments, fabrics, dye, style, skin contact, intended use, and more.”  Id. at *4.  Furthermore, employees would receive different uniforms depending on the employee’s job, work climate, gender, and personal selection.  Lands’ End estimated it would have to review over 64,000 items of clothing to determine causation.  The Court rejected this argument as premature and held that the issue was more appropriately addressed in discovery.

Lands’ End also argued that each employee wore the clothing in different ways and in different contexts, requiring individual assessments of each employee.  In particular, Lands’ End pointed out one Plaintiff’s use of an undershirt.  Id.  The Court was skeptical that the alleged variations were relevant, ultimately holding that it was not going to strike the class allegations “because Lands’ End assumes that confounding behavioral and environmental variables will impossibly complicate the causation inquiry.”  Id.

Finally, Lands’ End pointed out the variations in employees’ “alleged physical ailments, coupled with their inherently individualized treatment choices, medical histories, preexisting conditions, and potential alternative causes, preclude[d] class certification.” Id. at 5. The Court acknowledged that Plaintiffs “will likely face an uphill battle at class certification” due to these issues but declined to strike their class allegations before Plaintiffs had an opportunity to engage in discovery on these issues. As a result, the Court held that “this is not a case in which the pleadings make clear that the suit cannot satisfy Rule 23 such that striking the class allegations would be justified,” and denied Lands’ End’s motion.  Id.

Implications for Employers

This case serves as a warning to employers to carefully assess the pros and cons of filing a motion to strike class allegations early in litigation.  Though the Court in this case agreed that class certification could be an “uphill battle” for Plaintiffs, it still denied Defendant’s motion, thereby giving the Plaintiffs a chance to build a record in discovery.  Before filing a motion to strike class allegations, employers should be cautious that even substantial deficiencies in class allegations may still survive the pleadings stage.

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

Seyfarth SynopsisIn a class action lawsuit alleging multiple fraud claims, a federal court in Illinois granted the plaintiff’s motion to sanction the defendants for interfering with the class notice process by encouraging class members to opt-out, and sanctioned their attorney for communicating directly with a represented party.

For employers (and their defense counsel) who are embroiled in class action lawsuits, this ruling serves as a cautionary tale of “what not to do” in terms of communicating with class members.

Case Background

In Mullen v. GLV, Inc., No. 18-C-1465, 2020 U.S. Dist. LEXIS 43705 (N.D. Ill. Mar. 13, 2020), the plaintiff alleged that a youth volleyball program and its owners and operators, Rick Butler and Cheryl Butler, concealed Rick Butler’s history of sexual abuse of underage girls from her and other parents who enrolled their children in the programs.  The Court granted the plaintiff’s motion to certify a class of similarly-situated parents, and in February 2019, the Court approved a class notice to be distributed.

On March 19, 2019, the class administrator published the class website and distributed class notices via e-mail.  Later that day, Cheryl Butler e-mailed the defendants’ employees alerting them that they were “starting to get phone calls” about the class action.  Id. at *2.  She told the employees that, “Opt out is crucial!”  Id.  Further, when the defendants’ vice president received an email from a class member asking whether it would affect the next season, he responded, “ . . . [i]f there is a groundswell of parents that opt out of the lawsuit, which I think will happen, then it most likely will get dismissed. If you have any questions please let me know.”  Id. at *3.  The next day, he sent a mass email to class members describing the suit and the implications of opting out.  Cheryl Butler and the vice president thereafter continued to communicate with class members about the lawsuit, and even referred one class member to a Facebook page, “Parents against the Sports Performance Class Action Lawsuit,” explaining the opt-out process.  Id. at *4.

