Seyfarth Synopsis: On October 5, 2017, U.S. Attorney General Jeff Sessions issued an agency memorandum stating that the language contained in Title VII of the Civil Rights Act of 1964, “does not prohibit discrimination based on gender identity per se, including transgender status.” It represented a head-snapping pivot of the position of the U.S. Department of Justice. In this video, Jerry Maatman of Seyfarth Shaw, LLP gives blog readers an overview of the recent history regarding legal interpretation of Title VII. Jerry discusses potentially conflicting statutes and court rulings, as well as the ways in which this Department of Justice memorandum could affect businesses and those who litigate under Title VII.

Summary

Title VII of the Civil Rights Act of 1964 has been a prevalent federal statute since its passage over 50 years ago. Therefore, it is an especially important statute to understand for nearly every employer. During the Obama Administration, Attorney General Eric Holder stated in a 2014 memorandum that the Department of Justice does, in fact, apply the concept of sex discrimination in the workplace to transgender workers. However, Congress has rejected all attempts thus far to amend Title VII. To that end, the language of the law leaves legal interpretation open for debate.

The EEOC’s current view of Title VII is that it includes protections for transgender workers. In addition, 20 states and the District of Columbia include both sexual orientation and gender identity as protected categories under their discrimination statutes. The recent statement by the Department of Justice has renewed the widespread debate over the definition of sex discrimination, a dispute which we suspect will not end any time soon. Make sure to stay tuned to our blog and Twitter account for updates and insights on this important legal issue!

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

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

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

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

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

New SEP, Same Focus

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

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

Uncertainty For Equal Pay Claims

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

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

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

Implications For Employers

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

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

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

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

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

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

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

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

Case Background

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

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

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

The Court’s Decision

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

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

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

Implications For Employers

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

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

 

By Gerald L. Maatman, Jr. and Anthony S. Califano

Seyfarth Synopsis: In Smith v. City of Boston, Plaintiffs brought suit against their employer, the City of Boston (the “City”), challenging the City’s police promotional exam from sergeant to lieutenant.  Plaintiffs alleged that the exam had a disparate impact on racial minorities and was invalid under Title VII of the Civil Rights Act of 1964 (“Title VII”).  For the second time, in the same case, District Court Judge William G. Young ruled in favor of Plaintiffs and imposed liability on the City.

The Court’s decision, Smith v. City of Boston, No. 12-CV-10291-WGY (D. Mass. July 26, 2017) (“Smith II”), serves as a cautionary tale about the discretion that trial courts have to distinguish between similar cases and reach conclusions that might appear to be inconsistent with appellate authority.

Case Background

In 2012, a group of African-American police sergeants filed a lawsuit claiming that the City’s exam for promotion from sergeant to lieutenant discriminated against minority candidates in violation of Title VII.  In a 2015 decision, the Court agreed with Plaintiffs after a bench trial, holding that the “lieutenants’ exam had a racially disparate impact and was insufficiently job-related to survive the Plaintiffs’ challenge.” Smith v. City of Boston, 144 F. Supp. 3d 177, 180-81 (D. Mass. 2015) (“Smith I”).

In a different case, Lopez v. City of Lawrence, No. 07-11694, 2014 U.S. Dist. LEXIS 124139 (D. Mass. Sept. 5, 2014) (“Lopez I”), a different judge in the District of Massachusetts addressed similar claims.  In that case, a group of African-American and Hispanic patrolmen challenged the civil service exam for promotion from patrolman to sergeant, claiming disparate impact discrimination.  The presiding judge in Lopez, Judge George A. O’Toole, rejected the plaintiffs’ claim after a bench trial.  The trial court reasoned that, although the sergeants’ exam “imposed a significantly disparate impact on minority applicants,” the defendants established that the exam was nevertheless justified by business necessity.  Id. at *48, 60-61.  The Lopez plaintiffs appealed to the U.S. Court of Appeals for the First Circuit.

Before Judge Young undertook to determine a proper remedy consistent with its ruling in Smith I, the First Circuit issued a ruling affirming the trial court’s decision in Lopez ILopez v. City of Lawrence, 823 F.3d 102 (1st Cir. 2016), cert. denied, 137 S. Ct. 1088 (2017) (“Lopez II”).  The First Circuit concluded, as did Judge O’Toole, that the sergeants’ exam had a significantly disparate impact on racial minorities, and that Judge O’Toole did not clearly err in concluding that business necessity nevertheless justified the exam.  Id. at 107-111.

In light of the First Circuit’s order in Lopez II, Judge Young revisited his earlier ruling in Smith I.  The City argued that Lopez II compelled the Court to reach a different conclusion on the issue of business necessity, and to consider whether there existed an equal or better exam that identified the best candidates for the lieutenant position, which had a less disparate impact on racial minorities.  The Court disagreed.

The Decision

Job Related & Consistent With Business Necessity

The City advanced several arguments in reliance on Lopez II.  First, the City argued that the Court used the wrong legal standard to evaluate the exam’s validity.  It argued that Lopez II requires the Court to determine the exam’s validity by utilizing a “better than random selection” standard, not the “representative sample test” established by the Equal Employment Opportunity Commission’s (“EEOC”) Uniform Guidelines on Employee Selection Procedures (“Guidelines”).  Smith II, at *15.  In its earlier analysis, the Court reasoned that the Guidelines “provide a sensible way of evaluating whether a given test . . . measures an important work characteristic, and whether the outcomes of that test are actually correlated with the characteristic measured.”  Id. at *11.  Using the Guidelines, and relying on expert testimony, the Court determined that the exam results were not predictive of or correlated with the important work behaviors of police lieutenants.  IdLopez II, according to the Court, does not require a different conclusion.  Indeed, the Court stated that the “First Circuit certainly did not ban the use of the Uniform Guidelines’ representative sample test.”  Id. at *15-16.  Such a ban, the Court observed, would be “surprising” because they come from the EEOC and “are due an appropriate degree of deference.”  Id. at *16.

