By Gerald L. Maatman, Timothy F. Haley, and Ashley K. Laken

Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions.  While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal.  Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace.  Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks.

In January 2018, Makan Delrahim, the Assistant Attorney General for the Antitrust Division, said that the Department Of Justice (“DOJ”) had been very active in reviewing potential antitrust violations resulting from agreements among employers not to compete for workers.  (We previously reported on this announcement here.)  He said that he was “shocked” at how many there were and that in the coming months there would be announcements of enforcement actions.  He also mentioned that if the conduct occurred or continued after issuance of the October 2016 joint DOJ and Federal Trade Commission (“FTC”) Antitrust Guidance for Human Resource Professionals (the “Joint Guidance”), the DOJ may treat those agreements as criminal.

On April 3, 2018, the first of these announcements was made.  See “Justice Department Requires Knorr and Wabtec to Terminate Unlawful Agreements Not to Compete for Employees,” available at (“News Release”).  The DOJ advised that it filed a complaint in which it alleged that Knorr-Bremse AG (“Knorr”), Westinghouse Air Brake Technologies Corporation (“Wabtec”) and Faiveley Transport S.A., before it was acquired by Wabtec, entered into agreements not to compete for each other’s employees (“no-poach” agreements).  The DOJ contends that these were naked agreements – i.e., not reasonably necessary for a separate, legitimate business transaction or collaboration – and amounted to per se violations of Section 1 of the Sherman Act.  With the Complaint DOJ also filed a Competitive Impact Statement; Explanation of Consent Decree; and Stipulation and Proposed Final Judgment.  (See News Release.)

As noted, Mr. Delrahim stated that there were a number of these investigations ongoing, and in the News Release said that this Complaint was “part of a broader investigation by the Antitrust Division into naked agreements not to compete for employees.”  So more of these announcements can be expected, and some may be announcements of criminal prosecutions.

Many Employees Are Unaware That the Antitrust Laws Apply to the Employment Market

Often some business executives and human resource professionals are unaware that the antitrust laws apply to the workplace.  Executives who would never consider discussing prices with their competitors are unaware that discussing wages or salaries could have antitrust risks.  Similarly, employee covenants not to compete are commonplace and many executives have them in their own employment contracts.  So unless they have received specific training, an executive may be unaware of the antitrust risks associated with no-poaching agreements.  And up until recently even the most elaborate and detailed antitrust compliance policies that strictly prohibited discussing prices rarely addressed the exchange of wage and salary information or prohibited no-poaching agreements.

But the DOJ and FTC have now greatly ratcheted up their enforcement efforts with respect to alleged restraints in the employment market.  And with the DOJ and FTC taking the position that naked no-poaching agreements are per se unlawful and subject to criminal prosecution, the antitrust risks have been greatly increased — not to mention the costly class actions that are likely to follow any settlement with the DOJ.

Employers Should Investigate and Implement Compliance Programs

Thus, employers can no longer ignore the risk.  If they have not already done so, employers should consider:

  1. Conducting an internal investigation to determine whether the company is engaging in the informal gathering of wage, salary or benefit information; or whether it has entered into any no-poach agreements.  The investigation should be conducted or closely supervised by counsel with steps taken to preserve the attorney-client privilege.  Also, if it is discovered that the company has engaged in any “naked” wage-fixing or no-poaching agreements on or after October 25, 2016, then criminal counsel should be consulted as DOJ may treat such conduct as criminal.
  2. Implementing an antitrust compliance program that ensures that all management and human resources personnel are aware that they cannot: (1) engage in a naked wage, salary or benefits-fixing agreement with any other unrelated employer; (2) engage in the gathering or exchange of wage, salary or benefits information without full compliance with the Joint Guidance; or (3) enter into any no-poach agreement without prior approval of counsel.  Such individuals should, on an annual basis, be required to acknowledge in writing that they are aware of these prohibitions.  Also, anyone hired or transferred into any of these positions should be made aware of these prohibitions at the time they are hired or transferred.  These employees should also be advised that the DOJ is likely to treat naked wage/salary/benefit-fixing and no-poaching agreements as criminal and employees could be sentenced to prison for engaging in such conduct.