During a March 29, 2019 status hearing, class counsel informed the Court that they suspected the defendants were improperly communicating with class members and encouraging them to opt out.  The defendants’ attorney denied the allegations, noting, “ . . . [t]hey received e-mails from class members regarding the opt-outs, regarding their opinions on the lawsuit, and every e-mail I’ve seen them respond with is, I’m very sorry, I can’t talk about this right now, you know, thank you, something along those lines.”  Id. at *5.  After the March 29, 2019 hearing, the defendants continued to communicate with class members about the suit, despite what the defendants’ attorney told the Court.  On April 11, 2019, the defendants’ attorney directly e-mailed a class member who had forwarded an email to the defendants.  Id. at *6.

Subsequently, the plaintiff moved for sanctions against the defendants for improperly interfering with the class notice process.  Further, the plaintiff moved for sanctions against the defendants’ counsel on the basis that she violated her ethical responsibilities by communicating directly with represented parties, and knowingly misrepresenting her clients’ conduct during the opt-out period when questioned about it by the Court.  The defendants separately moved for summary judgment.

The Court’s Decision

Although the Court held it would be largely granting the defendants’ motion for summary judgment in a separate opinion, it granted plaintiff’s motion for sanctions and held the summary judgment, “ruling does not render moot the motion for sanctions.”  Id. at *2.  The Court explained that when a party communicates with class members during the notice period in a way that is potentially misleading or may discourage class participation, it disrupts the Court’s authority over the class notice process.  Id. at *8.

The defendants argued that there was nothing improper about their communications with class members since they allegedly did not discourage class participation.  The Court rejected this argument, opining that this logic disregarded the potential for coercion arising from the context and source of a part’s communications with class members.  Id. at *9.  Accordingly, the Court held the Court that the defendants’ communications with class members during the notice period were potentially coercive and therefore undermined the notice process set forth in Rule 23.

Turning to the issue of sanctions, the Court explained that it may only do so if it found the abuse of Rule 23 to be willful.  Applying this standard here, the Court found that the defendants intentionally interfered with the class notice and opt-out process, and therefore granted the plaintiff’s motion for sanctions.  After noting that the sanctions must be proportionate to the gravity of the offense, the Court held that the plaintiffs were entitled to recover from the defendants their reasonable attorney’s fees and expenses for bringing the sanctions motion, and individually assessed each named defendant a civil sanction of $5,000 fine as a penalty for their misconduct.

Finally, the Court held that the defendants’ counsel violated Model Rule 4.2, which prohibits attorneys from directly contacting parties they know to be represented by counsel, by ceasing to immediately terminate communications with class members.  Further, the Court held that the representation made by the defendants’ attorney at the March 29 court hearing constituted a misrepresentation to the Court and prejudiced the class.  Accordingly, the Court reprimanded the defendants’ attorney for her false statement to the Court.  The Court further directed her to complete for her next continuing legal education cycle imposed by the state bar twice the required amount of professional responsibility hours.  Id. at *19-20.

Implications For Employers

For employers, the class notice process can be difficult to stomach as it involves adverse attorneys directly communicating with their employees.  Nonetheless, the sanctions issued by the Court here should remind employers to avoid communicating with class members about the lawsuit.  Finally, outside defense counsel should proactively educate their clients on the pitfalls of class member communications, and be sure to avoid such communications themselves.

By Gerald L. Maatman, Jr. and Paul M. Waldera

Seyfarth Synopsis: The State of New York has filed a lawsuit challenging the U.S. Department of Labor’s recent rule regarding paid sick time and paid family medical leave under the Families First Coronavirus Response Act. New York’s lawsuit signals that the fight over the newly enacted law will continue for some time. Employers are well served to watch the case closely as it winds through the court system.

The Lawsuit

On April 14, 2020, the State of New York filed a lawsuit against the U.S. Department of Labor (“DOL”) challenging the DOL’s recent temporary rule interpreting the paid sick time and paid family medical leave provisions of the Families First Coronavirus Response Act. New York contends that the new rule “den[ies] vital financial support and expos[es] millions of American workers and their communities to further transmission of infectious disease.” Complaint at 1.The new rule gives guidance to employers on the specific circumstances where an employee can take the newly provided leave time.  New York challenges the rule because it believes the rule excludes millions of workers from paid leave who would otherwise be eligible.

