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!

washington-monument-754745_960_720Seyfarth Synopsis: Governmental enforcement litigation was a mixed bag in 2016. The U.S. Department of Labor (“DOL”) and the Equal Employment Opportunity Commission (“EEOC”) continued their aggressive enforcement programs, but their effectiveness was down “by the numbers” as compared to previous years. What does this mean for 2017?  In the 6th and final installment in our series of blog postings on workplace class action trends, we examine what employers are likely to see in 2017 on the government enforcement litigation front.

Introduction

Government enforcement lawsuits brought by the DOL and EEOC continued the aggressive litigation programs of both agencies, but by sheer numbers of cases, their enforcement activities were arguably limited in their effectiveness, at least when measured by lawsuit filings and recoveries compared to previous years. Settlement numbers for government enforcement litigation in 2016 decreased substantially as compared to 2015, as did the litigation dockets of the DOL and the EEOC. This trends is aptly illustrated by a comparison of settlement recoveries over the past 7 years. Settlement recoveries in 2016 were the second lowest of any year during that period.

Top 10 Government Enforcement

This trend is critical to employers, as both agencies have a focus on “big impact” lawsuits against companies and “lead by example” in terms of areas that the private plaintiffs’ bar aims to pursue. The content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration remains to be seen; most believe there will be wholesale changes, which may well prompt the private plaintiffs’ class action bar to “fill the void” and expand the volume of litigation pursued against employers over the coming year.

Governmental Enforcement Litigation Trends In 2016

On the governmental enforcement front, both the EEOC and the DOL intensified the focus of their administrative enforcement activities and litigation filings in 2016.  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 – were less than half of what the EEOC and DOL achieved in 2015.

The EEOC’s lawsuit count dropped precipitously. 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 less cases overall but more systemic lawsuits. This manifested the notion that the Commission’s limited budget and bandwidth are best deployed to matters where a systemic focus is most needed and the largest numbers of alleged victims are at issue.  As 2016 demonstrated, the EEOC’s prosecution of pattern or practice lawsuits is now 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 2016. These numbers are shown by the following chart:

EEOC Systemic Cases: Filed, Resolved, And On Active Docket
FY 2013 – 2016

Cases Filed

The Commission’s 2016 Annual Report also announced that it expects to continue the dramatic shift in the composition of its litigation docket from small individual cases to systemic pattern or practice lawsuits on behalf of larger groups of workers.  The EEOC’s FY 2016 Annual Report detailed the EEOC’s activities from October 1, 2015 to September 30, 2016.  The EEOC’s Report indicated that:

  • The Commission completed work on 273 systemic investigations in FY 2016, which resulted in 21 settlements or conciliation agreements that yielded a total recovery of $20.5 million for systemic claims; six of the settlements involved 50 alleged victims or more, and 13 settlements included 20 or more alleged victims. The FY 2016 recoveries represent a decrease of systemic recoveries in FY 2015 when the Commission netted $33 million based on resolution of systemic investigations.
  • The EEOC recovered $347.9 million for alleged victims of employment discrimination in FY 2016 through mediation, conciliation, and settlements. This represented a decrease of $10.4 million as compared to FY 2015, when the Commission garnered $356.6 million for its enforcement efforts.
  • For its lawsuits, the EEOC secured $58.3 million in recoveries in FY 2016.  This figure was down $7 million as compared to the FY 2015 recoveries of $65.3 million. However, the EEOC resolved fewer lawsuits than it did last year, and recovered less money from those cases.  Specifically, the EEOC resolved 139 lawsuits during FY 2016 for a total recovery of $52.2 million; by comparison, the EEOC resolved 155 lawsuits in FY 2015 for a total recovery of $65.3 million.
  • The EEOC filed only 86 lawsuits in 2016 (down significantly from the 139 lawsuits it filed in 2015), of which 31 were “multiple victim” lawsuits, with 18 cases involved claims of systemic discrimination on behalf of 20 or more workers, and 13 cases involved multiple alleged discrimination victims of up to 20 individuals.  The EEOC had 165 cases on its active lawsuit docket by year end (down from FY 2015, when it had 218 cases on its docket, of which 48% involved multiple aggrieved parties and 28.5% involved challenges to alleged systemic discrimination).  Overall, this represented increases in these categories in terms of the make-up of the Commission’s litigation being tilted more heavily toward systemic cases.
  • The EEOC also received 91,503 administrative charges of discrimination, which was slightly up from the FY 2015 total of 89,385 charges and the FY 2014 total of 88,778 charges. Thus, charge activity was one of the heaviest in the 52 year history of the Commission.
  • The EEOC also encountered significant criticism in the manner in which it enforced anti-discrimination laws.  This criticism took various forms in terms of judicial sanctions, suits against the Commission by private litigants and States, and questioning by Congress over the EEOC’s alleged lack of transparency.