By Timothy F. Haley and Ashley K. Laken

Seyfarth Synopsis: Criminal prosecution of “no-poaching/no-hire” agreements appears imminent.  Employers should investigate their hiring and compensation practices to ensure compliance with recent antitrust pronouncements.

Background

In October 2016, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) under the Obama Administration issued a joint Antitrust Guidance for Human Resource Professionals (“HR Guidance,” available here).  Among other things, the HR Guidance announced that so-called “naked” agreements among employers not to recruit employees or not to compete on employee compensation would be considered per se violations of the antitrust laws and prosecuted criminally.

On September 12, 2017, at the Global Antitrust Enforcement Symposium, then Acting Assistant Attorney General Andrew Finch reiterated that such “naked” agreements may be prosecuted criminally.  Thus, although the Trump Administration has withdrawn other Obama-era employment law policy statements (see, e.g., News Release: US Secretary Of Labor Withdraws Joint Employment, Independent Contractor Informal Guidance, available here), it has adopted the Obama Administration’s position as stated in the HR Guidance.

Most Recent Developments

According to reported statements by current Assistant Attorney General Makan Delrahim, Finch’s comments were not empty words.  On January 19, 2018, at a conference sponsored by the Antitrust Research Foundation at George Mason University, Delrahim announced that DOJ had been “very active” in reviewing potential violations of the antitrust laws resulting from agreements among employers not to compete for workers (reports from that conference are available here and here).

Reportedly, Delrahim went on to say that “[i]n the coming couple of months you will see some announcements, and to be honest with you, I’ve been shocked about how many of these there are, but they’re real.”  According to Delrahim, if the conduct occurred or continued after issuance of the HR Guidance, the DOJ will treat those agreements as criminal.

Antitrust Legality Of “No-Poaching” Agreements

“No-poaching” agreements are agreements between or among two or more employers not to solicit each other’s employees.  They are similar to, but slightly different from, “no-hire” agreements (sometimes referred to as “no-switching” agreements).  A “no-poaching” agreement merely prohibits the solicitation of employees; if an employee applies without solicitation, there is no prohibition on hiring that worker.  A “no-hire” agreement prohibits the hiring of the worker even if he or she was not solicited.  It appears that the DOJ considers both such agreements – if they are “naked” – to be per se unlawful and subject to criminal prosecution.

What is a “naked” agreement?  It is an agreement that stands alone.  It is not ancillary to a larger, legitimate collaboration.  Ancillary “no-hire” or “no-poaching” agreements do not violate the antitrust laws if they are reasonable in scope and duration and are reasonably necessary to further the interests of the legitimate collaboration.  For example, in Eichorn v. AT&T Corp., 248 F.3d 131, 146 (3d. Cir. 2001), the Third Circuit held that an agreement on behalf of all AT&T affiliates not to hire or solicit any employees from a company (Paradyne) that it sold to Texas Pacific Group, for a period of eight months after the sale, was lawful under Section 1 of the Sherman Act.  The Third Circuit found that the agreement was a legitimate ancillary restraint and that its primary purpose was to ensure that the purchaser could retain the skilled services of the Paradyne employees.  It concluded that any restraint on the plaintiffs’ ability to seek employment at AT&T or its affiliates was incidental to the sale of Paradyne.

Employer Concerns

In spite of the publicity given to the issuance of the HR Guidance in 2016 and high-profile class action cases such as In Re High-Tech Employee Antitrust Litigation, No. 11-CV-02509 (“High-Tech”) (selected case documents available here), human resources personnel and other executives often do not realize that the antitrust laws apply to the employment marketplace.  Thus, many simply are not aware that an agreement among employers not to hire employees or to exchange wage information could result in a violation of the antitrust laws.  As noted, Delrahim reportedly expressed shock at the number of potential violations DOJ is investigating even after the issuance of the HR Guidance, but this “number” may simply be the result of a lack of awareness and understanding by employers.

In addition to the impending criminal cases, employers subject to an enforcement action should anticipate that civil lawsuits will follow.  These will likely be class actions, and if a class is certified, it could expose the employers to substantial monetary liability.  This is the pattern that occurred in the High-Tech consolidated cases which resulted in a settlement of $435 million  (settlement website available here).

