Seyfarth Synopsis:  Despite the major ideological shift that occurred within American politics in 2017, government-initiated litigation continued to flourish if not increase even after with the election of the pro-business Trump Administration.  A clear example of this can be seen in the courtroom, as the U.S. Equal Employment Opportunity Commission (“EEOC”) filed more than the double the amount of merit lawsuits in 2017 than the Commission initiated in 2016.  Today, readers are given an overview of a busy year at the EEOC and Department of Labor (“DOL”), as well as what employers should expect in the future in terms of government enforcement litigation.  Check out this exclusive excerpt from the 2018 Workplace Class Action Report below!   

On the governmental enforcement front, the change-over from the Obama Administration to the Trump Administration had little to no impact on reducing the pace of litigation filings and settlements in 2017. Both the EEOC and the DOL intensified the focus of their administrative enforcement activities and litigation filings in 2017. At the same time, the number of lawsuits filed and the resulting recoveries by settlement – measured by aggregate litigation filings and the top 10 settlements in government enforcement litigation – constituted a ten-fold increase as compared to what the EEOC and DOL achieved in 2016.

To the extent the Trump Administration aims to change those dynamics, its agency appointees either were not nominated in time to influence their respective agencies or were not put into place until mid to late 2017. The result was a delay in charges to agency policies and priorities. In this respect, fundamental changes to patterns in government enforcement litigation are more akin to changing the direction of a large sea-going cargo tanker than a small motor boat. Change is inevitable, but it takes time. Thus, the impact of change on governmental litigation enforcement trends is not likely to be felt until well into 2018.

As a result, the EEOC’s lawsuit count increased geometrically in 2017. By continuing to follow through on the systemic enforcement and litigation strategy plan it announced in April of 2006 (that centers on the government bringing more systemic discrimination cases affecting large numbers of workers), the EEOC filed more cases as well as more systemic lawsuits. As 2017 demonstrated, the EEOC’s prosecution of pattern or practice lawsuits remained an agency-wide priority backed up by the numbers. Many of the high-level investigations started in the last three years mushroomed into the institution of EEOC pattern or practice lawsuits in 2017.

By comparison to previous years, 2017 was a big one for the EEOC in terms of the number of lawsuits filed. Total merits filings were up more than 100% as compared to 2016. In fact, the EEOC filed more lawsuits in the month of September of 2017 than it did in all of the months of 2016 combined. This can be seen in the following graph:This past year also marked the first year of the EEOC’s new Strategic Enforcement Plan (“SEP”), which is intended to guide enforcement activity for 2017 to 2021. Although the new SEP outlines the same six enforcement priorities as in prior years, few people familiar with how the agency pursues its objectives expect that the EEOC will continue to enforce those priorities in the same way under the Trump Administration. The six enforcement priorities include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach.

Each of these priorities can be interpreted in multiple ways. For example, the EEOC has consistently focused on the protection of lesbians, gay men, bisexuals, and transgender people as one of the most important emerging and developing issues in the workplace. A breakdown of court decisions by state regarding sexual orientation under Title VII can be seen in the following map:

The EEOC’s efforts in this area have resulted in a body of case law in many jurisdictions over the past several years that now holds that discrimination against transgender individuals, or on the basis of sexual orientation, is a form of sex discrimination prohibited by Title VII. However, the Department of Justice under President Trump has recently disagreed with that interpretation. This may signal that this is one area that will shift in 2018 as high-level personnel changes are made within the EEOC.

The EEOC also focused in the past year on employers’ utilization of social media and the use of algorithms and information available on the internet to screen job applicants. Recent comments by the EEOC’s staff indicate that this may be one of the “barriers to recruitment and hiring” that the agency will focus on in 2018 and beyond. Along the same lines, the EEOC has shown an increased willingness to bring ADEA lawsuits against employers – especially in the hospitality industry – that it believes are discriminating against hiring applicants aged 40 and over.

The EEOC also recently issued new guidance impacting two of its enforcement priorities, including preserving access to the legal system (i.e., through increased enforcement of the anti-retaliation provisions of Title VII, the ADA, and the ADEA) and preventing harassment in the workplace. Among other things, the retaliation guidance expands the definition of “adverse action” to include one-off incidents and warnings, as well as anything that reasonably could be likely to deter protected activity. With respect to preventing harassment, the new guidance clarifies the EEOC’s thinking about what constitutes a hostile work environment and the defenses available to employers when that hostile work environment is the result of supervisors’ misconduct. Although important developments in their own right, the real impact of these new guidelines may not be clear until employers see how they are interpreted by the EEOC in active litigation situations. Like the priorities themselves, that will be impacted by whatever new policies and directives are put in place by the new Trump appointees.