While the inevitable by-product of these governmental enforcement efforts is that employers are likely to face bigger lawsuits on behalf of larger groups of workers in 2017, the EEOC’s systemic litigation program is not without its detractors.  Several federal judges entered significant sanctions against the EEOC – some in excess of seven figures – for its pursuit of pattern or practice cases that were deemed to be without a good faith basis in fact or law. The U.S. Supreme Court in EEOC v. CRST Van Expedited, Inc., 136 S. Ct. 1642 (2016), examined the propriety of the $4.7 million fee sanction, the largest fee sanction ever leveled against the Commission; while the EEOC had been successful in its initial appeal in reversing the sanction before the Eighth Circuit, the Supreme Court unanimously rejected the EEOC’s position, remanded the fee sanction issue for review, and gave new life to the employer’s efforts to recoup millions of dollars against the Commission.

Fiscal year 2016 also marked another year in the EEOC’s 2012-2016 Strategic Enforcement Plan (“SEP”).  The SEP was created in 2012 as a blueprint to guide the EEOC’s enforcement activity.  Its most controversial and perhaps most far-reaching effect on the agency’s activity is the priority it gives to systemic cases: those pattern or practice, policy, or class-like cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic area.  Systemic cases have been the main driver of EEOC litigation over the past few years, and likely will be well into the future.  The EEOC is now fighting challenges to its power to bring those cases on a number of fronts.  Among other things, it is aggressively challenging any court’s ability to review how it conducts certain statutorily-mandated procedures before bringing suit, including how it investigates its cases and tries to conciliate those cases with employers.  If successful in those efforts, the EEOC will have greatly eased its path to pursuing systemic cases.

The EEOC is not only expanding its reach in procedural terms, but also it is attempting to broaden the scope of its authority through an expansion of the scope of anti-discrimination laws themselves.  In a number of recent cases, the EEOC has advanced novel legal theories that would, among other things, expand anti-discrimination protections to cover transgender employees and require employers to reasonably accommodate pregnant employees, even those who are experiencing normal pregnancies.  The EEOC continued to push the edge of the legal envelope in 2016, viewing itself as an agency that not only enforces the law, but also one that expands the scope of those laws as it deems appropriate.

For this and other reasons, the agency has come under increasing scrutiny and criticism by Republican members of Congress, business groups, and critics of an allegedly activist agency wasting the taxpayers’ dollars.  Such criticism is unlikely to stem the tide of systemic cases or deter the EEOC from continuing to try to expand its enforcement powers.  Subject to policy-directed changes mandated by the Trump Administration, employers can expect the EEOC will use the next year to continue to push for expansion of its procedural and substantive limits.

The DOL also undertook aggressive enforcement activities in 2016.

The Wage & Hour Division (“WHD”) kept up its aggressive enforcement actions in 2016, particularly in the hotel, restaurant, and retail industries.  Much of 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, WHD continued to increase its use of civil money penalties, liquidated damages, and enhanced compliance agreements.

Legislatures and government agencies in various states and municipalities also increased their activities on the wage & hour front.  Whether increasing the minimum or living wage, enacting scheduling laws and ordinances, implementing wage theft prohibitions, or increasing the minimum salary level required for exemption, many have already revised or are actively planning to revise laws and rules governing how businesses pay employees in 2017.

With the approaching ten-year anniversary of the last time Congress enacted a minimum wage increase (2007), advocates of a minimum wage increase are likely to turn up the volume on their requests for an increase to the federal minimum wage in 2017.  This may well depend on the politics of the debate, for the incoming Republican Administration appears opposed to such an increase.

Finally, if history is a guide, the incoming Administration is likely to return to the decades-old practice of issuing opinion letters in response to specific requests, which had been abandoned by the Obama Administration’s decision-makers at the DOL.

Over the past several years, the DOL’s Wage & Hour Division (“WHD”) fundamentally changed the way in which it pursues its investigations.  Suffice to say, the investigations are 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 $1.8 billion in back wages for over 2 million workers.  In FY 2016, the WHD collected more than $266.5 million in back pay wages, an increase of $20.5 million over the past year. Hence, in 2016, employers finally saw the impact of these changes on the WHD’s enforcement priorities, and 2017 is apt to bring much of the same absent a stark change in priorities under the Trump Administration.

The DOL also focused its activities in 2016 on wage & hour enforcement on what it terms “24/7.” The WHD’s Administrator, Dr. David Weil, was an architect of the WHD’s fissured industry initiative.  This initiative focuses on several priority industries, including food services (both limited service/full service establishments), hotel/motel, residential construction, janitorial services, moving companies/logistics providers, agricultural products, landscaping/horticultural services, healthcare services, home healthcare services, grocery stores, and retail trade.  In FY 2016, the WHD reported recoveries of $143,274,845 for nearly 19,000 workers within these fissured industries.