Background

On March 18, 2020, the U.S. Congress enacted the Families First Coronavirus Response Act (“FFCRA”).  The FFCRA has two main provisions. First, the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) requires employers with less than 500 employees provide up to twelve weeks of leave for employees unable to work or telework because they have to care for their child.  The first ten days of the EFMLEA are unpaid, and the remaining ten weeks are paid at two-thirds of the employee’s salary.  Second, the Emergency Paid Sick Leave Act (“EPSLA”) requires employers with less than 500 employees to provide employees two weeks of paid sick time, to be used for any of six qualifying reasons.  Both provisions allow the Secretary of Labor to exclude healthcare providers and emergency responders from the requirement.

On April 1, 2020, the DOL released a final, temporary rule interpreting both provisions of the FFCRA.  New York challenges the DOL rule on the basis that it conflicts with the plain language and purpose of the statute by: (i) codifying broad, unauthorized exclusions from employee eligibility; and (ii) creating from whole cloth new restrictions and burdens on employees that appear nowhere in the text of the FFCRA. Complaint at 15.

Analysis Of The Claims

The new rule adds in new and additional qualifications for when an employee can take leave. First, the DOL states if an employer decides they do not have work for the employee, then the employee cannot take paid time off under the FFCRA.  Both the EFMLEA and EPSLA provide leave when an employee is “unable to work or telework” (which might be the rationale of the DOL).  New York challenges this interpretation as not being in the text of the FFCRA and because it would let employers determine when an employee is eligible for leave. The DOL’s interpretation might be a bit strenuous, as the plain language of the FFCRA only requires the employee is unable to work or telework.  If the employer does not have any work for the employee because of a temporary shutdown or furlough, then an employee likely cannot take paid leave, but the DOL’s rule seems far broader than this.

Second, the new rule broadly expands the definition of a “health care provider” excluded from the FFCRA.  The rule includes almost any individual who works at a “site where medical services are provided,” a company that contracts with a medical services site, or any employee that provides medical services or produces COVID-19 medical equipment or tests. New York argues this exclusion would include “a teaching assistant or librarian at a university; employees who manage the dining hall or information technology services at a medical school; the cashier at a hospital gift shop;” or employees who have little or no connection to the actual medical services provided. Complaint at 75. New York argues the new definition provided by the DOL denies millions of employees paid leave. The DOL’s definition of “health care provider” is significantly broader than other federal definitions, making it ripe for challenge.

The DOL’s new rule allows employees to take paid leave on an intermittent basis, only if the employee and the employer agree.  New York challenges the DOL’s authority to make this rule, on the basis that this power is absent from the FFCRA and New York argues this interpretation of the FFCRA is incorrect.  The original draft of the FFCRA allowed employees to take EPSLA intermittently, but it did not allow employees to take EFMLEA intermittently.  Congress removed all references to intermittent leave from the final text of the bill as passed.  As a result, the DOL’s rule seems like a reasonable interpretation of the legislative history, but depending on the Judge assigned to the case and the arguments litigated by the parties, New York might still be successful.

Finally, New York challenges the DOL’s broad documentation requirements.  The text of the FFCRA requires workers to provide reasonable notice before taking paid leave.  The DOL’s rule expanded the employer’s right to request documentation.  The new rule from the DOL requires any employee requesting paid leave under the act provide the: (i) employee’s name; (ii) date(s) for which leave is requested; (iii) qualifying reason for the leave; and (iv) an oral or written statement that the Employee is unable to work because of the qualified reason for leave. Complaint at 88.   Additionally, the DOL rule requires workers to provide additional documentation for each specific reason for leave.  New York challenges all of these document requirements on the basis that they are unduly burdensome and deny eligible employees the ability to take paid leave. Some of the documents employers can request appear reasonable.  Requiring workers to provide the name of the doctor ordering the employee to quarantine, or the name of the government body issuing the stay-at-home order will provide the employer with some rationale for why the employee should take leave. However, some of the document requests appear less reasonable.  The rule requires employees taking time off to care for a child to provide the child’s name, the name of the school or child care provider, and “[a] representation that no other suitable person will be caring for the Son or Daughter during the period for which the Employee” takes leave. Complaint at 90.    While requiring the name of the child’s school might be reasonable, requiring the child’s name and a certification that no one else can care for the child is not related to the text of the bill. The court will likely address each of these new documentation requirements individually, potentially invalidating some.

