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

In the words of the immortal bard Yogi Berra, “it’s like déjà vu all over again.”

As we have reported in years past (see here and here), the EEOC has a predictable trend of filing a flurry of lawsuits in the last days of its fiscal year, which ends on September 30. Fiscal year 2013-14 was no different. Like clockwork, the EEOC filed a spate of lawsuits as time ran out, yet again enmeshing dozens of employers across the country in government initiated litigation. Indeed, the EEOC filed an astonishing 58 lawsuits in September 2014 alone, up 10 lawsuits over September 2013. But does this year-end-rush accomplish the EEOC’s goals and square with its statutory mandate? The following post explores this annual governmental filing phenomenon and what it means to employers in its aftermath.

Different Year, Same Spike: FY 2014 Cases Filed By Month

As this graph shows, the year-end-rush is still a very real phenomenon for employers, with a gradual increase in filings throughout the year, punctuated by a final blast in September. Readers may note the uptick in December 2013. This was most likely due to clearing a backlog caused by the October 2013 government shut-down; we expect that, like most other government agencies, the EEOC needed a few weeks to get its legs back beneath it before it got back to business as usual.

The end-of-year rush pushed the total number of suits filed up a bit from last year, increasing to 142 from last year’s 134. But this is still a dramatic drop from the high point of 261 filings in 2011. This drop, however, is consistent with the EEOC’s 2012 strategic enforcement plan, which directed the regional offices to pursue more systemic, class-wide employment discrimination cases. In short, the EEOC continues to strive for getting the most bang for the taxpayer buck.

But with fewer total filings, what has consumed the EEOC’s resources this year? Where does the money go? We have developed some ideas based on our study of EEOC activity:

The EEOC Is Still Fighting The Giants From Previous Years

The EEOC has finite resources. Predictably, one problem the EEOC faces with an increased focus on systemic cases is that these whopper cases take up more resources and last longer than garden-variety matters. The EEOC is still fighting some of the same major cases that it filed during the high-water mark for filings. For example, the EEOC recently convinced U.S. District Judge Keith Ellison to reverse, at least in part, his earlier employer-friendly decision in EEOC v. Bass Pro Outdoor World, LLC, et al., Case No. 11-CV-3425 (S.D. Tex. July 30, 2014). That large-scale case still remains in its relative infancy, even though it was filed in 2011.

The EEOC has also continued its battle against employers – and at least one state – over the legality of using credit and criminal background checks to make hiring and employment decisions. We have blogged often about this beleaguered EEOC initiative over the past few years. At least one of those cases came to a spectacular end this year in a stunning defeat for the EEOC, while other battles continue to rage on. As we previously blogged about here, the EEOC recently lost a landmark case against Kaplan Higher Education Corp. 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.”

But this EEOC theory lives on in the EEOC v. Freeman case, which is up for appellate review before the Fourth Circuit, and in the November 2013 case that Texas brought to enjoin the enforcement of the EEOC’s criminal history guidance.  As we discussed here, that suit was dismissed on August 20, 2014 in State of Texas v. EEOC, Case No.5:13-CV-255 (N.D. Tex. Aug. 20, 2014). The Court held that Texas lacked standing to maintain its suit because Texas did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance. While an important victory for the EEOC, this decision left untouched the important substantive issues regarding the EEOC’s guidance, which will have to be fought another day.

The key to this retrospective is that when analyzing EEOC activity, it is often necessary to look back at filings from previous years, as that activity impacts the EEOC’s resources and strategies today.

Clearing The Underbrush For An Enhanced Systemic Program

The EEOC also appears to be taking another strategic direction in FY2014: deploying considerable resources to litigate high-level, defining issues that will have a major impact on its ability to carry out its systemic initiative. As we previously blogged about here, in 2012 the EEOC issued its strategic enforcement plan that outlined the priorities for the Commission’s enforcement activity through 2016.  We have dissected the potential ways that the SEP would guide enforcement priorities as it was implemented (see, e.g., here, here, and here). But by FY2014, we start to see the EEOC’s agenda snap into clearer focus, and note how the government has adjusted its activities to pursue the SEP objectives. Of course, one of the EEOC’s most important strategic objectives is an increased focus on pattern or practice, policy, or class cases where the alleged discrimination has a broad impact on an industry, profession, company or geographic area. These so-called “systemic” cases are developing into its single most important litigation driver.

But this year, the agency has focused substantial resources to tackle the legal issues that could, if the EEOC is successful, sweep away certain procedural prerequisites to filing suit that the EEOC believes just get in the way of its enforcement efforts, especially concerning systemic cases.

Perhaps chief among those procedural brake-pumps is the EEOC’s statutorily mandated obligation to conciliate in good faith before bringing suit against an employer.  On June 30, 2014, the Supreme Court granted certiorari in Mach Mining, LLC v. EEOC (No. 13-1019). As we have discussed a length here, the outcome of that case could be a game-changer in EEOC litigation because the EEOC seeks to effectively immunize itself from any attack on its failure to meaningfully conciliate with an employer before bringing a lawsuit. The Seventh Circuit ruled in December 2013 that the EEOC’s failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit.  The Court held that such pre-suit obligations were beyond judicial scrutiny as long as the EEOC’s complaint pleads it has complied with all procedures required under Title VII, and the relevant documents are facially sufficient. This decision is now up for review by the Supreme Court because of the conflict among the circuits created by the Seventh Circuit’s decision. As we previously blogged about here, Seyfarth Shaw submitted an amicus brief to the Supreme Court on behalf of the American Insurance Association, questioning the underpinning of the Seventh Circuit’s decision.