Not to be outdone, the National Labor Relations Board (“NLRB”) undertook an ambitious agenda in 2016 too.  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. More than any other area impacting workplace litigation, the NLRB also remained steadfast in its view that workplace arbitration agreements limiting class or collective claims are void under § 7 of the NLRA. It pursued a myriad of unfair labor practice charges against employers for alleged violation of the NLRA for use of arbitration agreements with class action and collective action waivers.

Implications For Employers In 2017?

So what are employers likely to see in 2017 on the government enforcement litigation front? In the early days of the Trump Administration, clear direction on litigation policy remain unclear. Most pundits believe that employers can expect less litigation and less regulation than during the Obama Administration. Furthermore, the phenomenon of “regulation by enforcement litigation” is likely no longer the by-product of the DOL and the EEOC’s enforcement litigation programs. Most likely, control of agency budgets may well provide the lever that the Trump White House may use to force its policy choices upon the government enforcement litigation programs of the DOL and the EEOC.

thCATMS9YBBy Gerald L. Maatman Jr. and Howard M. Wexler

As we previously blogged about, most recently here and here, the EEOC has gone on the offensive challenging employer severance agreements. In one such case, the EEOC attacked CVS Pharmacy Inc.’s standard release agreement which contained terms more expansive in favor of employees than the EEOC’s own interpretive guidance, and agreements held enforceable by in key court decisions.  The EEOC’s case against CVS was eventually dismissed on procedural grounds because the EEOC had not met its obligation to conciliate the claims filed in that case, so failed to provide additional guidance on the EEOC’s aggressive theories.

The EEOC appealed its well-publicized defeat in the CVS case and on December 17, 2015 the U.S. Court of Appeal for the Seventh Circuit issued yet another stinging rebuke of the EEOC’s “shoot first aim later” litigation tactics and rejected the EEOC’s appeal.

Case Background

In its Complaint, the EEOC alleged that certain provisions of CVS’s standard severance agreement violated Title VII because they interfere with an employee’s right to file charges, communicate voluntarily with the EEOC and other state agencies, and participate in agency investigations.  Id. at 3.  The case arose out of a former CVS pharmacy manager who was discharged in July 2011. Id. at 2.  She filed a charge with the EEOC, alleging that CVS terminated her due to her sex and race.  Id.  On June 13, 2013, the EEOC dismissed the charge, but it then sent CVS a letter saying that it had reasonable cause to believe that CVS was engaged in a pattern or practice of resistance to the full employment of rights secured by Title VII by virtue of the severance agreements that the charging party and others signed at their terminations. Id. at 4. Specifically, the EEOC claimed that the agreement deterred the filing of charges and interfered with the employee’s ability to communicate voluntarily with the EEOC and other federal and state agencies.   Id.

The District Court dismissed the EEOC’s case on purely procedural grounds, as it was undisputed that the EEOC did not engage in any effort to conciliate prior to bringing suit. Id. at 6. The EEOC argued that it was not required to engage in conciliation procedures because it was not bringing a garden-variety pattern or practice claim under section 707(e), but rather was alleging a pattern or practice of resistance to the full enjoyment of rights created by Title VII.  Id.  That “resistance” claim was brought under section 707(a), which does not mandate the same pre-suit procedures as are required under section 707(e).  Id.

Seventh Circuit’s Decision

On appeal, the EEOC alleged that the District Court “got it wrong” because: (1) Section 707(a) authorizes the agency to bring actions challenging a “pattern or practice of resistance” to the full enjoyment of Title VII rights without following any of the pre‐suit procedures contained in Section 706, including conciliation; (2) CVS’s use of a severance agreement that could chill terminated employees from filing charges or participating in EEOC proceedings constitutes a “pattern or practice of resistance” for purposes of Section 707(a); and (3) a reasonable jury could conclude that the Agreement deterred signatories from filing charges with the EEOC because of its length, small font, and the fact that it is drafted in “legalese,” thus making summary judgment for CVS improper.  Id. at 7.  The Seventh Circuit summarily rejected the EEOC’s first argument, and therefore, did not address the additional grounds set forth by the EEOC in support of its appeal.

With respect to the Commission’s contention that it was not required to engage in any pre-suit procedures, the Seventh Circuit rejected “the EEOC’s … novel interpretation of its powers under Section 707(a) that extends beyond the pursuit of unlawful unemployment practices involving discrimination and retaliation, and that frees the EEOC from engaging in informal methods of dispute resolution as a prerequisite to litigation,” as it   “cites to no case law….nor has any case been found that supports the distinction between the two sections as argued by the EEOC.”  Id. at 11.