New York’s Challenges

 

New York seeks relief under the Administrative Procedure Act on the basis that this new rule violates the text of the FFCRA and that the DOL has exceeded their rule making authority.  New York contends that the new rule will cause fewer people to be eligible to take the paid leave, which will cause more people to get sick.  As result, New York claims it will pay out more in unemployment claims, lose tax revenue, and New York hospitals will lose money covering the costs of the uninsured.  New York asks the court to declare these sections of the rule unlawful and vacate the challenged provisions of the rule.

Implications For Employers

All employers with less than 500 employees should monitor this case because it is going to have an impact on when employers have to provide leave under the FFCRA.  What might be a reasonable interpretation of the act today could be very different in a few weeks.  With the federal government beginning to enforce the FFCRA soon, employers need to make sure they comply with the most up to date interpretation of the law.  Right now, employers should comply with the DOL rule, but if the court agrees with New York, employers across the country may have to change how they apply the FFCRA

By Gerald L. Maatman, Jr. and Alex S. Oxyer

Seyfarth Synopsis: In Johnson v. Airbus Defense & Space Inc., No. 5:17-CV-2150, 2020 WL 1675776 (N.D. Ala. Apr. 6, 2020), the U.S. District Court for the Northern District of Alabama recently granted an employer’s motion for summary judgment on claims brought by plaintiffs alleging they were discriminated against when they were not offered severance packages following separation. Though the Court dismissed the plaintiffs’ claims, it left open the possibility that a denial of severance benefits could serve as the basis for discrimination suits.  Particularly in the uncertain landscape of the COVID-19 pandemic, the ruling is an important reminder for employers to keep a watchful eye on their severance practices.

Case Background

In Johnson, three former female employees filed claims of sex discrimination after they were separated from employment but not offered severance packages. Plaintiffs had been working for Airbus pursuant to a ten-year contract with the U.S. military. After the expiration of the contract, Airbus endeavored to transfer as many affected employees as possible to its other facilities and offer them positions substantially equivalent in terms of pay, status, position, and location. Employees who were not offered such positions were instead offered severance packages.

The plaintiffs were all offered transfer positions that the company believed to be equal in terms of pay, status, and location. However, there was a possibility that the new positions could require a transfer to a different location in the future. One of the plaintiffs immediately rejected the position, disagreeing that it was equivalent in terms of pay and status. The other two plaintiffs first accepted the new positions, but ultimately rejected them after they found out they would need to transfer to new locations down the road. After their employment terms expired, the plaintiffs were not offered severance packages. When the plaintiffs learned that other, male employees were offered severance pay, they filed a lawsuit alleging claims of discrimination.

The Court’s Decision

In assessing whether the plaintiffs met their burden in establishing a prima facie case of sex discrimination, the Court analyzed whether a denial of severance benefits could serve as an adverse employment action to support discrimination claims. The Court determined that “a denial of severance could be considered a material change to the terms and conditions of employment” and that plaintiffs could bring discrimination claims on such basis. Id. at *5.  Even though the denial of severance pay could serve as the foundation for discrimination claims, the Court reiterated that the plaintiffs still need to meet the additional prima facie criteria to bring a viable discrimination claim.