Recommendations

Employers should consider conducting an internal investigation to ascertain whether they are currently engaging in conduct outlined by the DOJ and the FTC in the HR Guidance as potentially unlawful.  The investigation should include investigation of potential wage fixing and wage information sharing in addition to “no-poaching/no-hiring” agreements.  Employers should also make sure that they have an antitrust compliance policy in place that includes instructions on these practices.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Each year the American Tort Reform Association (“ATRA”) publishes its “Judicial Hellholes Report” that focuses on litigation problems in state court systems and challenges for corporate defendants in the fair and unbiased administration of justice. The ATRA’s 2017 Report was recently published; a copy is here, as well as an executive summary here.

Insofar as the Report defines a judicial hellhole as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, the Judicial Hellholes Report is an important read for corporate counsel facing class action exposures. In sum, if one has to litigate class actions and make decisions with respect to venue strategy, the Report is a “must read.”

The 2017 Hellholes

The ATRA identified 8 jurisdictions on its 2017 hellholes list – including, in order, (1) Florida (particularly in the Florida Supreme Court and trial courts in southern Florida), (2) California, (3) St. Louis, Missouri, (4) New York (especially in its treatment of asbestos litigation in New York City), (5) Philadelphia (especially in the Philadelphia Court of Common Pleas), (6) New Jersey, (7) Illinois (especially Cook and Madison counties), and (8) Louisiana. As corporate counsel are undoubtedly aware, these are “magnet” venues for Plaintiffs’ class action lawyers and less than optimal venues for corporate defendants to be sued.

The 2017 “Watch List”

The ATRA also included 7 jurisdictions on its “watch list,” including Baltimore, Maryland, Georgia (principally in the Georgia Supreme Court), Newport News, Virginia (especially in asbestos litigation), Oregon (particularly in the Oregon Supreme Court), Pennsylvania (in the Pennsylvania Supreme Court), the U.S. Court of Appeals for the Ninth Circuit, and West Virginia. Just a notch below the 8 hellholes, the “watch list” jurisdictions also present significant challenges for corporate defendants.

Implications For Employers

The Judicial Hellholes Report dovetails with the experience of employers in high-stakes workplace class actions, as Florida, California, Missouri, New York, Pennsylvania, New Jersey, Illinois, and Louisiana are among the leading states where Plaintiffs’ lawyers file employment discrimination and wage & hour class actions in state courts. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and by generous damages recoveries possibilities under state laws.

 

Seyfarth Synopsis: Vote today for Seyfarth’s Workplace Class Action blog for the ABA Journal Blawg 100 Award.

Voting is open for the American Bar Association’s annual 100 Best Legal Blogs competition, and we hope you will cast your vote today to help Seyfarth’s Workplace Class Action blog get on the ABA’s list for 2017.

As many of you may know, the Workplace Class Action blog was selected as one 2016’s ABA Journal Best 100 Legal Blogs!  The ABA Journal said the following: “This Seyfarth Shaw blog is worth reading for any employer-side labor law attorneys or in-house counsel. In addition to giving readers summaries of the outcomes of various lawsuits, the blog publishes Seyfarth’s Annual Workplace Class Action Litigation Report, which compiles vital information for corporate counsel about what companies can and should be doing to stay ahead of lawsuits.”

We were also honored this year again with a review of our Annual Workplace Class Action Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here.

EPLiC said: “The Report is a definitive ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, a business executive, a risk manager, an underwriter, a consultant, or a broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’”

Please help us gain some extra recognition by nominating us for the ABA’s annual 100 best legal blogs competition today! We want to keep the streak going for 2017!

Nominations are open now untill July 30, 2017.

Click the link here and provide a short explanation of why you like this blog.

Hurry over to the site and nominate!  Thank you for your consideration and support!

 

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Seyfarth Synopsis: Employees are only human — misconduct, theft, harassment, discrimination, and even criminal conduct are a fact of life, even in the workplace.  Companies confronted with allegations of workplace misconduct must consider the manner of responding to the allegations and the means by which they will be investigated.

Businesses suffer millions of dollars in losses each year due to diminished productivity associated with employee misconduct and theft of confidential information, money, and merchandise.  It is for this reason that at one time or another in their careers, management personnel will have to deal with serious employee problems or problem employees.