Moreover, because the Seventh Circuit found no difference between a suit challenging a “pattern or practice of resistance” under Section 707(a) and a “pattern or practice of discrimination” under Section 707(e), it reasoned that the EEOC must comply with all of the pre‐suit procedures contained in Section 706, including conciliation.  Id. at 12.  As the Seventh Circuit noted, “[i]f we were to adopt the EEOC’s interpretation of Section 707(a), the EEOC would never be required to engage in conciliation before filing a suit because it could always contend that it was acting pursuant to its broader power under Section 707(a). In other words, the EEOC’s position reads the conciliation requirement out of the statute.”  Id. at 14-15.

Implications For Employers

While this stinging defeat for the EEOC in its attempt to attack carefully drafted severance agreements in line with the EEOC’s own interpretive guidance, employers are nonetheless well advised to review their separation agreement terms at issue in this case. While CVS may have won the battle for now,  the EEOC appears to be ready for war and focused on continuing to litigate terms of individual and/or form separation agreements. In doing so, the EEOC’s position attempts to alter existing case law authority governing terms of severance agreements, regardless of the Agency’s own guidance and leading case law interpreting such terms.

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

Magnifying_Glass_PhotoBy Gerald L. Maatman Jr. and Christina M. Janice

In an order recently issued in EEOC v J.R. Baker Farms, LLC, et al., Case No. 7:14-CV-136 (M.D. Ga. Sept. 9, 2015), Senior Judge Hugh Lawson  of the U.S. District Court for the Middle District of Georgia compelled the EEOC to produce in discovery anecdotal claims information for each known “class member” in a pattern or practice lawsuit (while not a class action governed by Rule 23, allegedly injured parties for whom the EEOC sues in a pattern or practice case are often referred to as “class members,” as in this order by Judge Lawson). The Court also denied the EEOC’s motions to quash or grant protective relief regarding the depositions of its lead investigator and a Rule 30(b)(6) witness.

The order is a case study for defense initiatives to take the fight to the EEOC in high-stakes workplace litigation.

Case Background

In August 2014 the EEOC brought a pattern or practice lawsuit under Title VII of the Civil Rights Act of 1964 against a Georgia-based farm J & R Baker Farms LLC and J & R Farms Partnership. The suit alleged that Defendants engaged in systemic race and national origin discrimination by providing greater opportunities for training and work hours to foreign-born workers, while involuntarily terminating or causing the constructive discharge of a disproportionate number of American and, specifically, African-American workers.

In discovery, Defendants sought to compel the EEOC to provide comprehensive responses to interrogatories requesting that the EEOC specify – for each class member – certain claim information, including whether each class member was a victim of an involuntary termination or constructive discharge. Id. The EEOC objected to the discovery requests as both exceeding the scope of discovery in a pattern or practice litigation largely to be proved through statistical data, and seeking privileged information. Id.

Defendants also issued a notice of deposition to the EEOC’s investigator, Jennifer Vanairsdale, who led the interviews of complaining and intervening parties and also participated in a prior conciliation. The EEOC filed a motion to quash or alternatively a motion for protective order to block the deposition, arguing the deliberative process privilege. Id. Relying on the recent decision of the Supreme Court in Mach Mining LLC v. EEOC, 135 S. Ct. 1645, 1655 (2015), the EEOC also objected to the deposition to the extent the examination would include an impermissible inquiry into the conciliation process. Id. The EEOC further argued that the deposition was superfluous because the EEOC already had produced its complete investigatory file. Id.

The EEOC filed an additional motion to quash or alternatively motion for protective order seeking to bar Defendants’ notice of the Rule 30(b)(6) deposition, objecting on the basis that EEOC personnel did not have knowledge of the claims underlying the lawsuit and the notice arguably called for the deposition of its attorneys. Id.

The Court’s Decision

In granting Defendants’ motion to compel, the Court observed that it was “clear” that the EEOC had collected pertinent information from only a “very small percentage of the alleged class,” including 60 potential “class members” out of a class approximated at 2,000 workers. Id. The Court also observed that the EEOC’s lawsuit presented a “hybrid scenario” in which some the Commission asserted that some class members suffered  involuntary discharges while others were victims of a constructive discharge, and that the EEOC had developed and mailed to each potential class member a “detailed questionnaire” in order to develop its case. Id. Finding that Defendants sought only information contained in the completed questionnaires, and not the documents themselves, the Court determined that Defendants’ interrogatories were within the scope of permissible discovery and were not unduly burdensome. Id.