It also appears that the EEOC is finally executing on its oft-stated intention to increase enforcement under the Equal Pay Act (“EPA”). The EEOC filed 11 EPA lawsuits in 2017. This is a significant increase over prior years (six EPA lawsuits were filed in 2016, five in 2015, and two in 2014). However, its enforcement efforts in this area may have suffered a setback when the changes the EEOC planned to make to the EEO-1 reporting requirements were put on hold in 2017. It was widely speculated that the new reporting requirements would have assisted the EEOC in bringing more claims under the EPA. Under the leadership of the new Administration, the Office of Management and Budget, pursuant to its authority under the Paperwork Reduction Act, stayed implementation of the EEOC’s new EEO-1 regulations this past year.

The Commission’s 2017 Performance Accountability Report announced that its systemic litigation program continues to be a focus for the EEOC. The EEOC labels a case “systemic” if it “has a broad impact on an industry, company, or geographic area.” Systemic trends from the last five years of EEOC systemic cases can be seen in the following graph:The EEOC’s FY 2017 report outlined the EEOC’s activity from October 2, 2016 to September 30, 2017. It showed the following:

  • The EEOC’s field offices resolved 329 systemic investigations and collected $38.4 million in remedies (compared to 273 systemic investigations and $20.5 million in 2016). The figures for 2017 constitute significant increases over the previous year, and are near record amounts for monetary relief for systemic cases.
  • The EEOC also issued cause determinations finding discrimination in 167 systemic investigations (compared to 113 in 2016). Consequently, not only did the EEOC resolve more systemic investigations compared to 2016, but also it made considerably more cause determinations that it converted into beefed-up recoveries for claimants compared to last year.
  • The EEOC secured approximately $484 million in total relief in 2017 in litigation, mediations, and pre-litigation investigations. This tracks closely to last year’s total relief figure 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 such recoveries.
  • Litigation recoveries, on the other hand, have been steadily declining over the past few years, hitting only $42.4 million in 2017. This is markedly lower than 2016 and 2015, which saw the EEOC obtain $52.2 million and $65.3 million in litigation recoveries respectively.
  • The EEOC filed 184 merits lawsuits in 2017. This is more than double the 86 merits lawsuits that were filed in 2016. Of the lawsuits, 124 were on behalf of individuals, 30 were non-systemic suits with multiple victims, and the other 30 were systemic claims. The EEOC also filed 18 subpoena enforcement actions in 2017. Hence, the EEOC in the first year of the Trump Administration was far more active in filing lawsuits than in the final year of the Obama Administration.
  • In FY 2017, the EEOC resolved 99,109 charges, a marked increase over the past two years. As a result, the EEOC decreased its charge inventory by 16.2%, to 61,621 charges. This is the lowest level of charge inventory in 10 years and represents a significant reduction compared to FY 2016, when the EEOC only reduced its outstanding charges by 3.8%.

By comparison, the DOL’s enforcement recoveries dwarfed those of the EEOC in 2017, as the DOL undertook aggressive enforcement activities over the past year and scored increases in settlements both in court actions and in the administrative investigation process. Without a full leadership team in place at the DOL’s Wage & Hour Division (“WHD”), the enforcement program continued on the same track as it had been under the Obama Administration. In FY 2017, the WHD recovered more than $270 million in back pay wages for more than 240,000 workers, which represented a solid increase from the back wages recovered in the previous year. Given the Trump Administration’s focus on policy changes, employers can expect that many of these enforcement strategies will get a closer look as the new DOL leadership team falls into place in 2018.

Over the past several years, the WHD fundamentally changed the way in which it pursues its investigations. Suffice to say, the investigations have been more searching and extensive, and often result in higher monetary penalties for employers. According to the DOL, since early 2009, the WHD has closed 200,000 cases nationwide, resulting in more than $2.2 billion in back wages for over 2.24 million workers. In FY 2017, the WHD collected more than $270 million in back wages. For much of the year, the DOL kept up its aggressive enforcement program, particularly in the hotel, restaurant, and retail industries. Much of the WHD’s enforcement and other activities took place under the umbrella of “fissured industries” initiatives, which focus on industries with high usage of franchising, sub-contracting, and independent contractors. At the conclusion of those enforcement actions, the WHD continued to increase its use of civil money penalties, liquidated damages, and enhanced compliance agreements. As the Trump Administration reviews and considers the prior Administration’s enforcement policies, we expect that 2018 is apt to bring a stark change in enforcement priorities and strategies.