But conciliation is not the only procedural hurdle that the EEOC seeks to dismantle. It is also challenging the court’s ability to inquire into the scope of the EEOC’s pre-suit investigation as well. On March 10, 2014, in EEOC v. Sterling Jewelers Inc., Case No. 08-CV-706 (W.D.N.Y. Mar. 10, 2014), Judge Richard J. Arcara of the U.S. District Court for the Western District of New York dismissed the EEOCs’ entire case against Sterling Jewelers with prejudice. In so doing, the Court rejected the EEOC’s contention that a court may not inquire as to the scope of the EEOC’s pre-lawsuit investigation, and found no evidence that the EEOC had actually investigated the nationwide claims that it had brought against Sterling prior to bringing suit. The EEOC promptly appealed that decision, which is now being litigated at the Second Circuit.

Pushing The Envelope On Non-Substantive Legal Theories

Not content to continue to pursue the novel issues raised in prior years, the EEOC is also attempting to add new weapons to its enforcement arsenal. In EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863 (N.D. Ill. Feb. 7, 2014), the EEOC challenged various provisions of CVS’s standard severance agreement, arguing that it violates Title VII because it interferes with an employee’s right to file charges, communicate voluntarily, and participate in investigations with the EEOC and other state agencies. In addition to the general release and the covenant not to sue – which were already areas of concern for the EEOC – the EEOC also challenged the agreement’s requirements that employees notify the company of any legal proceedings or administrative investigations, the non-disparagement provision, and the agreement’s prohibition on the disclosure of confidential information without the company’s consent. Although preliminary comments from the judge strongly suggest that this case will be dismissed, the EEOC is already pursuing a different employer under a similar theory in the District of Colorado. See EEOC v. CollegeAmerica Denver, Inc., Case No. 14-cv-01232-LTB-MJW (D. Colo.).

And in EEOC v. Supervalu, Inc. and Jewel-Osco, Case No. 1:09-CV-05637 (N.D. Ill.), the EEOC attacked an employer for supposedly failing to comply with the injunctive mandates that the employer had agreed to as part of a consent decree entered into with the EEOC.  The EEOC had sued Supervalu, Inc. and Jewel-Osco (“Jewel”) in 2009, alleging that it engaged in a pattern or practice of violating the Americans with Disabilities Act. On January 14, 2011, the EEOC and Jewel entered into a three-year consent decree to resolve the case. Jewel agreed, among other things, to engage an “accommodations consultant” to assist in identifying possible accommodations for disabled employees.

But just a year later, on March 26, 2012, the EEOC sought civil contempt sanctions against Jewel for failing to follow the requirements of the consent decree. Magistrate Judge Mason of the Northern District of Illinois filed his Report and Recommendation on July 15, 2014, ruling that Jewel violated the terms of the consent decree by allegedly failing to follow its own procedures, including the use of an accommodations consultant, and failing to accommodate and ultimately terminating three disabled employees. The EEOC almost always insists on some form of injunctive relief when it settles a case through a consent decree. If enforcement of the terms of those decrees is the new cause of action de jour, then this poses an entirely new threat to employers, who could face substantial exposure even after a case is settled and “over.”

Finally, the EEOC has been steadily increasing its use of its subpoena power to gather as much information as possible from employers prior to filing suit. Fiscal year 2014 saw 24 subpoena actions versus the 17 that were filed last year. As we have discussed here, although some employers have been successful in reigning in the EEOC’s subpoena power, many courts continue to give the agency considerable leeway to conduct searching pre-suit investigations, even where those investigations have little or no connection to the underlying charge.

What Types Of Cases Did The EEOC Focus On In FY2014?

Of course, the legal shifts discussed above are not the only story coming out of the EEOC’s FY2014 filings. We can also discern significant trends in the types of cases that the EEOC is choosing to pursue.  The following chart offers a breakdown of the EEOC’s filings by statute:

We continue to see a strong focus on disability issues: disability cases make up 34% of all EEOC filings this year, fairly close to the number of cases we saw filed last year (36% in 2013). Race cases were somewhat underrepresented this year when compared with past years (14 in 2014, as compared with 17 in 2013), but there has been a fairly sizable uptick in age discrimination filings (nine this year, compared with only five in 2013).

By far, sex and pregnancy issues are the dominant discrimination theories alleged in Title VII cases in FY2014. The Commission filed 6 pregnancy discrimination cases in September alone, and has repeatedly emphasized that this is a priority for the agency. In a recent case filing announcement, for example, the EEOC’s press release stressed that “[t]he law is clear – employers cannot refuse to hire or discharge women because of their pregnancy,” and that “[c]ombating pregnancy discrimination remains a priority.” Indeed, sex/pregnancy discrimination cases make up 61% of all Title VII cases filed in 2014:

Aggressive Regional Offices

Finally, as with prior years, FY2014 saw significant disparities in the number and types of filings coming out of the EEOC’s 15 districts. Five districts in particular are unusually aggressive in the number of cases they file, the types of cases they bring, and how aggressive they pursue those cases. Here is a breakdown of how many cases were filed where:

The EEOC’s Chicago district office, led by regional attorney John Hendrickson, remains one of the most aggressive in the country, pursuing not only a large number of cases (26 in FY2014), but also cases that are themselves large and important in terms of their impact on U.S. employers. CVS, Jewel, and Mach Mining, discussed above, all started in Chicago.