The Court also ordered the EEOC to provide lists of all known class members, whether their claim constituted a constructive discharge or an involuntary termination, and the date of discharge or termination. Id. The Court then went further by ordering the EEOC to provide “detailed anecdotal information for a representative portion of the class members,” which the Court found to be “at least 250 individuals.” Id.

The Court also denied the EEOC’s motion to quash or grant protective relief regarding the deposition of EEOC lead investigator Vanairsdale, cautioning Defendants “…not to venture into the territory of the adequacy of the conciliation process.” Id. The Court went on to deny the EEOC’s motion to quash or grant protective relief regarding Defendants’ notice for the Rule 30(b)(6) deposition, suggesting that the EEOC should notify Defendants if it has no witness meeting the criteria of the notice. Id.

Implications for Employers   

As the EEOC continues to assert deliberative privilege and Mach Mining as shields protecting it from discovery and judicial scrutiny, the order of the Court in EEOC v J.R. Baker Farms, LLC. demonstrates the importance of diligently pursuing discovery of claims underlying EEOC pattern or practice lawsuits. The Court not only ordered discovery to proceed, albeit with limitations, but also ordered the EEOC to provide detailed anecdotal information for a “representative portion” of the alleged class, quantified as 250 out of 2,000. Employers can use this order to support seeking both meaningful discovery and judicial intervention to obtain information critical to the defense of these costly and time consuming lawsuits.

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

By Gerald L. Maatman, Jr. and Laura Maechtlen

In a ruling on December 19, 2014, in EEOC v. Global Horizons, Inc., Case No. 11-CV-257 (D. Haw. Dec. 19, 2014), Judge Leslie Kobayashi of the U.S. District Court for the District of Hawaii entered a default judgment of $8.7 million in the EEOC’s favor against two essentially defunct businesses. While the Court entered the default without any opposition from the defaulted businesses, it is the biggest EEOC judgment of 2014. It brings to a close a chapter in a long and tortured history of litigation involving what the EEOC asserted was its pursuit of “human trafficking” discrimination claims (click here to read more).

Background To The Case

The EEOC brought claims against Defendant Global Horizons, Inc. (“Global Horizons”) and Maui Pineapple, Inc., among others, alleging a pattern or practice of unlawful discriminatory employment practices against foreign migrant workers based on their Asian race and/or Thai national original. The EEOC also asserted claims for harassment and hostile work environment, retaliation, and constructive discharge. The Asian and Thai workers were employed by Global Horizons under the U.S. Department of Labor H2‑A guest worker program to provide farm labor at various locations in California, Hawaii, and Washington. Previously, the Court entered a default judgment against Global Horizons and Maui Pineapple, Inc., as both elected to cease doing business. The Commission had sued other companies that had contracted with Global Horizons to supply workers to their farms and operations; those companies either secured dismissals of the EEOC’s claims against them and/or reached settlements with the EEOC.

Relative to its claims against Global Horizons and Maui Pineapple, the EEOC waived its demand for a jury trial, and the Court ordered the EEOC to file proposed findings of fact and conclusions of law relative to its request for damages and injunctive relief as to the two defaulted Defendants.  Based on that submission, the Court entered findings of fact and conclusions of law relative to the EEOC’s claims against Global Horizons and Maui Pineapple, Inc. on December 19 in a 77-page order.

The Court’s Ruling

The Court entered an award of compensatory damages of $50,000 each to every claimant based on the Defendants’ default and uncontested liability for the pattern or practice of discrimination, a hostile work environment, and retaliation relative to the claimants that Global Horizons brought to work in Hawaii. The Court concluded that the award of $50,000 per claimant was justified due to the egregious and pervasive nature of the discrimination at issue. In total, the Court entered this damages award with respect to 82 claimants represented by the EEOC. Further, the Court entered an award of $100,000 to each claimant for punitive damages based on the conduct at issue.  However, the Court rejected the EEOC’s arguments relative to damages.

The Court specifically rejected the EEOC’s argument that each claimant should receive a total of $300,000 in compensatory and punitive damages. The Court reasoned that “all of the claimants were subjected to deplorable conditions, but the Court notes that the records indicate that some claimants were subject to more brutal treatment than others … [and] the EEOC has chosen to seek damages based on generalized proof …, with anecdotal evidence of specific incidents and that evidence overall does not support the requested damages amounts.” Id. at 68. As a result, the Court entered a total damages award of $12.3 million against Global Horizons, and off-set that amount by $3.6 million (representing the total amount from previous settlements between the EEOC and various other Defendants), and entered a total monetary damages award for the 82 claimants in the amount $8.7 million. Id. at 70. Further, the Court found that Global Horizons and Maui Pineapple were jointly and severally liable to 54 of the claimants (representing the number of claimants who worked at Maui Pineapple’s facilities and who were supplied by Global Horizons), and that joint and several liability totaled $8.1 million.