Second, the City argued that the Court should reconsider its rejection of the Education and Experience (“E&E”) component of the lieutenants’ exam.  Because the First Circuit found in Lopez II that the E&E component of the sergeants’ exam was useful to assess qualities important to a sergeant’s daily work, the City argued that the Court should not have excluded the E&E component from its validity analysis of the lieutenants’ exam.  The Court was unpersuaded, noting that it did consider the E&E in its ruling, but held that the “E&E did not rescue an otherwise invalid written exam.”  Id. at *21.  The holding in Lopez II did not change the Court’s opinion given the variations between the two cases.  The Court: “(1) relied on expert testimony that the E&E component failed to differentiate among candidates or demonstrate the [knowledge, skills, and abilities] necessary in a lieutenant; (2) had no evidence that incumbent lieutenants performed better on the written exam; and (3) had no evidence to show that the E&E component was valid on its own.”  Id. at *21-22 (internal citations omitted).  Accordingly, unlike the evidence at issue in Lopez II regarding the sergeants’ exam, the evidence before the Court did “not establish that the E&E measured qualities important to a lieutenant’s daily responsibilities.”  Id. at *22.

Third, the City asserted that, in light of Lopez II, the Court “inappropriately applied a heightened validity requirement for rank ordering” and that “rank ordering furthers [the City’s] interest in eliminating patronage and intentional racism.”  Id.  The Court disagreed.  The Court reasoned that “[w]here a selection procedure not only has a disparate impact on a pass-fail basis, but also compounds that effect through use of rank ordering, each hiring decision carries an increased risk of a discriminatory result.”  Id. at *24.  In that case, the Court held that it “did not err in applying a heightened validity requirement for rank ordering,” and the First Circuit’s decision in Lopez II does not compel a contrary conclusion.  Id.  Even if the City faced a lower burden, it still failed according to the Court.  That is because the evidence before the Court did not support an inference that candidates who performed better on the lieutenants’ exam would be better performers on the job.  Id. at *25.

Equally Valid, Less Discriminatory Alternative Test

The City also challenged the Court’s finding of liability without first addressing whether an equally valid, less discriminatory alternative test existed to identify successful candidates for the lieutenant position.  Specifically, the City argued that the Court could not reject the City’s justification for the lieutenants’ exam absent “some showing that there exists an available alternative with less disparate impact that serves [the City’s] legitimate needs.”  Id. at *26.  Once again, the Court disagreed.  The Court held that the First Circuit’s ruling in Lopez II did not change the burden shifting framework that applies to the analysis of disparate impact cases.  Id.  If the plaintiff proves that a test has a significant disparate impact, and the defendant then fails to prove that the test is job related and consistent with business necessity, “then the defendant loses, regardless of the plaintiffs’ showing of an alternative.”  Id.  The City did not convince the Court that the lieutenants’ exam was sufficiently job related and consistent with business necessity.  Accordingly, the Court did not change its previous ruling in favor of Plaintiffs.

Implications For Employers

The Court concluded its decision by observing that Lopez and Smith are “significantly different” and “fact intensive cases.”  Id. at *29.  They involved different evidentiary records and different exams for different positions.  Id.  The Court held that it did not commit legal error by applying the same law to a different case and reaching a different conclusion.  Id. at *29-30.

The Smith II decision should therefore remind employers of the broad authority that trial court judges have when it comes to applying the law to the facts and evidence in order to reach a conclusion.  As Judge Young noted in Smith II: “Fact finding is the province of the district courts.”  Id. at *29-30.  Judge Young applied his understanding of disparate impact law to the evidence before him and determined that the City failed to meet its burden of proof.  Would a different judge have reached a different conclusion?  Will the First Circuit affirm the Court’s order if the City appeals?  These are fair questions, the answers to which are unclear.

By Gerald L. Maatman, Jr. and John S. Marrese

Seyfarth Synopsis:  In Harrington v. Sessions, No. 15-8009, No. 16-5285 & No. 16-5286 (D.C. Cir. July 21, 2017), the U.S. Court of Appeals for the D.C. Circuit found that absent class members may intervene in an appellate court proceeding to pursue a Rule 23(f) petition abandoned by a settling class representative, even if the intervention motion is filed after the dismissal of the settling representative’s claims.  The D.C. Circuit’s ruling illustrates that even the denial of class certification and final settlement of a class representative’s claims may not put an end to class action litigation.

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In Harrington v. Sessions, No. 15-8009, No. 16-5285 & No. 16-5286, 2017 U.S. App. LEXIS 13111 (D.C. Cir. July 21, 2017), the D.C. Circuit addressed whether it had jurisdiction to rule upon absent class members’ motion to intervene in an appellate court proceeding to pursue a Rule 23(f) petition abandoned by a settling named plaintiff-appellant.  The absent class members filed their motion to intervene after the settling plaintiff-appellant had already filed a stipulated dismissal of his settled claims.

The D.C. Circuit found that it indeed had jurisdiction to entertain the absent class members’ motion to intervene in the Rule 23(f) petition.  It explained that the elimination of an Article III case or controversy does not preclude a district court or appellate court from entertaining a subsequent motion to intervene for purposes of filing an appeal, as long as the intervenor has a sufficient Article III stake in the appeal.  The D.C. Circuit further opined that absent class members may have a sufficient stake to appeal the denial of class certification even if the named plaintiff does not appeal.  As such, the D.C. Circuit found that it had jurisdiction under Rule 23(f) to hear the absent class members’ motion to intervene for purposes of appealing the denial of class certification.

On the merits, the D.C. Circuit found that the absent class members satisfied the prerequisites for intervention as a matter of right and, thus, it addressed their Rule 23(f) petition.  However, the D.C. Circuit declined to review the denial of class certification under Rule 23(f) as the absent class members presented no special circumstances justifying such review.

Case Background

In 2008, U.S. Marshal David Grogan filed a putative class action in the U.S. District Court for the District of Columbia against the U.S. Marshals Service (the “Marshals”) alleging racial discrimination under Title VII of the Civil Rights Act of 1964.  2017 U.S. App. LEXIS 13111, at *2-3 (D.C. Cir. July 21, 2017).  The complaint sought both injunctive and monetary relief, but alleged that “injunctive and declaratory relief [we]re the predominant forms of relief sought.”  Id. at *3.