The Philadelphia office is also consistently active and aggressive. That office took the lead in a handful of cases alleging that employers’ use of criminal and credit history background checks had an adverse impact on minority applicants.  Although one of those cases, EEOC v. Kaplan, Inc., resulted in a stinging defeat for the agency at the district court and the Sixth Circuit, another case, EEOC v. Freeman, lives on at the appellate level. The Fourth Circuit is set to decide that case after a Maryland federal judge granted summary judgment to the company.

The New York office has also been quite active, and is pursuing a handful of high profile pregnancy and sex discrimination cases that are still winding their way through the Courts. Chief among those are the Sterling case discussed above, which is now before the Second Circuit, and a pregnancy discrimination suit against Bloomberg LP, which was gutted by the district court in September 2013, and which the EEOC was forced to walk away from in August of this year.

Rounding out the list of hard-hitting regional offices are the Houston office and the Phoenix office, which are both known to file high-profile cases and aggressively pursue them. Those offices filed 9 cases and 14 cases respectively in 2014.

Insight For Employers

Fiscal Year 2014 was curious in many ways. We can see the unquestionable fingerprints of the 2012 SEP in the EEOC’s filings, and we can expect to see those trends continue. But we also see the agency making more nuanced, strategic decisions with how it uses its finite resources – choosing to fight a number of procedural issues that may pave the way (at least if the EEOC has its way) to an open door to the federal courthouse in years to come, unfettered by procedural prerequisites. The 2014 fiscal year has just ended, and we continue to process this data. The EEOC’s official published statistics are typically released in November, which will give us additional insight into this often confounding agency. Stay tuned, loyal blog readers.

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

By Gerald L. Maatman, Jr.

The U.S. Equal Employment Opportunity Commission has made eliminating so-called “discriminatory” barriers in recruitment and hiring one of its top priorities. For practical purposes, this means the agency is targeting and scrutinizing the recruitment and hiring practices of all employers. 

As a result, issues with EEOC enforcement litigation remain at or near the top of corporate counsel’s radar screen. The financial stakes are typically high, corporate reputations are on the line, and problems with media attention can divert critical corporate resources. 

Often, I hear corporate counsel bemoan that defending an EEOC systemic investigation or pattern or practice lawsuit is akin to “holding a tiger by the tail…” This type of litigation can be tough, but sound defense strategies can turn the tables and secure successful outcomes.

Today I had the privilege of discussing these issues in a keynote address at the American Staffing Association’s Legal Symposium with over 650 corporate counsel.

Substantial Q & A focused on the defense victories earlier in 2014 in the two biggest and most-high profile EEOC lawsuits in the country – in EEOC v. Sterling (discussed here) and EEOC v. Kaplan (discussed here and here). The rulings in these cases have generated significant criticism of the EEOC’s systemic litigation program – with the Wall Street Journal calling the Sixth Circuit’s decision in EEOC v. Kaplan the “Opinion of the Year” (here and here).

But given the Commission’s current agenda, hiring and recruitment practices remain vulnerable to enhanced scrutiny.

Sound HR compliance programs, strong defense strategies, and practical litigation decisions are key to eliminating and/or minimizing these exposures.

By Rebecca Bjork and Gerald L. Maatman, Jr.

Our loyal readers know that we have been monitoring closely the proceedings in the EEOC’s appeal of the largest fee sanction award against the agency in its history — the $4.7 million awarded by the district court in the sexual harassment case entitled EEOC v. CRST Van Expedited, Inc., No.13-3159 (8th Circuit). You can read about the award and our take on the EEOC’s opening brief in the appeal here.

In essence, the district court awarded fees to CRST because it found the EEOC should not have brought the case in the first place. It found the EEOC’s conduct to be frivolous, unreasonable or groundless. Specifically, the district court found that the Commission failed to exhaust Title VII’s administrative prerequisites before filing suit, and also that its pattern or practice claim was unreasonable since it was based only on anecdotal evidence.

This past week, the EEOC filed its reply brief in the Eighth Circuit in support of its effort to overturn the fee award on the ground that CRST is not the prevailing party, even though the EEOC lost its pattern or practice case and 153 of 154 individual claimants’ cases, and the remaining individual’s case settled for $50,000. The EEOC’s hefty brief — which comes in at 45 pages — takes on CRST’s opposition brief point-by-technical-point, but ultimately turns on one overarching issue:  whether the EEOC should be considered the prevailing party because all of its claims and claimants must be understood as one claim because they are allegedly unified by common failures of CRST’s HR policies and procedures, or whether CRST prevailed by defeating multiple individual claims, and even under EEOC’s theory, “virtually 99.9%” of the case, in the district court. See Br. at 14. 

Among the most pertinent points the EEOC argues in reply is that CRST ignores controlling Supreme Court precedent cited in the EEOC’s opening brief on the standard for a prevailing civil rights plaintiff (Farrar v. Hobby, 506 U.S. 103 (1992)) and why EEOC supposedly meets that standard. Br. at 4. It also contends that the dismissal of the pattern or practice case is irrelevant to whether it is the prevailing party, because it can and did sue on behalf of individuals under its section 706 authority to represent aggrieved individuals. Br. at 4-6. And it argues that the finding that EEOC failed its pre-suit conciliation obligations is not a finding on the merits that would make CRST the prevailing party. Br. at 14-17. 