The new year brought a new Administration and high expectations by employers for change at the WHD. Political reality and the Senate calendar, however, combined to limit the WHD’s ability to implement that change. For most of 2017, only Secretary of Labor Alex Acosta and a single Assistant Secretary had been confirmed by the Senate. By year’s end, the DOL Solicitor and several Assistant Secretaries had been confirmed; the critical position of the WHD Administrator remained vacant, as well as another dozen or so senior positions at the DOL. With the senior leadership team in place at the DOL by 2018, the agency is likely to make significant headway on the Trump Administration’s policy objectives in the coming year.

Nevertheless, 2017 provided an opportunity for the new WHD to address some of its most pressing issues. The DOL was immediately tasked with defending the prior Administration’s revisions to the Part 541 overtime exemption regulations, which had been enjoined in federal court in advance of their effective date in late 2016. Those revisions, which would have doubled the existing salary level required for the white-collar exemptions, substantially increased the minimum level required for the highly-compensated-employee exemption, and automatically increased the salary level on a periodic basis. These were the first changes to Part 541 in more than 10 years. However, those changes were ruled invalid on the basis that the salary level established in the regulation exceeded the Department’s authority.

The Trump Administration managed to position itself well for future developments regarding the overtime regulations, defending the DOL’s authority to set a salary level generally (which some believed had been called into question by the order declaring the Obama overtime rule invalid), while electing not to defend the specific salary level established in the 2016 regulation. It is likely that DOL will propose yet another change to the regulations in 2018.

The DOL also took the first steps in rolling back the prior Administration’s view of what it means to be “employed” under the FLSA. In June of 2017, the DOL announced the withdrawal of the WHD Administrator’s Interpretation 2015-1 (“AI”), which contained the WHD’s analysis of the employee vs. independent contractor issue, and AI 2016-1, which contained the WHD’s analysis of the joint employment issue. Both AIs were regarded as having an incredibly broad interpretation of what it means to have an employment relationship. Although no replacement guidance has yet been issued, the withdrawal of the AIs is seen as a signal that the current Administration does not take such an expansive view of what it means to be “employed” under the FLSA.

Around the same time as its withdrawal of the AIs, the DOL also announced the return to the use of opinion letters. After decades of use, these regulatory tools had been abandoned by the Obama Administration. The DOL’s decision to restart its issuance of opinion letters allows employers and employees alike to seek formal guidance from the WHD on some of the most challenging wage & hour issues. No opinion letters have yet been issued, but it is clear that compliance assistance will once again be a valuable tool in the arsenal of the WHD, alongside its enforcement activities.

Not to be outdone, the National Labor Relations Board (“NLRB”) also undertook an ambitious agenda in 2017. It reconsidered well-settled NLRB principles on joint employer rules and representative elections, entertained the possibility of extending the protections of the National Labor Relations Act (“NLRA”) to college athletes, and litigated novel claims seeking to hold franchisors liable for the personnel decisions of franchisees. By the end of the year, however, the Trump Administration’s appointees began to roll-back NLRB precedents and positions that had been espoused during the Obama Administration, such as a reversal of the expansive view of joint employer liability, allowing more deference to employer workplace rules, eliminating protections for obscene, vulgar, and highly inappropriate activity under the NLRA.

Implications For Employers

Regarding the 2018 Fiscal Year, employers can expect to see a significant decrease in government-initiated litigation and overall government enforcement in the workplace. Additionally, the lawsuits that are filed will likely include smaller groups of people and more isolated issues. This will particularly be seen at the EEOC, which is awaiting Senate confirmation on two Trump-appointed Commissioners sure to alter the entity’s policy direction. Rather than expanding government’s role in business and attempting to set innovative legal precedent, we predict the DOL and EEOC will stick to simple enforcement of current regulations. As always, we will stay on top of this important issue and keep our readers informed as new revelations come to light!

Seyfarth Synopsis: At 878 pages, Seyfarth’s 14th Annual Workplace Class Action Litigation Report analyzes 1,408 rulings and is our biggest and most voluminous Report ever.

Click here to access the microsite featuring all the Report highlights. You can read about the four major trends of the past year, order your copy of the eBook, and download Chapters 1 and 2 on the 2018 Executive Summary and key class action settlements.