By 2013, after pleading and motion practice, the named plaintiff Herman Brewer (“Plaintiff”) was the sole plaintiff representing the putative class.  Id. at *4.  Plaintiff retired from the Marshals a few months before discovery closed.  Id.  After discovery closed, Plaintiff filed: (i) a motion to amend the complaint to substitute four additional plaintiffs as class representatives; and (ii) a Rule 23 motion for class certification.  Id. at *5.

The district court denied Plaintiff’s motion to substitute new plaintiffs, finding that Plaintiff had not diligently pursued such substitution.  Id.

The district court also denied Plaintiff’s motion for class certification.  Id. at *5-6.  The district court found that, because Plaintiff had retired and was no longer an employee of the Marshals, Plaintiff could not adequately represent a class predominantly seeking injunctive relief.  Id. at *6.  The district court also found that Plaintiff’s individual claims for monetary relief were not typical of the class-wide claims for injunctive relief and, as such, did not provide a basis to certify a class either.  Id.  Finally, the district court refused to certify a narrower class, seeking damages only, because doing so constituted “claim splitting” and jeopardized class members’ ability to subsequently pursue other claims in the face of potential res judicata arguments. Id.

Plaintiff timely petitioned the D.C. Circuit under Rule 23(f) for interlocutory review of the denial of class certification.  Id.  However, during the pendency of the petition, Plaintiff settled his individual claims and filed a stipulation of dismissal under Rule 41(a)(1)(A)(ii).  Id. at *7.

On the same day Plaintiff filed the stipulated dismissal, three current and one former African-American employee of the Marshals (the “Intervenors”) moved to intervene in the district court to appeal the district court’s denial of class certification and moved to intervene in the appellate court to pursue the Rule 23(f) petition filed by Plaintiff.  Id.

While their motion to intervene in the district court was still pending, the Intervenors filed a notice of appeal from: (i) Plaintiff’s stipulated dismissal; (ii) the order denying class certification; and (iii) the “effective” denial of their motion to intervene insofar as the district court had not decided their motion to intervene within the time Intervenors believed they had to file a notice of appeal (i.e., within 60 days of Plaintiff’s stipulated dismissal).  Id. at *7-8.  Thereafter, the district court dismissed the Intervenors’ motion to intervene based on the rationale that the Intervenors’ notice of appeal stripped the district court of jurisdiction to rule on the motion.  Id. at *8.

On the Intervenors’ motion, Plaintiff’s Rule 23(f) petition and the Intervenors’ appeal were consolidated before the D.C. Circuit.  Id.

The Decision

The D.C. Circuit first addressed whether it had jurisdiction.  Id. at *9.  The stipulated dismissal of Plaintiff’s claims, which removed any live Article III case or controversy from the district court and appellate court, presented a quandary.  Although intervention could cure that quandary by substituting Intervenors for Plaintiff, the D.C. Circuit had to have jurisdiction in the first place to rule on the intervention motion.  See id. (“Thus, the situation may appear to present a Catch-22: Intervention can overcome the apparent jurisdictional problem created by the stipulated dismissal, but a court may grant intervention only if it has jurisdiction to do so.”).  The D.C. Circuit resolved the quandary by finding that it had jurisdiction over the Intervenors’ motion to intervene in the Rule 23(f) petition.  Id.

In so finding, the D.C. Circuit rejected the decisions of other courts that have held that a stipulated dismissal precludes a court from taking further action on motions filed after, or even before, such a dismissal.  Id. at *11-12.  The D.C. Circuit explained that a stipulated dismissal and a court-ordered dismissal are no different in their jurisdictional effect – both eliminate a live case or controversy.  Id. at *12-14.   As such, the D.C. Circuit found that it had jurisdiction to entertain any motion after a stipulated dismissal that it could entertain after a court-ordered dismissal.

In that regard, the D.C. Circuit explained that it is well-established that, even in the absence of a live controversy, courts retain jurisdiction to hear motions to intervene for purposes of appealing dismissed claims, as long as the intervenor has an Article III interest sufficient to pursue the appeal.  Id. at *14 (citations omitted).  Moreover, the D.C. Circuit asserted that it is similarly well-established that absent class members may have a sufficient Article III interest to appeal the denial of class certification even if the named plaintiff does not appeal.  Id. at *14-15 (citing Twelve John Does v. District of Columbia, 117 F.3d 571, 575 (D.C. Cir. 1997)).  Indeed, “[w]hen an absent plaintiff intervenes to appeal a denial of class certification, he has the same Article III stake on appeal as he would have had in the action had the class been certified.”  Id. at *15 (citing Twelve John Does, 117 F.3d 571, 575).  The D.C. Circuit reasoned that, because the absence of an Article III controversy does not preclude a court from hearing a motion to intervene for purposes of appealing and because an appellate court has jurisdiction to hear an absent plaintiff’s appeal from the denial of class certification, it had jurisdiction under Rule 23(f) to hear the Intervenors’ motion to intervene.  Id. at *15-16.

In finding such jurisdiction, the D.C. Circuit distinguished the recent U.S. Supreme Court decision of Microsoft Corp. v. Baker, 137 S. Ct. 1702, 1712-1713 (2017), wherein the Supreme Court held that a plaintiff’s voluntary dismissal of his claims, subsequent to an appellate court’s denial of his Rule 23(f) petition, did not create a final, appealable order.  Harrington, 2017 U.S. App. LEXIS 13111, *16.  The D.C. Circuit explained that, unlike Baker, the issue here involved only a petition for review under Rule 23(f), not an appeal from a final order.  Id. at *17.  Furthermore, equitable considerations present in Baker, where the plaintiff had orchestrated guaranteed appellate review of his Rule 23 claims through voluntary dismissal, were not present here.  Id.  (For further discussion of Microsoft Corp. v. Baker, see here).