The stakes for the EEOC of course are high given the dollar figure at issue. So if the Eighth Circuit affirms the award, one can be quite sure that a hard look at the appellate decision will be forthcoming from decision makers at the highest levels of the EEOC. Watch this blog space for further developments.

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

By Laura Maechtlen and Michael Wahlander

Earlier this week, a federal district court in Nebraska dealt the EEOC two more blows in addition to its recent trial defeat in EEOC v. JBS USA, LLC, 8:10-CV-318 (D. Neb.), when it denied the EEOC’s request for a new trial and certified its trial ruling as an appealable judgment. We covered the Court’s earlier ruling here. Not only is the ruling a significant one for the case, but also it is significant to employers because an appellate ruling affirming the district court could provide further clarification on the requirements for establishing the “undue hardship” defense under Title VII of the Civil Rights Act of 1964.

Background

In EEOC vs. JBS USA, LLC, the EEOC alleged that JBS, which operates beef processing facilities, engaged in religious discrimination by refusing to allow Muslim employees unscheduled breaks to pray and refusing to move their meal break to a time that coincided with the sunset prayer time during Ramadan in 2008. The case included both “pattern or practice claims” and approximately 150 individual claims against JBS based on similar facts. 

The Court divided the case into two phases. Phase I addressed the merits of the pattern or practice claims. Phase II would address the merits of the individual claims. In October 2013, after a bench trial, the Court dismissed the pattern or practice claims, finding that JBS established the “undue hardship” defense with respect to the requested accommodations. Specifically, the Court found that the requested accommodations would impose more than a de minimis burden on both JBS and its non-Muslim employees. The full text of Court’s ruling can be found here.

After the trial, the parties made three motions. The EEOC filed a motion for a new trial. JBS moved for an award of attorneys’ fees. Perhaps most significantly, JBS also filed a motion to have the Court’s ruling as to its “undue hardship” defense become a final judgment and an immediately appealable order. 

The Court’s Ruling

The Court denied the EEOC’s motion for a new trial and JBS’s request for attorneys’ fees, but granted JBS’s request to have the ruling on its “undue hardship” defense certified as a final judgment and an appealable order. See EEOC v. JBS USA, LLC, 8:10-CV-318, 2014 U.S. Dist. LEXIS 9635, at *2-8 (D. Neb. Jan. 27, 2014).  The Court’s full ruling can be found here.

In granting JBS’s motion to certify the earlier ruling for immediate appeal, the Court made several observations.  First, the Court observed that courts usually only grant certification motions made by the prevailing party in “special” cases. Id. at 3-4. Next, the Court found that its earlier ruling was a final disposition of the EEOC’s pattern or practice claims. Id. at 4. The Court then reasoned that because JBS would base its “undue hardship” defense to the 150 remaining individual claims on the same evidence as it did for the pattern or practice claims, certifying the order for appeal could serve to streamline the litigation of the individual claims. Id. at 5-6. In other words, if the Court of Appeal affirms the ruling on the “undue hardship” defense, it could resolve the remaining individual claims as well.

As mentioned above, the Court also denied the EEOC’s motion for a new trial. The Court noted that the motion essentially restated the EEOC’s previous factual and legal arguments, which it already rejected. Id. at 8. As a result, the Court found that the EEOC’s motion failed to set forth any grounds supporting a new trial and that a new trial was not necessary to prevent a miscarriage of justice. Id. at 8.

The Court also denied JBS’s request for attorneys’ fees. In coming to that conclusion, the Court found that there was “some basis” for the EEOC’s claims because it did establish a prima facie case for its failure to accommodate claims. Id. at 7. The Court also noted the high burden that an employer must carry to recover attorneys’ fees. Id. at 6-7.

The Court’s ruling with respect to JBS’s motion to certify the order for appeal and the EEOC’s motion for a new trial are significant in this case. Essentially, the ruling virtually forces the EEOC to appeal the Court’s dismissal of its pattern or practice claims in order to pursue the remaining individual claims because of the impact of the “undue hardship” defense on those claims. The Court’s ruling on JBS’s attorneys’ fees motion is not entirely surprising given the high threshold for showing that a claim is “frivolous.”

Implications For Employers

The outcome of this case could have important implications for employers. If the EEOC does file an appeal, the ruling could impact the developing case law relative to an employer’s obligation to provide religious accommodations to employees. An appellate ruling could also impact and further clarify what kind of evidence an employer must provide to establish the “undue hardship” defense. The ruling is also significant to employers in that it shows that the EEOC will continue to aggressively litigate a case, even after it loses. This should again underscore to employers the importance of taking proactive and preventative measures to ensure compliance with the law to minimize the potential for litigation and its associated costs.

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

By Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

Back by popular demand, our Annual Workplace Class Action Report Webinar is on Tuesday, February 11, 2013. Click here to register and attend.

In the past two years we have seen a combination of Supreme Court decisions help create a defensive barrier for employers in class action cases. Enough time has passed, however, that plaintiff lawyers have begun to breach this barrier with new theories and approaches and, combined with increasing and aggressive government enforcement litigation, employers may once again find themselves facing bet-the-company-type class actions in 2014.

More than any other development in 2013, Wal-Mart Stores, Inc. v. Dukes continued to have a wide-ranging impact on virtually all class actions pending in federal and state courts throughout the country. Many Rule 23 decisions in 2013 pivoted off of Wal-Mart and leverage points in class action litigation increased or decreased depending on the manner in which judges interpreted and applied Wal-Mart.