In a broader sense, the problem employees may have a tendency to “push out” other employees. By and large, poor employee morale is intertwined with poor management techniques. Simply put, bad behavior begets bad supervision and bad supervision creates bad morale – it’s a cycle.

Holding on to the best workers is a process over which front-line managers have a key role.  Aside from a steady paycheck, employees want a boss who offers them a future filled with challenging work, the potential for advancement, and appropriate recognition.  Thus, workers do not quit companies as much as they quit their managers.  The boss of choice is one who inspires an employee to be as successful as possible, and to strive to grow professionally on a continuous basis.  This process starts with a supervisor-subordinate relationship marked by trust and respect. 

Better management of employee performance can eliminate perceptions of unfair treatment and discrimination.  Effective feedback and two-way communication between managers and workers also pays dividends in improved employee relations.  Furthermore, proper decision-making in firing an employee is grounded in sound evaluation and disciplinary practices.  It is for this reason that proper evaluation of employees and use of performance appraisals are especially critical to effective loss control and risk management of employment-related exposures.

Setting out a clear and consistent policy for evaluating and disciplining employees is very important – not only will all employees be equally accountable for their misconduct, and therefore gaining the trust of employees, but it will ensure that if an employee is terminated for their behavior, it will not come as a surprise.

Sound termination decisions, in turn, are dependent on effective evaluations and discipline.  The entire process is premised upon personnel decisions which are fair and non-discriminatory.

Our video provides insight for employers on how to best prevent employee grievances from occurring, and, because grievances are always bound to turn up, how to best manage them. 

 

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On February 9, 2017, Seyfarth Shaw hosted a signal event regarding workplace class action litigation in 2016 and the implications for employers looking to anticipate and prepare for workplace trends in 2017.

Vickie Lipnic, the newly appointed Acting Chair of the Equal Employment Opportunity Commission, joined Jerry Maatman in launching Seyfarth’s 2017 Workplace Class Action Litigation Report. Vickie has been a Commissioner with the EEOC since 2010 and her knowledge of the focal points of the government agency tasked with enforcing employee civil rights offered guests a great deal of insight. The EEOC has been increasingly committed to systemic litigation and, while these types of cases are intended to have a broad impact, Vickie stressed the importance of single plaintiff litigation and the impact that single plaintiff lawsuits can have on an industry, company, or geographic area. Vickie also opined on the importance of bi-partisanship as a Commissioner. She is the one remaining Republican-appointee on the Commission with Democratic-appointee Jenny Yang, her successor as Chair of the EEOC, whose term is ending July 1, 2017. Vickie noted that there are currently 2 seats open on the Commission, and President Trump will be tasked with appointing two new Commissioners as well as filling the currently vacant General Counsel position. With regard to these shifting positions and the new Presidential administration, Vickie confirmed that the EEOC is steadfast in its mission to protect and enforce the civil rights of all employees and to ensure that employers are readily prepared to adhere to the laws protecting their employees from discriminatory practices.

Additionally, Jerry discussed the six key trends in workplace class action litigation for 2016 and how those trends will impact employers in 2017. First is the impact of the U.S. Supreme Court decisions in Tyson Foods, Inc. v. Bouaphakeo, et al., and Spokeo, Inc. v. Robins, et al., and how they will influence complex employment-related litigation in the coming years.  Equally important for the coming year, the Supreme Court has accepted five cases that are likely to be decided in 2017 that also will impact and shape class action litigation and government enforcement lawsuits faced by employers; chief among them is the issue of the legality of class action waivers in arbitration agreements. In terms of settlements in 2016, after reaching all-time highs in 2014 and 2015, the monetary value of aggregate top-ten employment class action settlement declined significantly overall, but wage & hour class action settlements sky-rocketed.  Another trend for 2016 was that federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar than in past years. Plaintiffs, for instance, secured certification in 76% of the time in wage & hour class and collective actions. However, for the first time in over a decade, case filing statistics for 2016 reflected that wage & hour litigation decreased over the past year. Additional factors set to coalesce in 2017 – including litigation over the new FLSA regulations and the direction of wage & hour enforcement under the Trump Administration – are apt to drive these exposures for Corporate America. To the extent that government enforcement of wage & hour laws is ratcheted down, the private plaintiffs’ bar likely will “fill the void” and again increase the number of wage & hour lawsuit filings. Also in 2016, Plaintiffs’ attorneys were extremely successful in certifying first stage conditional certification motions, which can mean filings are likely to go up in 2017.  Finally, the government enforcement lawsuits brought by the DOL and EEOC continued the aggressive litigation programs of both agencies, but by sheer number, lawsuit filings and recoveries were lower when compared to previous years.