Injunctive Relief Order

The Court also entered a range of injunctive relief against both Global Horizons and Maui Pineapple, including requirements: (i) to develop, implement, and effectively distribute to all employees a policy and complaint procedure with respect to discrimination and retaliation, and to translate the policies and procedures into the dominant language of the foreign-based employees in their workforce; (ii) to develop and implement a procedure regarding how to conduct, document, and report an investigation of discrimination; (iii) to establish annual, live training sessions for all supervisory employees regarding their rights, responsibilities, and obligations under their employer’s non-discrimination and investigation policy and procedure; (iv) to obligate all farm labor contractors engaged by the companies to agree to be accountable for Title VII compliance; (v) to establish and publicize an employee hotline regarding questions, concerns, or complaints pertaining to housing and working conditions; and (vi) to the extent the company engages recruiters, to require in contracts with recruiters that they comply with all policies and procedures regarding Title VII.  Id. at 71-76.

Implications For Employers

The judgment and injunctive relief may be worth little more than the paper it is written on at this point, since enforcement of the judgment may be impossible. As neither business is a going concern, the injunctive relief is also likely to have no effect. Nonetheless, despite the Court’s rejection of the EEOC’s damages requests, its entry of a monetary award in favor of the Commission is apt to serve as a future set of bargaining demands by the EEOC when it sits at the settlement table and asserts how much money it demands to settle like or similar claims.

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

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

In the closely watched case of EEOC v. BMW Manufacturing Co., LLC, 13-CV-1583 (D.S.C.), which concerns the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII (most recently discussed here, the parties have waged a discovery battle over whether the EEOC should be forced to respond to discovery concerning its own use of criminal background checks and credit histories during the hiring practices.  Although the EEOC won the initial battle when a Magistrate Judge held that the it did not have to produce this evidence, the dust has settled and BMW has won the war. In a ruling of December 8, 2014, U.S. District Court Judge Henry M. Herlong Jr. ordered the EEOC to produce “all documents that constitute, contain, describe, reflect, mention, or refer or relate to any policy, guideline, standard, or practice utilized by the EEOC in accessing the criminal conviction record of applicants for employment with the EEOC.” EEOC v. BMW Manufacturing Co., LLC, 13-CV-1583, 2014 U.S. Dist. LEXIS 169849, at *4 (D.S.C. Dec. 2, 2014).

This decision represents a big win for BMW as well as all employers staring down the barrel of the EEOC’s “do as we say, not as we do” enforcement policies.

Case Background

The EEOC filed suit against BMW alleging that “its criminal conviction background check policy constitutes an unlawful employment practice in violation of…Title VII…because BMW’s policy had, and continues to have, a significant disparate impact on black employees and applicants and is not job-related and consistent with business necessity.” Id. at *1. This case is one of a handful of systemic cases that the EEOC has filed in recent years over employers use of background check policies.  The EEOC has suffered several resounding defeats in their pursuit of this initiative, including the landmark case against Kaplan Higher Education Corp. (most recently discussed here) where the Sixth Circuit upbraided the EEOC for the “homemade” methodology that the agency used to determine race in that case – namely, by asking “race raters” to assign race based on drivers’ license photographs – concluding that it was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.”

The Court’s Decision

Upon the Magistrate Judge’s denial of its motion to compel, BMW filed Rule 72 objections with Judge Herlong requesting that he overrule the Magistrate Judge’s decision given the relevance of the requested information. Id. at *1. The Magistrate Judge denied BMW’s request because “considering the burdens of proof in a disparate impact case and in light of BMW’s motion to compel, BMW has failed to explain how production of the EEOC’s convictions policy contributes to its ability to prove that BMW’s criminal conviction policy at issue is job-related and/or is consistent with a stated business necessity.” Id. at *2-3.

Judge Herlong disagreed with the Magistrate Judge’s reasoning, instead finding that the EEOC had the burden of establishing “why its objections are proper given the broad and liberal construction of the federal rules” and that it failed to meet this burden. Id. at *3. Although Judge Herlong noted that the EEOC based its argument on the fact that its own policies are not relevant because “the positions for which the EEOC utilized its policy were not similar to the positions at issue in this litigation,” he held that BMW is not simply required to sit back and “accept the EEOC’s position” without discovery as to its policies or information concerning the positions for which they are used. Id. Accordingly, Judge Herlong ordered the EEOC to produce the requested information since “this production should not be burdensome to the EEOC, and the Court can perceive no harm to the EEOC in producing its internal policies.” Id.