The Report was featured today in an exclusive article in the Wall Street Journal. Click here to read the coverage!

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We were again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a definitive ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, a business executive, a risk manager, an underwriter, a consultant, or a broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’”  Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation. You can read more about the review here.

The 2018 Report analyzes rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2017 for employment discrimination, wage & hour, ERISA class actions, and statutory workplace laws, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

We hope our loyal blog readers will enjoy it!

Executive Summary

The prosecution of workplace class action litigation by the plaintiffs’ bar has increased exponentially over the past decade. More often than not, class actions pose unique “bet-the-company” risks for employers. An adverse judgment in a class action has the potential to bankrupt a business and adverse publicity can eviscerate its market share. Likewise, the on-going defense of a class action can drain corporate resources long before the case even reaches a decision point.

Companies that do business in multiple states are also susceptible to “copy-cat” class actions, whereby plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time. Hence, workplace class actions can adversely impact a corporation’s business operations, jeopardize or cut short the careers of senior management, and cost millions of dollars to defend. For these reasons, risks from workplace class actions are at the top of the list of challenges that keep business leaders up late at night.

Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are not making this challenge any easier for companies. They are continuing to develop new theories and approaches to the successful prosecution of complex employment litigation. New rulings by federal and state courts have added to this patchwork quilt of compliance problems and risk management issues.

In turn, the events of the past year in the workplace class action world demonstrate that the array of litigation issues facing businesses are continuing to accelerate at a rapid pace while also undergoing significant change. Notwithstanding the transition to new leadership in the White House in 2017, governmental enforcement litigation pursued by the EEOC and the U.S. Department of Labor (“DOL”) continued to manifest an aggressive “push-the-envelope” agenda by agencies, with regulatory oversight of workplace issues continuing as a high priority.

The combination of these factors are challenging businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. These challenges are especially acute for businesses in the context of complex workplace litigation.

Adding to this mosaic of challenges in 2018 is the continuing evolution in federal policies based on a new political party occupying the White House for part of 2017. Furthermore, while changes to government priorities started on Inauguration Day and are on-going, others are being carried out by new leadership at the agency level who were appointed in the fourth quarter of this past year. As expected, many changes represent stark reversals in policy that are sure to have a cascading impact on private class action litigation. While predictions about the future of workplace class action litigation may cover a wide array of potential outcomes, the one sure bet is that change is inevitable and corporate America will continue to face new litigation challenges.

Key Trends Of 2017

An overview of workplace class action litigation developments in 2017 reveals four key trends.

First, the monetary value of the top workplace class action settlements rose dramatically in 2017. These numbers increased over past years, even after they had reached all-time highs in 2014 to 2016. The plaintiffs’ employment class action bar and governmental enforcement litigators were exceedingly successful in monetizing their case filings into large class-wide settlements, and they did so at decidedly higher values than in previous years. The top ten settlements in various employment-related class action categories totaled $2.72 billion in 2017, an increase of over $970 million from $1.75 billion in 2016. Furthermore, settlements of employment discrimination class actions experienced over a three-fold increase in value; statutory workplace class actions saw nearly a five-fold increase; and government enforcement litigation registered nearly a ten-fold increase. Whether this is the beginning of a long-range trend or a short-term aberration remains to be seen as 2018 unfolds, but the determinative markers suggest this upward trend will rise further in 2018, at least insofar as private plaintiff class actions are concerned.

Second, while federal and state courts issued many favorable class certification rulings for the plaintiffs’ bar in 2017, evolving case law precedents and new defense approaches resulted in better outcomes for employers in opposing class certification requests. Plaintiffs’ lawyers continued to craft refined class certification theories to counter the more stringent Rule 23 certification requirements established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). As a result, in the areas of employment discrimination and ERISA class actions, the plaintiffs’ bar scored well in securing class certification rulings in federal courts in 2017 (over comparative figures for 2016). Class actions were certified in significant numbers in “magnet” jurisdictions that continued to issue decisions that encourage or, in effect, force the resolution of large numbers of claims through class-wide mechanisms. Yet, while the sheer volume of wage & hour certification decisions in 2017 increased as compared to last year, employers actually fared better in litigating those class certification motions in federal court than last year. Of the 257 wage & hour certification decisions in 2017, plaintiffs won 170 of 233 conditional certification rulings (approximately 73%), but lost 15 of 24 decertification rulings (approximately 63%). By way of comparison, there were 224 wage & hour certification decisions in 2016, where plaintiffs won 147 of 195 conditional certification rulings (approximately 76%) and lost 13 of 29 decertification rulings (approximately 45%). In sum, employers beat slightly more first stage conditional certification motions in 2017, and dramatically increased their odds – a jump of 18% – of fracturing cases with successful decertification motions.