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Thank you to Victoria for visiting us in Chicago for this hugely successful event. We hosted over 150 guests at our Seyfarth Shaw Chicago office and over 1,800 guests via our live Webcast.

Thank you to everyone who joined us either here in Chicago or via our live webcast. For those interested in viewing a video of the presentation, stay tuned. We will be posting a complete video of the event next week.

Readers can find more information about the event on Seyfarth’s Pay Equity Issues & Insights Blog here.

Additionally, if you have not yet registered for the upcoming WCAR webinar, you can do so by clicking here.

SCOTUSBy Gerald L. Maatman, Jr., Christina M. Janice, Michael W. Stevens, and Kylie R. Byron

Make no mistake, the role of Justice of the U.S. Supreme Court profoundly impacts the balance of power among the branches of our government. Now, with the untimely passing of Justice Antonin Scalia on February 13, the void created in the balance within the Supreme Court itself cannot be overstated. President Obama’s promptly convened news conference about nominating a replacement, and the Republican presidential debate’s focus on confirming – or not confirming – a nominee, demonstrate that in the space of 24 hours the future composition of the Supreme Court has become one of the most important issues facing the country and its governance.

So what does this mean for employers?

First, many cases pending on the Supreme Court’s docket now almost certainly will reach a different outcome than they would have had Justice Scalia remained on the Supreme Court through the end of the June 2016 Term. Several key cases, including some with important ramifications for employers, have not yet been decided.

Second, the previous ideological makeup of the Supreme Court — generally thought of as five conservatives and four liberals — now has shifted to an even split between conservative and liberal Justices as the work of the Supreme Court continues. This tenuous balance likely will change again, but the complexion of the Supreme Court largely will depend on whether President Obama is able to secure the confirmation of a replacement, or if the vacancy remains open through the upcoming presidential election. Whether President Obama or his successor nominates the next Justice may influence the direction of the Supreme Court for years or decades to come.

Some Context Regarding The Supreme Court

The death of Justice Scalia means that the normally nine-member Supreme Court will probably be down to eight Justices when it rules this Term on such divisive issues as abortion rights, immigration, affirmative action, and the power of public-sector unions.

President Obama already has stated that he intends to nominate a replacement, and the White House has signaled that it has been preparing a slate of potential nominees. However, it is unclear whether the Republican-controlled Senate will allow a nomination to proceed, or if the Senate will confirm an Obama nominee. Even if a nominee is confirmed, he or she is unlikely to join the Supreme Court prior to the end of its 2016 Term in June.

Given the political showdown that is all but sure to consume the White House and Congress, it is substantially likely that several important decisions will be split on a 4 – 4 vote. When the Supreme Court is equally divided, the lower court ruling remains in place but no national precedent is set. Thus, several rulings this Term that were expected to change American law instead may only extend the status quo.

Moreover, Justice Scalia’s death affects more cases on the Supreme Court’s docket than those that have yet to be argued, or voted upon by the Supreme Court. His death also affects cases where oral argument has taken place, but rulings have not yet been issued. His previous votes in any such cases no longer count. Thus, if a preliminary vote on a case was 5 – 4 with Scalia in the majority, that opinion would have provided national precedent. Now, with his vote eliminated, a 4 – 4 decision emerges that does not affect the state of the law.

Cases On The Docket

Over the past decade, the U.S. Supreme Court – with its conservative faction led by Justice Scalia – increasingly has shaped the contours of complex litigation through its rulings on class actions, employment-related litigation, and governmental enforcement issues. Justice Scalia was at the center of these rulings. Two significant examples include his authorship of the 2011 decision in Wal-Mart Stores, Inc. v. Dukes (here) and the 2013 decision in Comcast Corp. v. Behrend (here), both of which dramatically changed the rules for when and how class actions may proceed.