Our readers have given us wide-ranging feedback over the last three weeks since the launch of the 10th Annual Report in the second week of January. Over 5,500 copies of the report have been downloaded to clients and the readers of our blog. We are pleased with the positive press we received from commentators, including Forbes, The Wall Street Journal, Corporate Counsel, Law360, Insurance Business America, and Bloomberg BNA Daily Labor Report and Class Action Reporter (read more here, here, here, here, here, and here).

For an interactive analysis of 2013 decisions and emerging trends, please join us for our annual webinar offered in conjunction with the publication of our 10th Annual Workplace Class Action Report. The Report’s author, partner Gerald L. Maatman, Jr., along with partners Lorie Almon and Ian Morrison, chairs of our wage & hour and ERISA class action groups, will cover a changed national landscape in workplace litigation.

Other significant developments to be addressed include:

  • The increasing focus of the U.S. Equal Employment Opportunity Commission on high-stakes, big-impact litigation
  • A continuing rising tide of Wage & Hour cases
  • Implications of the Supreme Court’s first ruling on the Class Action Fairness Act in Standard Fire Insurance Co. v. Knowles
  • Additions to the increasing number of rulings allowing employers to use arbitration agreements to manage class action risks
  • Rapid strategic changes due to rulings like Comcast Corp. v. Behrend

The date and time of the webinar is Tuesday, February 11, 2014:

1:00 p.m. to 2:00 p.m. Eastern Time

12:00 p.m. to 1:00 p.m. Central Time

11:00 a.m. to 12:00 p.m. Mountain Time

10:00 a.m. to 11:00 a.m. Pacific Time

Speakers: Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

By Gerald L. Maatman, Jr.

 The keynote speaker at today’s program (January 27, 2014) on Employment Practices Liability Insurance in New York City (sponsored by the American Conference Institute) was Constance Barker, one of the five Commissioners of the EEOC. We spoke on workplace class actions and EEOC litigation at today’s program, and Commissioner Barker presented her thoughts in the keynote address on what 2014 has in store for the EEOC and employers alike.

Commissioner Barker is a thoughtful and articulate government official with a broad spectrum of litigation experience before coming to the EEOC. As a result, like the old E.F. Hutton TV commercial, “when Constance Barker of the EEOC speaks, employers should listen….” In this respect, Commissioner Barker’s comments are important for all employers concerned with employment-related compliance efforts, as well as avoiding EEOC litigation.

Commissioner Barker acknowledged that the Obama Administration has used the EEOC’s enforcement litigation to “regulate” industries given the gridlock in Congress and its inability to pass worker-friendly legislation. Commissioner Barker stated that her perception is that with too much delegation of litigation decision-making in the hands of the Commission’s general counsel, 2014 will see extensive and aggressive litigation against employers. Commissioner Barker asserted that the delegation is “too broad,” and that the discretion of the EEOC’s general counsel over litigation decision-making should be reduced (so that the five Commissioners take a more active role n determining whether and what types of lawsuits will be brought against employers).

Commission Barker identified ADA issues, transgender rights, pregnancy discrimination, disparate impact discrimination cases, and discriminatory hiring screens at the top of the EEOC’s enforcement agenda. She urged employers to consider compliance efforts in reviewing their hiring and workforce data to ensure the lack of disparate impact in the treatment of protected-category applicants and employees.

Commissioner Barker also suggested that elections have consequences, and that the EEOC’s Strategic Enforcement Program (“SEP”) manifests how the Commission will direct its overall efforts (our past post on the SEP is here. She predicted that litigation will increase and that the EEOC’s systemic litigation program will take precedence over discrimination prevention efforts. Commissioner Barker predicted that hiring and promotional practices will be the key focus of the EEOC’s litigation efforts, and “bigger” rather than “smaller” lawsuits will be brought by the government.

Finally, Commissioner Barker opined that the Seventh Circuit’s ruling in EEOC v. Mach Mining (our take on it is here) was the most important case of the year. She called the ruling “surprising” in that it allows government counsel to give short shrift to pre-lawsuit conciliation obligations, and indicated that the Seventh Circuit’s decision is apt to get to the U.S. Supreme Court for review due to its importance for the litigation process.

Recently the Commission published its statistical breakdown of EEOC charges with retaliation, race, and sex discrimination charges leading the way. The EEOC also had the third highest number of discrimination charges filed in 2013 – a total of 93,727 charges – than ever before in its 49-year existence. In addition, the EEOC’s docket of systemic pattern or practice cases grew to over 20% of the Commission’s docket. And the EEOC recovered $372.1 million for claimants, the highest level of recoveries in the Commission’s history. All of this signals more cases and issues coming in 2014 for employers.

The bottom line – employers are well served to remain focused on compliance activities relevant to their workplace obligations.

By Gerald L. Maatman, Jr.

In one of the first workplace rulings of 2014, the U.S. District Court for the Western District Of New York granted an employer’s motion for summary judgment in EEOC v. Sterling Jewelers Inc., Case No. 08-CV-706 (W.D.N.Y. Jan. 2, 2014), and dismissed the lawsuit because the Commission failed to show that its pre-lawsuit investigation was consistent with the scope of the nationwide pattern or practice allegations of pay and promotion discrimination in its lawsuit. The case is the largest EEOC lawsuit on its docket. The result is the complete dismissal of the EEOC’s nationwide pattern or practice claims.

Background To The Ruling

When it filed the lawsuit in 2008, the EEOC claimed that the employer discriminated against female employees starting in 2003 in setting starting pay and in making promotions. In addition to denying those allegations, the employer filed an answer and affirmative defenses asserting that the Commission’s pre-lawsuit investigation was not a nationwide investigation, and the scope of the lawsuit exceeded the pre-lawsuit investigation.