Third, filings and settlements of government enforcement litigation in 2017 did not reflect a head-snapping pivot from the ideological pro-worker (or anti-big business) outlook of the Obama Administration to a pro-business, less regulation/litigation viewpoint of the Trump Administration. Instead, as compared to 2016, government enforcement litigation actually increased in 2017. As an example, the EEOC alone brought 184 lawsuits in 2017 as compared to 86 lawsuits in 2016. Further, the settlement value of the top ten settlements in government enforcement cases jumped dramatically – from $52.3 million in 2016 to $485.25 million in 2017. The explanations for this phenomenon are wide and varied, and include the time-lag between Obama-appointed enforcement personnel vacating their offices and Trump-appointed personnel taking charge of agency decision-making power; the number of lawsuits “in the pipeline” that were filed during the Obama Administration that came to conclusion in the past year; and the “hold-over” effect whereby Obama-appointed policy-makers remained in their positions long enough to continue their enforcement efforts before being replaced in the last half of 2017. This trend is critical to employers, as both the DOL and the EEOC have had a focus on “big impact” lawsuits against companies and “lead by example” in terms of areas that the private plaintiffs’ bar aims to pursue. As 2018 opens, it appears that the content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration will tilt away from the pro-employee/anti-big business mindset of the previous Administration. Trump appointees at the DOL and the EEOC are slowly but surely “peeling back” on positions previously advocated under the Obama Administration. As a result, it appears inevitable that the volume of government enforcement litigation and value of settlement numbers from those cases will decrease in 2018. The ultimate effect, however, may well prompt the private plaintiffs’ class action bar to “fill the void” and expand the volume of workplace litigation pursued against employers over the coming year as the DOL and the EEOC adjust their litigation enforcement activities.

Fourth and finally, class action litigation increasingly has been shaped and influenced by recent rulings of the U.S. Supreme Court. Over the past several years, the U.S. Supreme Court has accepted more cases for review – and issued more rulings that have impacted the prosecution and defense of class actions and government enforcement litigation. The past year continued that trend, with several key decisions on complex employment litigation and class action issues that were arguably more pro-business than decisions in past years. More cases also were accepted for review in 2017 that are positioned for rulings in 2018, including what may be the most high-stakes issue impacting employers since the Wal-Mart ruling in 2011 – the Epic Systems, Murphy Oil, and E & Y trilogy of cases on the legality of workplace arbitration agreements with class action waivers. The ruling expected in the Epic System, Murphy Oil, and E & Y cases in 2018 may well change the class action playing field in profound ways. Coupled with the appointment of Justice Neil Gorsuch in 2017 and potential additional appointments to the Supreme Court by President Trump in 2018 and beyond, litigation dynamics may well be re-shaped in ways that further change the playbook for prosecuting and defending class actions.

Implications For Employers

The one constant in workplace class action litigation is change. More than any other year in recent memory, 2017 was a year of great change in the landscape of Rule 23. As these issues play out in 2018, additional chapters in the class action playbook will be written.

The lesson to draw from 2017 is that the private plaintiffs’ bar and government enforcement attorneys at the state level are apt to be equally, if not more, aggressive in 2018 in bringing class action and collective action litigation against employers.

These novel challenges demand a shift of thinking in the way companies formulate their strategies. As class actions and collective actions are a pervasive aspect of litigation in Corporate America, defending and defeating this type of litigation is a top priority for corporate counsel. Identifying, addressing, and remediating class action vulnerabilities, therefore, deserves a place at the top of corporate counsel’s priorities list for 2018.

 

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.

 

Happy Holiday season to our loyal readers of the Workplace Class Action Blog!

Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report.

We anticipate going to press in early January, and launching the 2018 Report to our readers from our Blog.

This will be our Fourteenth Annual Report, and the biggest yet with analysis of over 1,350 class certification rulings from federal and state courts in 2017.  The Report will be available for download as an E-Book too.

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We were again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a definitive ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, a business executive, a risk manager, an underwriter, a consultant, or a broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’”  You can read more about the review here.  Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2018 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2017 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

Information on downloading your copy of the 2018 Report will be available on our blog in early January. Happy Holidays!

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…”

***

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.