To support their claims, the plaintiffs pointed primarily to the male employees who had received severance packages following the expiration of their employment terms. The Court reasoned that for the male employees to be appropriate comparators to the plaintiffs, the employees needed to meet specific criteria, including: (i) they were offered an equivalent transfer position; (ii) they rejected the offer; and (iii) they were then offered a severance package. The plaintiffs did not describe any male comparators who met the Court’s criteria, so they were not able to use the alleged comparators to support their claims.

The plaintiffs were also unable to produce any other compelling evidence to suggest that Airbus’s legitimate, non-discriminatory reasons for distributing the severance packages were pretextual. Airbus established that the male employees who received severance packages did so because they were not offered transfer positions or because the transfer positions were “materially lesser [in] status and pay.” Id. at *6.  Though the plaintiffs believed that Airbus’s reasons were pretextual because they disagreed they were ineligible for severance, the Court emphasized that “[t]he employer determined the triggers for severance, and the employees’ beliefs about what situation triggered severance do not matter concerning pretext.” Id. at *7. As a result, the Court granted Airbus’s motion for summary judgment and dismissed the plaintiffs’ claims.

Implications for Employers

While the Court dismissed the plaintiffs’ claims in this case, it left open the possibility that the denial of severance benefits could support claims of discrimination. Accordingly, employers should ensure that their decisions regarding severance pay do not result in a disparate impact on (or constitute disparate treatment of) a particular group of employees and that reasons for offering severance pay to some employees and not others are well-documented, particularly in group termination situations. As employers are navigating the difficult waters of the COVID-19 pandemic, it is important that they remain vigilant in all aspects of separation decisions, including the payment of severance benefits.

For more guidance related to COVID-19 issues, visit our COVID-19 Resource Center here.

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

Seyfarth Synopsis:  The EEOC recently released updated guidance for employers trying to navigate the federal anti-discrimination laws in the COVID-19 era – entitled What You Should Know About the ADA, the Rehabilitation Act, and COVID-19. The most recent update adds significantly to the EEOC’s position on how employers should treat requests for “reasonable accommodations” in these difficult times, as well as pandemic-related harassment issues, and issues that could arise as employees start returning to work. As such, the EEOC guidance should be required reading for all employers.

As we first reported here, the EEOC released guidance for employers trying to navigate the Americans With Disabilities Act and the Rehabilitation Act in the COVID-19 era: What You Should Know About the ADA, the Rehabilitation Act, and COVID-19. The guidance gives employers practical Q&A-style guidance on how they can navigate the safety concerns associated with COVID-19 while staying in compliance with the federal disability discrimination laws. The guidance has been updated by the EEOC several times since it was issued in March. On April 9 and 17, 2020, in particular, the EEOC added significantly to its discussion of requests for reasonable accommodation during the COVID-19 emergency, pandemic-related harassment issues, and issues that could arise as employees are furloughed or laid off and as they return to work.

Reasonable Accommodation Guidance

The EEOC’s updated guidance adds several Q&A points regarding requests for reasonable accommodations. Some of the most significant points include the following:

  • For individuals who have a pre-existing condition that puts them at higher risk from COVID-19, the EEOC recommends several low-cost changes to the work environment, such as designating one-way aisles, using plexiglass, tables, or other barriers to ensure minimum distances between customers and coworkers, or other accommodations that reduce chances of exposure. According to the EEOC, flexibility by employers and employees is key. Temporary job restructuring of marginal job duties, temporary transfers to a different position, or modifying a work schedule or shift assignment are other possible solutions recommended by the EEOC.
  • The EEOC reminds employers that employees’ preexisting mental illnesses or disorders can be exacerbated by the circumstances brought on by the health emergency, meaning that some individuals may now be in need of reasonable accommodations that had not been necessary before. Moreover, some employees may require different accommodations to deal with changed work situations, such as an employee who may need a different accommodation so he or she can effectively work from home.
  • The EEOC also opined that employers may still request information from an employee to determine if a medical condition is a disability and that they may still engage in the interactive process to see whether a disability requires an accommodation. Employers may also choose to shorten or forego the interactive process and simply grant an employee’s accommodation on a temporary basis. Employers are encouraged to be proactive; they may ask employees with disabilities to request accommodations and engage in the interactive process for accommodations that employees believe they may need when the workplace re-opens or they return to work.
  • Employers are also advised that they are not required to provide a reasonable accommodation that would pose an “undue hardship” on the employer. In some cases, the pandemic may have changed what counts as an undue hardship for an employer. In particular, economic concerns brought on by the pandemic are relevant to determining what counts as a significant expense. According to the EEOC, “the sudden loss of some or all of an employer’s income stream because of this pandemic is a relevant consideration.” The EEOC cautions, however, that this does not mean that an employer can reject any accommodation that costs money: “an employer must weigh the cost of an accommodation against its current budget while taking into account constraints created by this pandemic.”