Implications For Employers

This decision represents a big win for employers given the EEOC’s general reluctance to allow a “look behind the curtain.” This is not a surprise since in affirming dismissal of the EEOC’s case against Kaplan, the Sixth Circuit honed in on the fact that the EEOC had initiated a pattern or practice lawsuit against an employer for using “the same type of background check that the EEOC itself uses.” This is yet another decision that highlights the fact that simply because the EEOC says certain information is not relevant does not make it so. Employers should be able to put this ruling to good use for current and future discovery battles with the EEOC.

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

By Gerald L. Maatman, Jr.

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 the galley proofs of our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report.

We anticipate going to press in the first week of January, and launching the 2015 Report to our readers from our Blog.

This will be our Eleventh Annual Report, and the biggest yet with analysis of over 1,300 class certification rulings from federal and state courts in 2014. As last year, 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 humbled and honored by the review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said: “The Report is the singular, definitive source of information, research, and in-depth analysis on employment-related class action litigation. Practitioners and corporate counsel should not be without it on their desk, since the Report is the sole compendium of its kind in the United States.”

The 2015 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 2014 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 2015 Report will be available on our blog in early January. Happy Holidays!

By Christopher DeGroff, Paul Kehoe and Gerald L. Maatman, Jr.

Employers have become accustomed to the federal courts rubber stamping EEOC subpoenas seeking company-wide information based on a single charge of discrimination. In light of the EEOC’s systemic focus — and the agency’s desire to transform single allegations into a blockbuster systemic actions — aggressive and extensive EEOC subpoenas requests are more and more prevalent, with very little case law authority to cabin the EEOC’s authority. The Court in EEOC v. Forge Industrial Staffing Inc., No. 14-MC-90 (S. D. Ind. Nov. 24, 2014), however, had enough of the EEOC’s strong-arm tactics. In rejecting the Commission’s broad subpoena, Magistrate Judge Mark Dinsmore authored an opinion that provides employers with ammunition to fight “everything and the kitchen sink…” subpoena requests.

Factual Background

In EEOC v. Forge Industrial Staffing Inc., a former employee filed an EEOC charge four months after her termination alleging sexual harassment and retaliation. The Commission sought extensive information from the company as part of its administrative investigation. In its subpoena, the EEOC requested all employment applications for roughly a two and a half year period because the applications purportedly required employees to agree to file all employment-related claims within six months of the event, except as prohibited by law. The EEOC views this provision as an impermissible waiver of an applicant’s statutory rights. The company argued that the requested information was irrelevant to the charge and complying with it would be unduly burdensome.

The Court’s Decision

At the hearing, the EEOC argued that the application waiver related to the “overall conditions of the workplace.” Id. at 5. The Court rejected the EEOC’s position for several reasons. First, the charge did not contain pattern or practice allegations – claims that would suggest a pervasive violation of the law. Second, the charging party filed the charge within four months of the termination, meaning the clause had no impact on her willingness to file a charge. As a result, the waiver could not be relevant to the charge under investigation. The Court recognized that accepting the “overall condition of the workplace” argument would eviscerate the meaning of “relevance” because it would allow the EEOC to subpoena any information about a company at the EEOC’s whim. Id. at 5-6.

Finally, the Court rejected the EEOC’s standard argument that it has a broad mandate to promote the public interest, and therefore, can seek to remedy violations not alleged in a charge. Based on a plain reading of Title VII, which requires relevance to the charge under investigation, the Court reasoned that the EEOC could not expand a single charge into a pattern or practice case with wholly different allegations. The Court noted that the plain language of the statute does not permit an investigation into an violation not alleged in the charge.

Implications For Employers

The ruling in EEOC v. Forge Industrial Staffing Inc. marks the second time in a month that courts have limited the EEOC’s subpoena enforcement authority (see our blog posting here on the recent Eleventh Circuit’s defense ruling on an EEOC subpoena). Although many federal courts continue to grant the EEOC significant deference in subpoena matters, these recent decisions provide a glimmer of hope. Just because the EEOC says information is relevant does not make it so. When confronted with an expanded investigation based on a single charge, without pattern or practice allegations, there is a solid, common sense argument for employers to challenge the subpoena on both relevance and timeliness grounds. Employers should be aware of this and other recent decisions limiting the EEOC’s subpoena authority.

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

For the second year in a row, we are honored to have received the “Chicago Litigation Department of Year: Labor & Employment” award from The National Law Journal. In The National Law Journal’s annual report on the Chicago Litigation Departments of the Year, Seyfarth was recognized for our litigation prowess in a series of high-profile and precedent-setting victories in pattern or practice cases that the U.S. Equal Employment Opportunity Commission brought against our clients. Seyfarth Shaw is grateful for the The National Law Journal‘s recognition and honor for our firm.