This Term also includes several cases that have the potential to affect employers in the realm of consumer or employment class actions, labor relations, and affirmative action. Supreme Court prognosticators were expecting several of these decisions to be decided 5 – 4 and set national precedent. Although we cannot predict with certainty how the Supreme Court will rule, it now appears substantially likelier that many of the decisions will turn out 4 – 4, leaving the lower court decision intact and, in some cases, failing to resolve circuit splits that led to the grant of certiorari in the first place.

Key cases affecting employers include:

·           Spokeo, Inc. v. Robins, No. 13-1339 – Widely considered the most important class action case of the current Supreme Court term, Spokeo concerns whether individuals who lack allegations of actual injury, but claim a technical violation of a statutory right, can still file class actions. The case involves the Fair Credit Reporting Act and liability for hiring procedures. Oral argument took place in November of 2015.

·           Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146 – The case presents an opportunity for the Supreme Court to allow or forbid class actions that rely on a composite or “average plaintiff” or “average class member” for damages purposes, sometimes dubbed as “trial by formula.” Brought under the Fair Labor Standards Act, this case presents an opportunity for the Supreme Court to determine whether differences between class members essentially prohibit class treatment or that averaging and aggregation are permissible. Oral argument also took place in November of 2015.

·           Friedrichs v. Calif. Teachers Association, No. 14-915 – At issue in this case is whether public-sector employees may be compelled to contribute dues to a union. Oral argument took place in January of 2016, and the five conservative Justices seemed ready to invalidate the law. A 4 – 4 split would leave intact the lower court ruling that permitted the law to stand.

·           CRST Van Expedited, Inc. v. EEOC, No. 14-1375 – This closely watched case concerns the largest fee sanction award – approximately $4.7 million – ever issued against the Commission. The fee was issued in favor of an employer after a district court ruled that the EEOC failed to meet its pre-suit investigation obligations in a case involving dozens of claimants. The Supreme Court is expected to clarify the obligations of the EEOC in prosecuting systemic lawsuits, and the grounds on which it may be sanctioned for initiating litigation without satisfying its duties under Title VII. Oral argument is set for March.

·           Fisher v. University of Texas, No. 14-981 – This case involves the use of affirmative action programs in public university admissions processes. Fisher had previously been up to the Supreme Court in 2013, at which point the it was remanded to the lower court for reconsideration. At oral argument in December of 2015, the conservative Justices seemed ready to strike down the law. Because Justice Kagan has recused herself, it is possible that this case may still be decided on a 4 – 3 vote.

·           Heffernan v. Patterson, No. 14-1280 – This case concerns First Amendment freedoms of speech and association. The Supreme Court is likely to determine what standards apply to public employers taking action on the basis of the assumed speech or assumed political affiliation of employees. Oral argument took place in January of 2016.

·           Zubik v. Burwell, No. 14-1418 – This case addresses whether or not the government places an undue burden on religiously-affiliated employers by requiring them to opt out of the Affordable Care Act’s contraception coverage mandate. Oral argument is set for March of 2016. A 4 – 4 split would affirm the Third Circuit’s holding that the Act places no substantial burden on employers and religiously-affiliated employers will be required to comply with the Act or face statutory penalties.

Seyfarth is monitoring each of these cases carefully, and likewise will be paying close attention as the process unfolds for the nomination of the next Supreme Court Justice. The stakes for the future of employment law are high, and Seyfarth will keep you updated in real-time as developments occur.

trophy-clip-art-154708Seyfarth’s Workplace Class Action Blog is a one-of-a-kind reference site and thought leadership forum that analyzes the latest trends in complex employment litigation. The Workplace Class Action blog is also one of the primary vehicles for disseminating Seyfarth’s Annual Workplace Class Action Litigation Report. We were honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”).

Here is what EPLiC said: “The Report is the singular, definitive source of information, research, and in-depth analysis on employment-related class action litigation. Practitioners and corporate counsel should not be without it on their desk, since the Report is the sole compendium of its kind in the United States.” Further, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.  You can read more here.

Help us gain some extra recognition by casting your vote in The Expert Institute 2015 Best Legal Blog competition!