Pandemic-Related Harassment Guidance

The EEOC’s updated guidance also points employers to resources and tips they can use to prevent harassment that might arise as a result of the pandemic. Among other things, the EEOC recommends that employers explicitly communicate to their employees that fear of the pandemic should not be misdirected at individuals because of their national origin, race, or other protected characteristic. The EEOC also recommends that employers advise supervisors and managers of their roles in watching for, stopping, and reporting any harassment or other discrimination. Employers can also make it clear that they will continue to immediately review any allegations of harassment or discrimination and take appropriate action.

Guidance Relating To Furloughs, Lay-Offs, And Returning To Work

The EEOC had little to say to employers who are forced to consider layoffs or furloughs of employees, beyond simply reminding them about its guidance regarding waivers of discrimination claims in severance agreements, which can be found here.

With respect to returning employees, however, the EEOC reiterated that the ADA allows employers to make disability-related inquiries and to conduct medical exams if they are job-related and consistent with business necessity. That includes employees who might have a medical condition that would pose a direct threat to health or safety. Determinations as to whether a medical condition is a direct threat should be based on objective medical evidence, such as guidance from the CDC or other public health authority. According to the EEOC, “employers will be acting consistent with the ADA as long as any screening implemented is consistent with advice from the CDC and public health authorities for that type of workplace at that time.” That can include taking employees’ temperatures and inquiring about symptoms for all employees who enter the workplace because those actions are consistent with CDC guidance.

Finally, the EEOC has stated that it is permissible for employers to require returning workers to wear personal protective gear and observe infection control practices (including social distancing practices, among other things), provided that they continue to engage in the interactive process with any employee who requests an accommodation regarding those requirements. Employers’ requirements to discuss an employee’s requests and determine undue hardship are not lifted even for these COVID-19-related precautions.

Implications For Employers

These are just some of the important points clarified by the EEOC in this updated guidance. The EEOC continues to update this guidance on a rolling basis as it attempts to respond to this fast-moving crisis. It is a valuable resource for employers who every day are finding themselves encountering situations that have never or only rarely been seen before in the American workplace. We encourage all employers to review in detail the entirety of the EEOC’s guidance here, and to review Seyfarth Shaw’s COVID-19 Resource Center for additional guidance and information. 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. and Michael L. DeMarino

Seyfarth Synopsis:  The battle continues over the applicability of the U.S. Supreme Court’s decision in Bristol-Myers Squibb v. Superior Court, 137 S.Ct. 1773 (2017), to Rule 23 class actions. Last month, in Mussat v. IQVIA, Inc., 953 F.3d 441, 448 (7th Cir. 2020), the Seventh Circuit refused to apply the reasoning in Bristol-Myers Squibb to class actions, calling that push a “major change in the law of personal jurisdiction and class actions.” Now, on the heels of that decision, the Defendant IQVIA, Inc. has sought rehearing en banc.  IQVIA argues that the question of whether personal jurisdiction protections apply to class actions is critically important, and the panel’s decision “undermines the basic federalism principals underlying longstanding personal-jurisdiction requirements.” Mussat v. IQVIA, Inc., Case No. 19-1204, at 18 (7th Cir. Apr. 8, 2020).