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

Judge John Darrah of the U.S. District Court for the Northern District of Illinois issued a decision this week in the EEOC’s landmark case against CVS Pharmacy. As we have previously blogged about here, in EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863 (N.D. Ill.), the EEOC staked out new ground in Title VII litigation by taking aim at certain provisions of CVS’s standard severance agreement. As we reported here, the Court decided to dismiss the case a few weeks ago but had not yet issued a decision. That decision came out on October 7, 2014. While we expected an important decision about the substance of Title VII’s protections, what we got instead was a landmark ruling on the scope of the EEOC’s enforcement authority. It is a stunner of a defeat for the Commission.

Case Background

In February of this year the EEOC brought suit against CVS, alleging that certain provisions of CVS’s standard severance agreement violate Title VII because they interfere with an employee’s right to file charges, communicate voluntarily with the EEOC and other state agencies, and participate in agency investigations. The case arose out of a former CVS pharmacy manager who was discharged in July 2011. She filed a charge with the EEOC, alleging that CVS terminated her due to her sex and race. On June 13, 2013, the EEOC dismissed the charge, but it then sent CVS a letter saying that it had reasonable cause to believe that CVS was engaged in a pattern or practice of resistance to the full employment of rights secured by Title VII by virtue of the severance agreements that the charging party and others signed at termination. Id. at 2-3. Specifically, the EEOC claimed that the agreement deters the filing of charges and interferes with the employee’s ability to communicate voluntarily with the EEOC and other federal and state agencies.

The Court’s Decision

Judge Darrah decided the case on purely procedural grounds. It was undisputed that the EEOC did not engage in any effort to conciliate prior to bringing suit. Id. at 3. The EEOC argued that it was not required to engage in conciliation procedures because it was not bringing a garden-variety pattern or practice claim under section 707(e), but rather was alleging a pattern or practice of resistance to the full enjoyment of rights created by Title VII. That “resistance” claim was brought under section 707(a), which does not mandate the same pre-suit procedures as are required under section 707(e).

Judge Darrah dove into the history of Title VII  to dismantle the EEOC’s argument. When Title VII was originally enacted, the Attorney General was given the power to bring civil complaints under section 707(a) when there was a reasonable cause to believe that an employer engaged in “a pattern or practice of resistance” to the full enjoyment of any of the rights secured by Title VII.  That power was transferred to the EEOC in March 1974. Under section 707(e), the Commission was given the authority to investigate and bring pattern or practice claims either on behalf of a person aggrieved, or on behalf the Commission itself. However, section 707(e) expressly mandates that all such actions must be conducted in accordance with the procedures set forth in section 706, which, among other things, requires the EEOC to engage in conciliation procedures before filing suit.

The EEOC’s argument was that the Attorney General was not required to adhere to section 706 pre-suit obligations when it exercised authority under section 707(a). Since the Attorney General’s authority was transferred to the EEOC, the EEOC was similarly not required to follow the pre-suit procedures of section 706.

The Court disagreed, holding that the transfer of authority may have granted the EEOC the power to bring charges of a pattern or practice of discrimination, but it did not create a separate cause of action. Judge Darrah reasoned that: “[I]t is clear that the transfer of prosecutorial authority in 707(a) from the Attorney General was not intended to create a cause of action for the EEOC other than those specifically conferred on the commission pursuant to 707(e) and subject to the procedures provided in 706, including the obligation of conciliation.” Id. at 7. In other words, there is no separate cause of action for “resisting” employment laws under section 707(a). The EEOC is stuck with the pattern or practice claims under section 707(e) and the procedural requirements of section 706.  Because the EEOC did not adhere to those procedures when it failed to conciliate, it was not authorized to file suit against CVS, and CVS was entitled to judgment as a matter of law.

Implications For Employers

One has to admire the EEOC’s creativity as it seeks to boost its power. In the same case it sought to open up whole new territory for itself through a novel interpretation of the substantive protections of Title VII, while at the same time advancing a theory that would further dismantle the procedures that protect employers from the EEOC’s trigger finger. As we blogged about here, the EEOC is spending a considerable amount of time and resources easing its path to bringing systemic pattern or practice cases. This case touches on one of the most visible of those efforts: its attempt to immunize itself from any judicial scrutiny of how it conducts its pre-suit obligations, especially its conciliation obligations. If the EEOC had its way against CVS, then it would be able to dispense with that obligation altogether for some pattern or practice cases. Thanks to Judge Darrah’s ruling, that protection remains, at least for now.

While this turned out to be quite an interesting ruling on the procedural aspects of defending against EEOC litigation, it leaves the EEOC’s substantive challenges to CVS’s severance agreements unresolved. The EEOC is pursuing a similar theory against a different employer in the U.S. District Court for the District of Colorado. See EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-01232-LTB-MJW (D. Colo.). That may provide another opportunity to see if the EEOC’s substantive theory holds water. Stay tuned.

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