After significant discovery, including rounds of depositions of the EEOC’s investigators responsible for the case, the employer moved for partial summary judgment on the grounds of the scope of the investigation issue. The employer argued that there was no evidence that the Commission had conducted a nationwide investigation prior to commencing the lawsuit. Id. at 4.

The Court’s Opinion

Magistrate Judge Jeremiah McCarthy of the Western District Of New York granted the motion – with a 20-page report and recommendation – on January 2, 2014. He rejected the EEOC’s position that a Court may not inquire into the scope of the EEOC’s pre-suit investigation. Id. at 5-7. In analyzing the record, Magistrate Judge McCarthy concluded that there was no genuine issue of material fact as to the scope of the investigation in that the Commission’s investigation was not nationwide. Id. at 9-12.  The Court rejected all of the contentions of the EEOC in trying to show that its nationwide claims should not be dismissed.

Implications For Employers

As the EEOC is committed to prosecution of large systemic lawsuits against employers, the ruling in this case is important in elucidating the Commission’s statutory obligations in terms of the way it investigates and litigates its cases.

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

By Christopher DeGroff, Reema Kapur, and Gerald L. Maatman, Jr.

We are pleased to offer a year-end bonus for all of our loyal readers of our blog – a pre-publication preview of our annual study of EEOC litigation is here: the launch of our book entitled EEOC-Initiated Litigation: Case Law Developments In 2013 And Trends To Watch For In 2014. Distribution of the report is set for early January 2014.

This publication focuses exclusively on EEOC-related litigation; and it covers more decisions than ever before.  The attached Executive Summary excerpted from our book explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2013 and in the near term. As we did last year, this publication will be offered for download as an eBook. To order a copy, please click here

Further, as in the past, this year we selected a short list of what we consider the five most intriguing EEOC-related decisions handed down in 2013. See previous blog postings here and here for past year’s rulings of note. 

So what are the 5 most intriguing decisions? Here are our picks:

1.    EEOC v. Mach Mining, LLC, No. 13-2456, 2013 WL 6698515 (7th Cir. Dec. 20, 2013).   

In recent years, the EEOC has become increasingly aggressive in its enforcement efforts, even as its resources have dwindled. With mounting pressure to “do more with less,” the EEOC is re-imagining itself.  Some argue (convincingly) that the agency appears to be moving away from its mandate to combat discrimination by encouraging employers’ voluntary compliance and, instead, is focused on a “scorched earth” litigation agenda. Especially troubling are instances where the EEOC has rushed to file high-profile lawsuits that splash allegations of systemic discrimination across headlines, only to have its claims dismissed altogether or whittled down to a single claimant.  In some instances, courts have stepped in to right the balance and sanctioned the EEOC for failing to do its homework.  (See e.g., EEOC v. The Original Honeybaked Ham, EEOC v. CRST Van Expedited, Inc., EEOC v. Bloomberg LP, and EEOC v. Peoplemark, Inc., where courts sanctioned the EEOC for conducting haphazard and questionable investigations and conciliation efforts in its rush to court.)

Against this backdrop, the Seventh Circuit decision in EEOC v. Mach Mining, LLC, is stunning. On December 20, 2013, the Seventh Circuit broke from a majority of the U.S. Courts of Appeal when it held that the EEOC’s pre-suit conciliation efforts are not subject to judicial review, at all. This ruling has stark implications for employers in the Seventh Circuit – it arguably extinguishes the traditional failure to conciliate defense to an EEOC lawsuit.

The Seventh Circuit’s reasoning is puzzling. It brushes aside the agency’s mandate to encourage voluntary compliance with employment laws, noting: “[t]he statutory directive to the EEOC to negotiate first and sue later does not implicitly create a defense for employers who have allegedly violated Title VII.” It defers entirely to the agency’s ability to police itself and rejects the notion that “EEOC field offices are so eager to win publicity or to curry favor with Washington by filing more lawsuits that they will needlessly rush to court.” The 27-page opinion does not delve into the facts that recently have lead numerous courts to chastise the agency for precisely the type of conduct the Seventh Circuit characterizes as implausible. 

The Mach Mining decision, in effect, condones the EEOC’s questionable tactics. Because of the legal importance of the issues involved and the Circuit split on this issue, we expect that it is only a matter of time before the U.S. Supreme Court accepts a certiorari petition and weighs in on the issue. In the interim, all employers, and not just those in the Seventh Circuit, should expect the EEOC to enter 2014 vigorously challenging employers’ ability to challenge the sufficiency of conciliation efforts.

2.    EEOC v. Abercrombie & Fitch Stores, Inc., 731 F.3d 1106 (10th Cir. 2013). 

Abercrombie’s “Look Policy,” which requires its employees to dress in a manner that “exemplifies a classic East Coast collegiate style of clothing” has been intensely scrutinized, both in the courtroom and in the public arena.  Indeed, the Look Policy has been challenged in several lawsuits, one of which recently culminated in a Tenth Circuit ruling clarifying an employer’s duty to accommodate religious practices where an employer has notice that the practice conflicts with a job requirement or work policy.  We followed the case closely as it wound its way through the courts, taking sometimes unpredictable turns. The district court granted summary judgment for the EEOC, but the Tenth Circuit did an about face, not only reversing the district court’s judgment, but also granting summary judgment to Abercrombie.  On December 4, 2013, the EEOC filed a Petition for Rehearing En Banc seeking review of the Tenth Circuit decision.