Next, the D.C. Circuit turned to the motion to intervene.  It stated that it could address the motion to intervene in the first instance on appeal primarily for purposes of judicial economy.  Harrington, 2017 U.S. App. LEXIS 13111, *18-19 .  The D.C. Circuit then found that the Intervenors easily met the criteria for intervention as a matter of right under Rule 24(a)(2).  Id. at *19-23.

Nonetheless, the D.C. Circuit rejected the Intervenors’ Rule 23(f) request and declined to review the district court’s denial of class certification.  Id. at *24-31.  It found that the Intervenors failed to show that any special circumstances warranted such review.  Id.

Finally, the D.C. Circuit dismissed the Intervenors’ appeal from final judgment in the case below, restoring the district court’s jurisdiction over the case.  Id. at *31.  It ordered that, on remand, the district court should allow reasonable time for the Intervenors to file both a motion to substitute a new class representative and a renewed motion for class certification.  Id.

Implication for Employers

Defeating the class representative does not necessarily end class litigation.  Absent class members may be able to pursue such litigation after the class representative exits.  Accordingly, employers should litigate with an eye toward defeating the class even where they anticipate that a named representative is inadequate or that the claims of a named representative may be defeated.

armor-158430__340By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis:  In a sexual harassment lawsuit brought by the EEOC, the Sixth Circuit affirmed a U.S. District Court’s grant of an employer’s motion for summary judgment after finding that the harassing employee was not a supervisor under Title VII, and therefore the company was not vicariously liable for his actions. It is a decidedly pro-employer ruling.

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In EEOC v. AutoZone, Inc., No. 16-6387 (6th Cir. June 9, 2017), the EEOC alleged that AutoZone was liable under Title VII for a store manager’s alleged sexual harassment of three female employees.  After the U.S. District Court for the Western District of Tennessee granted the employer’s motion for summary judgment, the EEOC appealed.  The Sixth Circuit affirmed the District Court’s grant of summary judgment, finding that because the store manager did not take any tangible employment action against his co-workers and had no authority to do so, he was not a supervisor under Title VII, and thus AutoZone was not vicariously liable for the conduct alleged.  The Sixth Circuit further held that even if the store manager was found to be a supervisor under Title VII, AutoZone established an affirmative defense to liability.

For employers facing EEOC lawsuits alleging that they are vicariously liable for sexual harassment claims brought against employees with managerial job titles, yet who have limited authority to take tangible employment actions, this ruling can be used as a blueprint to attack such claims in motions for summary judgment.

Case Background

In May 2012, AutoZone transferred a store manager to its Cordova, Tennessee location.  Id. at 2.  The store manager could hire new hourly employees and write up employees at the store for misbehaving, but could not fire, demote, promote, or transfer employees.  Authority over firing, promoting, and transferring rested with the district manager for the store.

After an employee claimed that the store manager made lewd comments to her, AutoZone internally investigated the allegations.  As part of AutoZone’s internal investigation, two other female employees who worked at the Cordova location confirmed that the store manager made lewd sexual comments.  Despite his denial of the allegations, AutoZone ultimately transferred and terminated the store manager.  Thereafter, the EEOC brought a lawsuit alleging that AutoZone subjected the three female employees to sexual harassment.  Following discovery, AutoZone moved for summary judgment.  The District Court granted AutoZone’s motion for summary judgment, finding that the store manager was not a supervisor under Title VII and therefore AutoZone was not vicariously liable for his actions.  The EEOC appealed the District Court’s grant of summary judgment to the Sixth Circuit.

The Sixth Circuit’s Decision

The Sixth Circuit affirmed the District Court’s grant of AutoZone’s motion for summary judgment.  First, the Sixth Circuit instructed that under Title VII, if the harassing employee is the victim’s co-worker, the employer is liable only if it was negligent in controlling working conditions, or in other words, if the employer knew or should have known of the harassment yet failed to take prompt and appropriate corrective action.  Id. at 4 (internal quotation marks and citation omitted).  However, if the harasser is the victim’s supervisor, a non-negligent employer may become vicariously liable if the agency relationship aids the victim’s supervisor in his harassment.  Id.  The Sixth Circuit further explained that an employee is a “supervisor” for purposes of vicarious liability under Title VII if he or she is empowered by the employer to take tangible employment actions against the victim.  Id.

Applied here, the Sixth Circuit found that AutoZone did not empower the store manager to take any tangible employment action against his victims since he could not fire, demote, promote, or transfer any employees.  Id. at 5.  Further, the Sixth Circuit held that the store manager’s ability to direct the victims’ work at the store and his title as store manager did not make him the victims’ supervisor for purposes of Title VII.  The Sixth Circuit also noted that while the store manager could initiate the disciplinary process and recommend demotion or promotion, his recommendations were not binding, and his ability to influence the district manager did not suffice to turn him into his victims’ supervisor.  Id. at 5-7.  Finally, the Sixth Circuit held that the store manager’s ability to hire other hourly employees was irrelevant since he did not hire the employees he harassed.  Id. at 7.

After finding that the store manager was not a supervisor for purposes of Title VII, the Sixth Circuit further held that even if he was found to be a supervisor, AutoZone established an affirmative defense to liability.  The defense has two elements: (1) that the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior; and (2) that the harassed employees unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.  Id.  The Sixth Circuit held that AutoZone met the first element by utilizing an appropriate anti-harassment policy to prevent harassment, and by transferring and later terminating the store manager promptly after it investigated the allegations.  Regarding the second element, the Sixth Circuit held that AutoZone satisfied this prong since the victims failed to report the store manager’s behavior for several months.  The Sixth Circuit thus held that AutoZone established an affirmative defense to liability.  Accordingly, the Sixth Circuit affirmed the District Court’s grant of AutoZone’s motion for summary judgment.  Id. at 10.