This issue is critical to employers facing class actions because it impacts where an employer may be forced to defend a nationwide class action. District courts remain deeply divided on the impact of Bristol-Myers Squibb on class actions, IQVIA’s petition for rehearing raises complex and fundamental questions about class actions and due process. This case and, more broadly, the issue of the applicability of the Supreme Court’s ruling to class actions should be on every employer’s radar.

IQVIA’s Petition For Rehearing En Banc

IQVIA asks the Seventh Circuit to revisit the panel’s decision that the principles announced in Bristol-Myers Squibb do not apply to the case of a nationwide class action filed in federal court under a federal statute.

In Bristol-Myers Squibb, the Supreme Court ruled that plaintiffs who lived outside of California could not sue Bristol-Myers Squibb in a mass personal injury case in California state court because California does not have specific jurisdiction to hear claims by nonresidents. See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1782 (2017).

IQVIA criticizes the panel’s attempt to draw a distinction between its case and Bristol-Myers Squibb. At the core of the panel’s decision was its conclusion that, unlike in a mass tort action, “absent class members are not full parties to the case” for purposes of personal jurisdiction. Mussat, 953 F.3d at 447.  IQVIA argues that the party status of absent class members is irrelevant to the personal jurisdiction inquiry. 

IQVIA also challenges the panel’s assertion that there was no pre-Bristol-Myers Squibb general consensus that due process principles did not prohibit a plaintiff from seeking to represent a nationwide class in federal court. According to IQVIA, simply because challenges to class actions on personal jurisdiction grounds were not raised before Bristol-Myers Squibb does not mean those challenges lack merit.

IQVIA also takes issue with the panel’s conclusion that Federal Rule of Civil Procedure 4(k) only requires that a plaintiff comply with state-based rules on the service of process, but does not establish an independent limitation on a federal court’s exercise of personal jurisdiction.  Rather, IQVIA asserts that allowing non-Illinois unnamed class members to proceed in the case is consistent with Rule 4(k), which allows personal jurisdiction only when the defendant is subject to a court of general jurisdiction in the state where the district court is located. Because Illinois law would not authorize some the absent class members to sue IQVIA in Illinois, IQVIA posits that Rule 4(k) prohibits a federal district court in Illinois from exercising jurisdiction.  

Implication For Employers

This case has important consequences for employers with national operations. If the panel’s decision remains undisturbed, plaintiffs filing nationwide class actions will be encouraged to forum shop. Nevertheless, as courts across the country are divided on this issue, employers facing nationwide class actions where they are not subject to general jurisdiction should strongly consider challenging personal jurisdiction over the non-resident class members under the rationale of Bristol-Myers Squibb. The filing of the petition for rehearing en banc is a strong signal that future petitions for certiorari on this issue are apt to end up before the U.S. Supreme Court in 2020.

 

By Gerald L. Maatman, Jr. and Christina M. Janice

Seyfarth Synopsis: In the latest development in the ultra-high stakes nationwide Prescription Opiate Litigation, the U.S. Court of Appeals for the Sixth Circuit granted the petition for writ of mandamus brought by twelve pharmacy defendants to overturn a November 2019 order by the U.S. District Court allowing two county plaintiffs to amend their respective complaints to allege new and untimely claims against the pharmacies, as part of a larger effort to increase efficiencies in the overall Opiate multidistrict litigation (“Opiate MDL”).  In In Re National Prescription Opiate Litigation, No. 20-3075 (6th Cir. April 15, 2019), the Sixth Circuit determined that the District Court’s order allowing plaintiffs to amend their complaints and add new claims some nineteen months after the deadline for amendment of pleadings and ten months after the close of discovery prejudiced the pharmacies in a way that could not be corrected on appeal, thereby warranting the extraordinary remedy of a writ to the District Court to strike the amended claims.