This is a significant, employer-friendly decision regarding the relative burdens in religious discrimination claims alleging a failure to accommodate. The Tenth Circuit placed the burden of notice squarely on the applicant or employee who is uniquely qualified to know whether a particular practice is religiously motivated, and whether a workplace accommodation may be necessary. It  noted that the EEOC itself warns employers against asking about an applicant’s or employee’s religious practices, which are intensely personal and individual-driven, or making assumptions about religious practices based on stereotypes. Further, it acknowledged a line of cases holding that an employer’s actual, particularized knowledge of a conflict between a religious practice and workplace policy may be enough to trigger an employer’s duty to engage in the interactive process, but ruled that no such facts were present in this case. 

The EEOC is seeking reconsideration of the Tenth Circuit’s ruling, arguing that something less than an employer’s particularized, actual knowledge should suffice. If this argument finds traction in the courts, it would put employers in an impossible position: an employer would be penalized for not acting on stereotypical assumptions regarding an applicant’s or employee’s religious beliefs, an outcome that is directly opposed to Title VII’s goals. As the final chapter in this saga has yet to be written; employers should watch this case closely in FY 2014.

3.    EEOC v. Kaplan Higher Learning Educ. Corp., No. 10-CV-2882, 2013 WL 322116 (Jan. 28, 2013).

In December 2010, the EEOC filed a lawsuit alleging that Kaplan’s use of credit checks in connection with employment decisions had an unlawful disparate impact on African-American individuals in violation of Title VII.  The lawsuit was one of the Commission’s highest profile cases concerning a national priority under the current Strategic Enforcement Plan — “target[ing] class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.” 

On January 28, 2013, the court granted summary judgment to the defense and dismissed the EEOC’s suit. The EEOC’s claim faltered at the outset — its statistical evidence was unreliable. Specifically, the Court excluded the EEOC’s  expert reports and testimony of its expert as inadmissible because the EEOC failed to show that the expert’s methodology was reliable. The court tossed the entire case because without expert testimony, EEOC could not prove its disparate impact theory. 

Not only did Kaplan win the war (complete dismissal of the lawsuit), in the course of the litigation, it also won important battles including persuading the Court to compel the Commission to disclose its own consideration of credit history in connection with employment decisions. In doing so, Kaplan successfully turned the tables on the agency’s “do as I say, not as I do” litigation strategies. 

The court did not reach the merits of the EEOC’s underlying disparate impact theory; rather, it held that the methodology the EEOC chose to prove its claims was flawed. Indeed, the EEOC is appealing the ruling and in the summer of 2013 filed a new round of lawsuits attacking employers’ use of background screening tools based on the same disparate impact theories. Employers should expect that the EEOC to continue to aggressively litigate this theory in 2014.

4.    EEOC v. Boh Brothers Constr. Co., 731 F.3d 444 (5th Cir. 2013).  

The EEOC scored a significant win in the Boh Brothers case, when the Firth Circuit held that harassment based on gender-stereotypes can be actionable “because of sex” under Title VII. This case exemplifies the edge-of-the-envelope theories that the EEOC championed in 2013, in its drive to stretch the boundaries of existing law or make new law. 

In Boh Brothers, an ironworker was allegedly subjected to “almost-daily verbal and physical harassment.” The EEOC presented evidence that the supervisor thought the victim was not a “manly-enough man.” The Fifth Circuit held that the EEOC could prove that the same-sex harassment was “because of sex” by presenting evidence that the harassment was based on a perceived lack of conformity with gender stereotypes.

Almost immediately after the decision on appeal, the EEOC issued a press release touting the Fifth Circuit’s ruling. It remains to be seen whether other courts will adopt the Fifth Circuit’s reasoning. While Boh Brothers is arguably an extreme case of gender-stereotype discrimination, a colorful dissenting opinion (a must-read) highlighted the difficulty of identifying actionable conduct at predominately male-populated worksites, like construction sites and oil/gas fields. In the interim, we expect that the EEOC will continue to push the boundaries of Title VII to encompass cutting edge harassment theories.

5.    EEOC v. Hill Country Farms, Inc. d/b/a Henry’s Turkey’s Servs., No. 11-CV-41 (S.D. Iowa). 

In a record breaking and widely publicized jury trial award, the EEOC recovered $240 million in an ADA case on behalf of a class of mentally disabled men who suffered mistreatment and discrimination on the basis of their disability. To put the $240 million award in context – between 1997 and 2012, the EEOC secured a total of $89 million in damages for all ADA claims. The EEOC’s complaint alleged that the 32 claimants were verbally and physically abused in a variety of ways over three decades.  Before the case proceeded the trial, the EEOC won summary judgment on a claim that the claimants were paid lower wages than their non-disabled counterparts.  On May 1, 2013, after a six-day trial on the remaining claims, the jury awarded $7.5 million in compensatory and punitive damages for each of the 32 claimants, totaling $240 million. The court later reduced the award per claimant to $50,000 ($1.6 million total for all claimants) pursuant to the ADA’s statutory cap on damages. On August 12, 2013, Hill Country Farms filed an  appeal raising two issues: one, that another entity, West Liberty Foods, Inc., should have been joined in the action as a necessary party, and two, that the court erred in admitting evidence regarding activities in the Bunkhouse. The outcome of the appeal is still pending. 