Implications For Employers

Employers often utilize employees that may be “managers” in title, yet do not have the authority to take tangible employment actions.  When those employers are sued by the EEOC for the conduct of managers with limited authority, this ruling can be used to argue that such employees are not “supervisors” under Title VII, and therefore the employer is not vicariously liable for their actions.  Nonetheless, given the EEOC’s aggressiveness in attempting to use the theory of vicarious liability to hold “deep-pockets” large-scale employers liable for the conduct of employees, employers would be prudent to invest in harassment-prevention training to minimize the likelihood of such behavior occurring.  But in the event that such incidents of harassment arise and lead to EEOC lawsuits, employers can use this decision to tailor their arguments to focus on the authority of the harasser, as opposed to his or her job title.

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

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

Seyfarth Synopsis: Reviewing the EEOC’s case filings during the first half of the Commission’s fiscal year may already reveal some surprising trends, most notably a sharp uptick in the total number of case filings – up 75% from the same point last year – and a corresponding increase in systemic cases.

March 31 was the mid-point of the EEOC’s fiscal year. Given the significant changes brought to the federal government by the Trump Administration, we sharpened our pencils and examined the EEOC’s case filings during the first half of FY 2017 and compared those filings to the first half of FY 2016 to see what changes, if any, the new administration has wrought.

As the chart below reveals, the number of filings is up significantly from the same point in time in FY 2016. From October 1, 2016 through March 31, 2017, there were 35 new cases filed. During the same time period in the prior year, there were only 20. That means that filings are up a whopping 75% for the first half of the year.

Total EEOC Case Filings - 2017 Midyear Review

In addition to a larger number of total filings, we have also seen a rise in systemic cases. These cases – defined as having a significant impact on the development of the law or promoting compliance across a large organization, community, or industry – have long been a strategic priority for the agency. As we blogged about here, Acting Chair of the EEOC, Victoria Lipnic, reaffirmed the agency’s commitment to systemic cases when she spoke to Seyfarth Shaw and our invited guests in February of this year. However, systemic cases have garnered negative attention from Republican members of Congress, so it was not clear whether the EEOC would shift direction under the new Republican leadership.

Although we cannot know for certain which cases the EEOC considers “systemic,” based on our review of EEOC press releases and the substance of the EEOC filings, we have identified a significant uptick in systemic case filings in the first half of FY 2017 compared to the same period in FY 2016. Last year there were only four filings during this time period, compared with nine this year. If this trend holds through to the end of the year, then this could turn out to be a banner year for systemic case filings.

Systemic EEOC Case Filings - 2017 Midyear Review

Finally, we analyzed the particular discrimination theories and statutes that the EEOC is pursuing. That analysis can be seen in the chart below. Not surprisingly, Title VII and Americans with Disabilities Act cases lead the way, with 17 and 14 cases filed respectively. Year after year, those types of cases lead the pack. The number of ADEA cases is slightly higher than this time last year, but is still generally consistent with prior years and does not yet reflect a significant change in direction for the EEOC.

As Seyfarth’s Pay Equity Issues & Insights Blog noted here, Chairperson Lipnic has stated that she is very interested in pay equity issues. However, that level of interest is not yet translating into any increase in Equal Pay Act (“EPA”) cases on a year over year basis. The first half of FY 2017 saw only one EPA case filed, the same as during the same period last year.

EEOC Case Filings By Statute - 2017 Midyear Review

We will continue to monitor trends and developments in EEOC litigation throughout the year so that we can once again bring you our annual comprehensive end-of-year examination of trends affecting EEOC litigation (see here for last year’s version). As always, we look forward to bringing that analysis to you, our loyal readers!

bassBy Gerald L. Maatman, Jr., Christopher J. DeGroff, and Alex W. Karasik

Seyfarth Synopsis: After a Fifth Circuit decision affirming a ruling by a U.S. District Court in Texas allowed the EEOC to seek compensatory and punitive damages in its high-profile Title VII pattern or practice race discrimination lawsuit against Bass Pro, a deadlocked Fifth Circuit denied Bass Pro’s petition for a rehearing en banc.  The highly contentious dissenting opinion, which prompted a response from the panel in favor of denying the rehearing, is a must-read for employers regarding judicial views on the damages the EEOC can seek in Title VII pattern or practice of discrimination litigation.

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One of the EEOC’s largest pending nationwide lawsuits, a Title VII pattern or practice race discrimination case concerning retailer Bass Pro’s hiring practices, has resurfaced in an appeal.  In EEOC v. Bass Pro Outdoor World LLC, No. 15-20078, 2017 U.S. App. LEXIS 7628 (5th Cir. Apr. 28, 2017), the U.S. Court of Appeals for the Fifth Circuit was tasked with deciding whether to grant Bass Pro’s petition for a rehearing en banc after it previously affirmed a decision of the U.S. District Court for the Southern District of Texas allowing the EEOC to seek compensatory and punitive damages by bringing claims under § 706 and 707 of Title VII.  Evident in a pair of pull-no-punches opinions, the Fifth Circuit panel of judges was deadlocked in a 7-7 split on whether to grant the rehearing, thus resulting in Bass Pro’s petition being denied.

As employers continue to challenge the EEOC’s willingness to stretch the bounds of pattern or practice Title VII litigation, the highly contentious dissenting opinion (“Dissent”), and equally provocative response from the panel in favor of denying the rehearing (“Panel”), are must-reads for employers.

Case Background

As we have discussed in previous blog posts (here, here and here), the EEOC brought a lawsuit alleging discriminatory hiring practices in violation of Title VII on behalf of a group of individuals allegedly discriminated against on the basis of their gender or race, both as a representative action (under § 706) and based on a pattern or practice theory (under § 707).  The Dissent noted that the 50,000 allegedly aggrieved individuals, Black and Hispanic applicants, was a number “asserted [by the EEOC] in shotgun fashion, with no development or refinement of who or where the individuals are.”  Id. at *4.  Further, the Dissent explained that “[t]he EEOC, after a three-year investigation, could identify zero discriminatees or even potential discriminatees. Upon being pressed by the [D]istrict [C]ourt, the EEOC identified about 100, and later, about 200, of the 50,000 mass.”  Ultimately, the District Court allowed the EEOC to pursue pattern or practice claims on behalf of the 50,000 claimants under § 706, seeking individualized compensatory and punitive damages.  On June 17, 2016, the Fifth Circuit affirmed the District Court’s decision.  Bass Pro thereafter filed an interlocutory appeal.  Id. at *5.