When: Nominations are now open.

Where: https://www.theexpertinstitute.com/blog-contest/.  You will need to provide your full name, e-mail address, blog address (www.workplaceclassaction.com), blog category (Labor and Employment), and a brief description on why the Workplace Class Action Blog deserves to be nominated.

Why:

We have…

Written hundreds of posts

Scored thousands of pageviews

Won diehard fans and subscribers

Thank you for your support and consideration!

gold standardBy Gerald L. Maatman, Jr. and Lorie Almon

We wanted to share a new, significant development with our loyal blog readers — Seyfarth’s Labor & Employment Practice Group has just been recognized for excellence by one of the most prestigious awards in the legal profession.

The Seyfarth L&E practice group was named Labor & Employment Team of the Year at the 10th Annual Chambers USA Awards for Excellence ceremony in New York City on Tuesday evening. Our practice group was selected as the top-ranked firm in the United States in labor & employment law from a Winners Logo 2shortlist of highly respected firms that also included Jones Day, Littler, Morgan Lewis, and Proskauer.

The Chambers Awards honor the achievements of leading law firms and lawyers across the country for pre-eminence in key practice areas and notable achievements during the past 12 months, including outstanding work, impressive strategic growth, and excellence in client service. Chambers described Seyfarth as “the market-leading labor & employment practice in the country with an expertise and track-record of successful, cutting-edge defenses to employment discrimination class actions, bet-the-company EEOC lawsuits, and complex, high-stakes  wage & hour litigation.”

The Chambers report included client quotes about Seyfarth’s work that included: “Aside from being legal experts in their fields, the firm’s attorneys are incredibly responsive and provide pragmatic, value-add legal advice,” and “I’ve had several occasions when they’ve given advice contrary to that of other firms – in every instance the lawyers at Seyfarth have been correct.”

Chambers’ 150-member research team conducted and analyzed hundreds of interviews with corporate general counsel of companies, court rulings in cases defended, and submissions provided by the firms. The Chambers selection is a gold standard award for the firm, one that holds great credibility with client companies.

To all of our clients, loyal blog readers, and colleagues, thank you so much for your support and the honor bestowed on Seyfarth’s labor & employment practice group by Chambers.

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

On December 22, 2014, the U.S. Court of Appeals for the Eighth Circuit issued yet another decision in EEOC v. CRST Van Expedited, Inc., No. 13-3159, 2014 U.S. App. LEXIS 24130 (8th Cir. Dec. 22, 2014). This time, the Eighth Circuit reversed and remanded the district court’s previous order directing the EEOC to pay more nearly $4.7 million in attorneys’ fees. (We have blogged on the prior rulings in this litigation; read about the district court’s order here.)

In doing so, the Eighth Circuit narrowed the potential fees available to CRST for the EEOC’s litigation abuses. Most notably, it held that, because the district court’s dismissal of 67 claims for failure to investigate or conciliate “does not constitute a ruling on the merits,” CRST is not entitled to an award of attorneys’ fees on those claims. Id. at *26-27. The Eighth Circuit remanded the case to the district court and directed it to make findings as to why any of the remaining individual claims were frivolous, unreasonable, or groundless.

The Eighth Circuit effectively raised the bar for employers seeking to recover attorneys’ fees expended as a result of groundless claims brought by the EEOC. Whereas it found that employers can seek fees for partial victories, it held that they must demonstrate why each particular claim is frivolous, unreasonable, or groundless, and that the work for which they seek fees related exclusively to the meritless claims.

Factual Background

The EEOC brought suit against CRST alleging that the company subjected Monika Starke and a class of similarly-situated female employees to a hostile work environment in violation of Title VII of the Civil Rights Act. Id. at *2.

After more than a year of discovery, in October 2008, the EEOC identified 270 allegedly aggrieved female employees. The district court ordered the EEOC to make all women on whose behalf it sought relief available for deposition. Id. at *3. The EEOC failed to so do, and the district court barred the EEOC from pursing relief for 99 individuals. Id.