Background

As previously reported here and here, Judge Daniel A. Polster of the U.S. District Court for the Northern District of Ohio is steering into unchartered waters in the mammoth nationwide Opiate MDL consisting of 2,700 individual cases brought by 34,448 cities, counties, and municipalities against the drug’s manufacturers and distributors.  Last September, Judge Polster issued an innovative class certification order expanding the interpretation of Rule 23 to authorize certification of a novel settlement “negotiation” class. In Re National Prescription Opiate Litigation, No. 1:17-MD-2804, 2019 U.S. Dist. LEXIS 155118 (N.D. Ohio Sept. 11, 2019).  That order remains on appeal to the Sixth Circuit.

As certain pharmacy defendants started to settle claims against them in advance of scheduled trials, the District Court on November 19, 2019 granted an order allowing two Ohio counties with claims scheduled for trial to amend the complaints in their two cases to allege new “dispensary” claims against the pharmacy defendants.  The amendments were permitted nineteen months after the deadline to amend pleadings had expired, and ten months after the close of discovery.  By the same order, the District Court also refused to adjudicate the pharmacies’ motions to dismiss.  The District Court then ordered the pharmacies to produce nationwide prescription data, despite the pending claims being limited to Ohio’s Cuyahoga and Summit counties.  In so ordering, the District Court acknowledged that the nationwide prescription data would be inadmissible in the two Ohio county cases, but reasoned that the data would be available for future trials in the Opiate MDL.

The pharmacies filed a petition for writ of mandamus to the Sixth Circuit, seeking an order directing the District Court to strike the amended claims, to allow the pharmacies to file motions to dismiss, and to limit discovery of prescription data of tens of millions of nationwide customers.

The Sixth Circuit’s Ruling

Observing that a writ of mandamus is granted “only in “exceptional circumstances” involving a “judicial usurpation of power” or a “clear abuse” of discretion, the Sixth Circuit considered: (i) if the pharmacies had any other adequate means of relief from the District Court’s orders, such as an appeal; (ii) whether the damage or prejudice to the pharmacies caused by the orders could be corrected on appeal; and (iii) if the order “manifests a persistent disregard of the federal rules.” Id. at 4-5.

The Sixth Circuit determined that while Rule 16(b) requires a party seeking untimely amendment of claims to demonstrate good cause for the untimely amendment, no attempt to show good cause was made.  Id. at 6.  The Sixth Circuit rejected the District Court’s rationale of increasing efficiencies in the Opiate MDL by allowing amendment, opining that efficiencies are “no substitute for the showing of diligence required by [Rule 16(b)].”  Id. at 7.

Stating that the District Court “is notably conscientious and capable, and we fully recognize the complexity of his task in managing the MDL here,” id. at 7, the Sixth Circuit rejected any idea that Judge Polster was authorized by law to allow the late amendment; particularly by Rule 1, which provides that the Civil Rules should be construed “to secure the just, speedy and inexpensive determination of every action and proceeding.” Id.  The Sixth Circuit observed that MDL litigation is “not some kind of judicial border country, where the rules are few and the law rarely makes an appearance… [n]or can a party’s rights in one case be impinged to create efficiencies in the MDL generally.”  Id.

For these reasons, the Sixth Circuit granted the writ, and directed the District Court to strike the amendments adding “dispensary” claims to the counties’ litigations.  Finding the remaining grounds for the writ moot, the Sixth Circuit further cautioned that the District Court may not refuse to adjudicate motions to dismiss properly brought under Rule 12, and that additional discovery must be proportionate the needs of the case.  Id. at 9.

Implication For Employers:

The Sixth Circuit’s grant of a writ of mandamus demonstrates the real world tension that judges face in complex litigation when called on to construe the protections afforded to litigants by specific Federal Civil Rules, in light of the Rules’ express requirement to construe the Rules to serve the goal of speedy and efficient determinations of cases.  The decision also is a reminder to employers that strenuous assertion of individual protections in complex cases is not without reward.

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.