The egregious facts of this case drove the record-breaking verdict.  Nevertheless, the EEOC’s recent and growing focus on ADA claims should be taken as fair warning to employers that the EEOC will pursue any and all perceived violations.  

We hope you find this retrospective on 2013 and EEOC-Initiated Litigation helpful to corporate counsel. It was quite a year, and we expect 2014 will be no different.

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

We were privileged to attend the National Law Journal’s awards dinner for Law Department of the Year yesterday evening at the Ritz-Carlton Hotel in Chicago, Illinois. Seyfarth’s Labor & Employment Department won Department of the Year honors for our work on the defense of workplace class actions and EEOC pattern or practice litigation – a description of the award is here.

Photo Credit: Seyfarth Shaw

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

In both disability and religious discrimination cases employers, especially larger ones, are often taken to task by the EEOC for arguing that an undue hardship exists that prevents them from accommodating an employee’s disability or sincerely held religious belief. While in some cases a simple accommodation (e.g., ergonomic chair) may do the trick, in most cases – especially those that form the basis of a federal lawsuit – the accommodation is much more onerous and requires an employer to expend significant resources and/or severely restructure a job. Although this burden is high, a recent decision from the U.S. District Court for the District of Nebraska in EEOC v. JBS USA, LLC, 8:10-CV-318 (D. Neb.  Oct. 11, 2013), in dismissing a pattern or practice lawsuit brought by the EEOC, demonstrates that the undue hardship defense is alive and well!

In EEOC v. JBS USA, LLC, Chief Judge Laurie Smith Camp entered judgment for the employer, finding that it established the affirmative defense of undue hardship since “a religious accommodation for Muslim employees, within the parameters requested [by the EEOC], would have caused more than a de minimis burden on JBS [the employer] and on its non-Muslim employees.” Id. at 40.

Background

JBS operates beef processing facilities in several states, including Grand Island, Nebraska. Id. at 2. In 2007, between 80 to 100 Somali Muslim employees in the Grand Island location took part in a “walk out” in protest of JBS’s refusal to allow them use their “informal breaks” (typically reserved for bathroom breaks) to pray, instead requiring them to pray during their regularly scheduled breaks. Shortly thereafter, JBS also refused (after much deliberation) to change all employees’ meal break times during Ramadan to accommodate its Muslim employees’ prayer schedule and to shorten the overall workday (with a corresponding decrease in pay for all employees). Id. at 23. The EEOC brought suit alleging that JBS violated Title VII by engaging in a pattern or practice of failing to reasonably accommodate the religious practices of Muslim employees in that it failed to: (1) allow Muslim employees to take unscheduled breaks to pray; and/or (2) move the meal break during the remainder of Ramadan 2008 to a time that coincided closely with such employees’ sunset prayer time. Id. at 28.

Basis Of Decision

In reaching her decision, Judge Camp noted that an employer can establish an undue hardship in two ways: (1) the accommodation creates more than a de minimis cost to the employer; or (2) the accommodation would have caused more than a de minimis imposition on co-workers. Id. at 32-33. Judge Camp held that the two accommodations sought by the Muslim employees – permission to take unscheduled breaks during the day to pray and to move the meal break period during Ramadan and shorten everyone’s work shifts – would have resulted in  an undue hardship for JBS under either theory. Id. at 34.

With respect to the request for unscheduled prayer breaks, Judge Camp found that granting such a request would have imposed a greater than de minimis burden on JBS and on the non-Muslim employees. For example, if the production lines were not shut down completely during these break times, the remaining workers would have to work harder and at dangerous speeds. Id. at 35. Additionally, if the lines were merely “stopped or slowed,” the raw meat might be exposed to air and bacteria for a prolonged time, increasing the risk of contamination. Id. at 35-37. Such an accommodation would also have a negative impact on operational efficiency (e.g. the non-Muslim employees would have to work quicker, and thus, would not be able to meet quality specifications) and would also create a substantial financial burden based on the decrease in production and decreased employee morale if non-Muslims were forced to work harder and faster to cover for the Muslim employees taking extra breaks. Id. at 37.

With respect to the requested accommodation of moving all employees’ meal break periods to coincide with the sunset prayer time during Ramadan, Judge Camp ruled that this too created an undue hardship since a 30-minute mass break would result in cattle being left on the “kill floor” for longer than 45 minutes, thus substantially decreasing its value and causing JBS to incur a financial loss. Id. at 38. Additionally, a 30-minute mass break would overwhelm JBS’s facility given that its locker rooms, restrooms, etc. were not large enough to accommodate the large influx of employees that such a mass break would cause. Id. Furthermore, Judge Camp held that JBS established greater than a de minimis imposition on its non-Muslim employees as this proposed accommodation would decrease  their compensation and negatively impact their work schedules. Id. at 39.

Implications For Employers

As we have previously blogged several times – most recently here – employers faced with a claim of religious discrimination under Title VII who refuse an accommodation request must be prepared to come forward with specific evidence demonstrating the “undue burden” that granting the request would cause. Conjecture and speculative “evidence” of the purported undue burden is not enough to establish a cognizable defense. Rather than merely speculating as to potential harm it possibly would have incurred, JBS – as all employers should do – came forward with facts and figures that Judge Camp heavily relied upon in dismissing the EEOC’s case as it was clear that the proposed accommodations posed an undue hardship both on JBS as well as JBS’ non-Muslim employees. This decision should serve as a helpful roadmap for employers going forward seeking to establish the undue hardship defense to a failure to accommodate claim under either Title VII or the ADA.

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