The Fifth Circuit’s Decision

As a result of a 7-7 split between the circuit judges, the Fifth Circuit denied Bass Pro’s petition for a rehearing en banc.  The Dissent initially summarized its argument by matter-of-factly noting “this ‘pattern or practice’ case cannot be brought under § 706 or § 707 as to provide individualized compensatory and punitive damages for a mass of 50,000 persons.”  Id. at *6.  In support of this assertion, the Dissent argued that the plain language and legislative history of the Title VII forbids § 706 “pattern or practice” suits, and the Panel’s contrary holding rendered § 707 of the Act a meaningless appendage to Title VII and hence superfluous.  Second, the Dissent argued that allowing pattern or practice suits for individualized compensatory and punitive damages poses insurmountable manageability concerns, which the Supreme Court has addressed before and rejected such suits.  Finally, the Dissent opined that allowing pattern or practice suits for individualized compensatory and punitive damages for the 50,000 allegedly aggrieved individuals necessarily ran afoul of the Seventh Amendment.

After the Dissent pointedly advocated this array of arguments, the Panel countered with a 16 page response, asserting that Bass Pro ignored “the independent role of the EEOC when it sues on behalf of the United States government . . . [and] asks us to hold as a matter of law that damages authorized by the 1991 amendments to the Civil Rights Act can only be recovered in individual suits.”  Id. at *20-21.  After clarifying the role of the EEOC in light of the 1991 amendments of the Civil Right Act of 1964, the Panel opined that, “Bass Pro’s argument rests upon a fundamental premise: that the EEOC’s enforcement authority and choice of remedies is tethered to the individuals for whose benefit it seeks relief. That premise is false.”  Id. at *23.  The Panel then argued that because the EEOC brought suit under both § 706 and 707, Bass Pro’s argument that the Commission was not entitled to punitive damages failed because it “would be truly perverse to withhold the remedy of punitive damages from the EEOC when it targets discrimination in its most virulent and damaging form: polices intentionally calculated to exclude protected minorities and perpetrated on a large scale.”  Id. at *35.

Finally, the Panel addressed Bass Pro’s argument that even if Congress did grant the EEOC the authority to seek compensatory and punitive damages via the pattern-or-practice model, this grant of authority was unconstitutional.  Noting that Bass Pro’s argument appeared to implicate due process concerns under the Seventh Amendment, the Panel held that Bass Pro’s reliance on Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), was misplaced as that case involved Rule 23 class actions, which  have “no force” in EEOC litigation.  Id. at *36.  After providing a hypothetical analysis as to how a jury may award various types of damages, the Panel concluded by finding Bass Pro’s manageability concerns to be unfounded, and its “claim that this suit cannot be tried is not a statement of fact but an advocate’s prayer.  Seeking to limit its exposure to liability, Bass Pro asks us to shut down this lawsuit before it even gets off the ground.”  Id. at *41-42.

Not to be outdone, the Dissent threw the final punch in a two paragraph dissent to the Panel’s response.  In an effort to clarify the procedural uniqueness of the Panel’s response to the dissenting opinion, the Dissent noted “[l]est there be any mistake, the [P]anel’s ‘response’ must not be confused with a binding opinion on the denial of an en banc petition, because no authority authorizes any such opinion.”  Id. at *42.  As such, the Dissent concluded by instructing that in no way should the Panel’s response be treated as precedential.

Implications For Employers

The Fifth Circuit’s ruling is certainly unfavorable for employers, as this gives the EEOC ammunition to seek a broad range of damages under § 706 and 707, and essentially pick and choose which section’s procedures it wants to follow at various stages of the litigation.  But when reading the tea leaves within the tenaciously written opinions by the divided panel, employers can find encouragement in that many judges – both in the Fifth Circuit and throughout the country – support the Dissent’s belief that the EEOC conflated its rights under § 706 and 707.  As such, employers should continue to follow this case and similar large-scale EEOC pattern or practice cases, which will likely continue to percolate following this government-friendly ruling.

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

gavel on white backgroundBy Gerald L. Maatman, Jr., Christopher J. DeGroff, and Alex W. Karasik

Seyfarth Synopsis:  A federal district court in Illinois recently granted the EEOC’s motion for partial summary judgment in EEOC v. Dolgencorp, LLC, No. 13-CV-4307 (N.D. Ill. Apr. 10, 2017), relative to two defenses advanced by an employer, including: (1) the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation; and (2) the EEOC failed to satisfy its Title VII pre-suit duty to conciliate with the employer. The ruling should be required reading for any employer facing or engaged in litigation with the Commission.

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An increasingly common issue in EEOC litigation against employers involves the scope of the Commission’s lawsuits as related to the charges of discrimination, as well as the EEOC’s conciliation efforts, or lack thereof.  In EEOC v. Dolgencorp, LLC, No. 13-CV-4307 (N.D. Ill. Apr. 10, 2017), the EEOC moved for partial summary judgment regarding two defenses enumerated by the defendant, Dolgencorp, LLC (“Dollar General”): (1) the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation; and (2) the EEOC failed to satisfy its Title VII pre-suit duty to conciliate with the employer.  On April 10, 2017, Judge Andrea R. Wood of the U.S. District Court for the Northern District of Illinois granted the EEOC’s motion for partial summary judgment as to these defenses asserted by Dollar General.

As Judge Wood acknowledged, many courts across the country have embraced defenses asserted by employers relating to the sufficiency of the EEOC’s investigation.  However, this ruling demonstrates that not all courts may be as receptive to those arguments.

Case Background

Two former Dollar General employees filed charges of discrimination with the EEOC regarding Dollar General’s allegedly discriminatory use of criminal background checks in hiring and firing determinations.  Id. at 1.  The EEOC investigated and determined that there was reasonable cause to believe that Dollar General had engaged in employment discrimination on the basis of race. The parties then engaged in written and oral communications regarding the alleged discrimination, which did not result in a conciliation agreement acceptable to the EEOC.  Id. at 2.  Thereafter, the EEOC brought a lawsuit against Dollar General under Title VII.

Amongst its enumerated defenses, Dollar General asserted that the EEOC’s claims were barred as beyond the scope of the charges of discrimination and investigation (its 7th enumerated defense), and that the EEOC failed to satisfy the statutory precondition for bringing suit when it failed to conciliate with Dollar General (its 8th enumerated defense). The EEOC moved for partial summary judgment as to Dollar General’s two enumerated defenses.  Id. at 3. The EEOC contended that, on the undisputed facts, these two defenses failed as a matter of law.

The Court’s Decision

The Court granted the EEOC’s motion for partial summary judgment regarding Dollar General’s two enumerated defenses.  Dollar General’s seventh enumerated defense relied upon two separate propositions: first, the EEOC’s claims were barred because they went beyond the claims delineated in the charges of discrimination that generated the EEOC’s lawsuit; and second, the EEOC’s claims were barred because the EEOC failed to investigate those claims adequately prior to bringing suit.  Id. at 4.  The Court rejected the first proposition, holding that when the EEOC files suit, it is not confined to claims typified by those of the charging party, and further, that any violations that the EEOC ascertains in the course of a reasonable investigation of the charging party’s complaint are actionable.  Id.  As to the second proposition, the Court similarly opined that the Seventh Circuit has held that if courts may not limit a suit by the EEOC to claims made in the administrative charge, they likewise cannot limit the suit to claims that are found to be supported by the evidence obtained in the Commission’s investigation.  Id.  Accordingly, the Court rejected Dollar General’s defenses insofar as it sought to dismiss the EEOC’s claims because they went beyond the charges of discrimination or because they were not subject to an adequate pre-suit investigation.  Id. at 4-5.

In addition, the Court addressed Dollar General’s eighth enumerated defense, which contended that the suit could not go forward because the EEOC did not satisfy its pre-suit statutory obligation to conciliate.  The EEOC sent two Letters of Determination to Dollar General that stated that the EEOC found reasonable cause to believe that Dollar General engaged in discrimination in violation of Title VII because, through application of its background check policy, a class of African-American applicants and employees were not hired, not considered for employment, or discharged.  Dollar General argued that this notice of the charge was not specific enough because it failed to identify the persons allegedly harmed and to identify the allegedly discriminatory practice.

Rejecting Dollar General’s argument regarding the specificity of notice, the Court held that the EEOC’s letters clearly set forth that there were African-American applicants and employees who were harmed by the allegedly discriminatory practice.  Id. at 6.  Further, the Court opined that as the Seventh Circuit has explained, the sufficiency of the EEOC’s investigation was not a matter for the judiciary to second-guess.  Dollar General also argued that the EEOC failed to specifically describe the allegedly discriminatory practice, and that merely pointing to the background check policy was not sufficient.  The Court rejected this argument, holding that the EEOC’s notice was sufficient since it identified the two complainants and further put Dollar General on notice that the EEOC’s allegations related to African-American applicants and employees that were not hired, not considered for employment, or discharged due to failing a background check.  Id. at 8-9.

Finally, Dollar General contended that the EEOC’s conciliation discussions were inadequate because the EEOC did not provide Dollar General with an opportunity to remedy the allegedly discriminatory practice.  Id. at 9.  Citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1655-56 (2015) (which we analyzed here), the Court refused to examine the sufficiency of the EEOC’s investigation, noting it was beyond the scope of its review.  Id.  The Court thus rejected Dollar General’s argument that the EEOC did not adequately engage the employer in conciliation discussions.

Accordingly, the Court granted the EEOC motion for partial summary judgment on Dollar General’s seventh and eighth enumerated defenses.

Implications For Employers

While the Court did not find in the employer’s favor, other courts have routinely held the EEOC accountable in instances where it did not fulfill its pre-suit obligations.  With rulings such as this one, it can be expected that the EEOC will continue to test courts’ willingness to force the Commission to abide by its statutory duties under Title VII.  As such, employers should continue to be aggressive in attacking instances where the EEOC improperly expands its lawsuits beyond charges or fails to conciliate.

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

court-northern-district-of-iowaBy Gerald L. Maatman, Jr., John S. Marrese, and Christopher M. Cascino

Seyfarth Synopsis:  A group of female truck drivers sued their employer for policies allegedly resulting in a hostile work environment for and retaliation against women who complained of sexual harassment on the job.  Under Rules 23(b)(3) and 23(c)(4), the U.S. District Court for the Northern District of Iowa certified both a hostile work environment class and retaliation class on issues relating to the employer’s liability.  Such certification was made possible by the drivers’ bifurcation proposal, which involved a representative trial on aspects of liability and individualized trials on remaining aspects of liability and damages.  Employers should take note that there is a trend among some federal courts to use Rule 23 in novel ways to certify classes of employees to avoid confronting issues that, traditionally, would preclude class certification.

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Class actions are supposed to promote the efficiency and economy of litigation by allowing the claims of a group of individuals with the same claims to be decided in one proceeding.  Many claims brought in the employment context, such as hostile work environment and retaliation claims, are not amenable to class treatment, but some courts have taken an expansive reading of Rule 23 to allow certification of classes even when resolution of the class claims would not resolve the claims of the individual class members.  This is precisely what happened in Sellars v. CRST Expedited, Inc., No. 15-CV-117 (N.D. Iowa Mar. 30, 2017), where Chief Judge Leonard T. Strand of the U.S. District Court for the Northern District of Iowa certified classes alleging hostile work environment and retaliation even though individualized trials would be required to establish remaining issues of liability and damages for each individual class member.

Case Background

Plaintiffs, three female truck drivers, brought claims under Title VII of the Civil Rights Act of 1964 and the California Fair Employment and Housing Act against their employer, CRST Expedited, Inc. (“CRST”).  Id. at 3.  CRST employs thousands of truck drivers on two-person teams, so that one driver can sleep while the other drives.  Id.  Plaintiffs alleged that CRST maintained patterns or practices of discrimination amounting to a hostile work environment and retaliation toward female drivers who reported sexual harassment.  Id.

Specifically, Plaintiffs alleged that three practices of CRST created a hostile work environment, including: (a) failing to find a harassment complaint corroborated without an admission by the accused himself or a third-party’s eyewitness account; (b) failing to discipline male drivers even when a harassment complaint was corroborated; and (c) tolerating the failure of responsible employees to act promptly in the face of a harassment complaint and instead encouraging the accuser to keep driving with the accused.  Id. at 8-15.

Plaintiffs also alleged that three practices of CRST constituted retaliation against female drivers who reported harassment, including: (a) requiring an accuser to exit the truck upon complaining and thereby precluding her from earning wages by continuing to drive; (b) forcing accusers to cover transit and lodging costs after exiting the truck; and (c) extending student-driver training for those student-driver accusers who were forced to exit the truck after complaining of harassment. Id. at 13-18.

Based on evidence which included testimony from CRST employees and eight female drivers supporting the foregoing allegations, Plaintiffs moved for certification of two classes under Rule 23, including: (a) female drivers subjected to a hostile work environment based on sex (“Hostile Work Environment Class”); and (b) female drivers subjected to retaliation in response to complaints of sexual harassment (“Retaliation Class”).  Id. at 23-24.  Plaintiffs also moved to certify a California-only class of female drivers.  Id. at 24.

The Court’s Decision

In a lengthy opinion, Judge Strand certified the Hostile Work Environment and Retaliation Classes only with respect to particular issues under Rule 23(b)(3) and Rule 23(c)(4), but denied certification of the California-only classes.

The Court’s decision to certify the classes depended heavily upon Plaintiffs’ proposal of bifurcating the case into two phases.  Id. at 28, 46.  Under Plaintiffs’ proposal, Phase I – the “liability” phase, as the Court characterized it – would determine whether CRST: (a) created or tolerated a hostile work environment; and (b) retaliated against women based on sex.  If such liability were established, each case would then proceed to Phase II to determine in individual trials whether: (a) each plaintiff subjectively believed the work environment to be hostile (a finding required to prove a hostile work environment claim and, therefore, a part of liability omitted from Phase I’s “liability” trial); and (b) damages.  Id. at 28, 40 n.15.

In finding that liability issues for the Hostile Work Environment Class satisfied Rule 23(a) and 23(b)(3), the Court found that all three of Plaintiffs’ theories of discrimination provided common questions of law and fact which predominated over individual questions affecting the claim.  Id. at 27-39 & 43-48.  The Court emphasized that the fact that Plaintiffs would attempt to prove those theories through one-off accounts of individual employees did not preclude certification.  Id. at 35 (“Plaintiffs’ reliance on anecdotal evidence to establish a pattern or practice does not defeat commonality”) (citations omitted)).

In finding that liability issues for the Retaliation Class also satisfied Rule 23(a) and 23(b)(3), the Court reasoned that Plaintiffs’ theory that CRST retaliated by requiring female drivers to exit the truck after complaining of harassment provided common questions of law and fact that  predominated over individual questions affecting the claim.  Id. at 36-37 & 43-48.  However, the Court determined that Plaintiffs’ two other theories of retaliation – forcing accusers to cover transit and lodging costs and extending student-driver training –  presented too many individualized questions for adjudication by representative evidence, even in a bifurcated trial.  Id. at 37-39.

The Court cited Rule 23(c)(4) in certifying the above classes, which allows a court to certify a class “with respect to particular issues,” as opposed to an entire claim.  Id. at 48. Nonetheless, the Court went on to consider Plaintiffs’ “alternative” request for certification under Rule 23(c)(4) in a separate portion of the opinion.  Id. at 50-52.

In addressing Rule 23(c)(4), the Court noted a circuit split as to whether a plaintiff must show that his entire claim satisfies the predominance requirement of Rule 23(b)(3) before certifying particular issues under Rule 23(c)(4), or whether a plaintiff need only show predominance with respect to the particular issue for certification under 23(c)(4).  Id. at 51-52.  The Court opined that while the Eighth Circuit has not yet decided the issue, the Court would follow the Second, Fourth and Ninth Circuits in certifying the sufficiently common issues presented by Plaintiffs despite the fact that Plaintiffs’ claims in their entirety did not merit certification.  Id. at 52.

Accordingly, as to the Hostile Work Environment Class, the Court certified the issues of whether CRST had any of the following policies, patterns or practices that create or contribute to a hostile work environment: (1) failing to find their complaints were corroborated without an eyewitness or admission; (2) failing to discipline drivers after complaints were corroborated; and (3) failing to discipline responsible employees for not promptly responding to sexual harassment complaints.  Id. at 55.  As to the Retaliation Class, the Court certified the issue of whether CRST has a policy, pattern, or practice of retaliating against women complaining of sexual harassment by requiring them to exit the truck after complaining.  Id.

In other parts of the opinion, the Court denied Plaintiff’s request for hybrid certification of injunctive relief classes under Rule 23(b)(2). Id. at 49-50.  The Court also rejected CRST’s arguments against certification based on the Rules Enabling Act and Article III standing.  Id. at 52-54.

Implication For Employers

This case is part of a trend, post-Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), whereby courts have used Rule 23(c)(4) issue certification or an expansive view of Rule 23(b)(3) to sidestep individualized issues that would otherwise preclude certification.  In this case, the Court certified a class claim despite the fact that individual issues of liability as well as damages would remain in individual trials in Phase II under the bifurcation plan at issue.  The Court did not address in great detail whether such a hyper-segmented plan is likely to achieve the efficiency and fairness objectives the class action device was designed to achieve.  In circumstances like this, employers should emphasize the absence of such efficiency and fairness in defending against certification.