Thereafter, CRST filed various motions for summary judgment. First, although the EEOC did not explicitly assert a pattern or practice claim in its complaint, it repeatedly referred to such a theory in its papers and the district court found insufficient evidence to support such a claim.  Id. at *4.  Second, the district court found that the applicable statute of limitations barred relief for 9 individuals and that 3 were judicially estopped from prosecuting their claims.  Id. at *5.  Third, the district court granted summary judgment on the claims of 75 individuals, finding that they otherwise failed on the merits.  Id. at *5-7.

Further, the district court barred the EEOC from seeking relief for the remaining 67 women because it failed to meet statutory conditions precedent to instituting suit, namely, the EEOC failed to conduct a reasonable investigation and bona fide conciliation of the claims. Id. at *7-8. CRST filed a bill of costs and moved for an award of attorneys’ fees pursuant to 42 U.S.C. § 2000e-5(k). The district court awarded a total of $4,560,285. Id. at *8.

CRST appealed the dismissal of its claims as to 107 women, as well as the district court’s award of attorneys’ fees. The Eighth Circuit reversed the district court’s order with respect to the claims of 2 individuals and vacated without prejudice the award of attorneys’ fees because, in light of the court’s rulings, CRST was no longer necessarily a “prevailing” defendant. Id. at *9.

On remand, the EEOC withdrew its claims as to one of the 2 remaining claimants (Jones) and settled the other (Starke) for $50,000. Id. at *10. CRST subsequently renewed its motion for attorneys’ fees. The district court found that CRST was the prevailing party as to the EEOC’s pattern or practice claims and 153 of the EEOC’s individual claims, and awarded nearly $4.7 million in attorneys’ fees, expenses, and costs. Id. at *13-14.

The Eighth Circuit’s Opinion

On further appeal, the EEOC argued that the district court erred in awarding attorneys’ fees, expenses, and costs to CRST.

First, the EEOC argued that the district court erred in finding CRST the prevailing party. It contended the EEOC brought only one “claim” against CRST – that CRST violated Title VII by failing to prevent and remedy sexual harassment of its female trainees and drivers – and the EEOC prevailed on this claim when it obtained a settlement for one claimant.

The Eighth Circuit agreed with the district court and CRST that the EEOC had alleged more than one claim. Although the EEOC did not initially specify the number of individuals on whose behalf it sought relief, “the face of the Complaint” did not allege that CRST was engaged in a pattern or practice and shows that the EEOC sought relief on behalf of at least two women. Id. at *19.

Second, the EEOC argued that the district court’s dismissal of 67 claims for failure to satisfy Title VII’s pre-suit obligations did not constitute a ruling on the merits, and therefore, CRST could not be a “prevailing party” with respect to those claims. Id. at *20.

The Eighth Circuit agreed that the EEOC’s pre-suit obligations constitute “nonjurisdictional preconditions that are not elements of the claim.” Id. at *25. The Eighth Circuit held that, therefore, the district court’s dismissal of 67 claims for failure to investigate or conciliate “does not constitute a ruling on the merits,” and CRST is not entitled to an award of attorneys’ fees on those claims. Id. at *26-27.

Third, having determined that CRST may not recover fees for any purported pattern or practice claim, or for claims that the district court dismissed for failure to satisfy its pre-suit obligations, the Eighth Circuit considered whether CRST was entitled to an award of fees based on the district court’s dispositive rulings.

The Eighth Circuit noted that the district court did not discuss specific claimants, choosing instead to make a universal finding that all of the EEOC’s claims were without foundation. Id. at *32. While the Eighth Circuit recognized that it is “an arduous task,” it found that the district court must make findings as to why each particular claim was “frivolous, unreasonable, or groundless.” Id. at *33.

The Eighth Circuit remanded the case back to the district court again. Because CRST did not prevail on at least one claim (Stark), the Court directed that, on remand, if the district court finds that a frivolous claim exists, it must determine what fees, if any, CRST “expended solely because of the frivolous allegations.” Id.

Implications For Employers

With its latest decision in the EEOC v. CRST saga, the Eighth Circuit may have, in effect, made it more difficult for employers to recover fees as a result of EEOC litigation abuses. Whereas the Eighth Circuit reaffirmed the view that an employer can recover fees short of a complete victory, it found that a district court must make specific findings as to why each particular claim is frivolous, unreasonable, or groundless, and must determine what fees, if any, were expended solely because of the meritless allegations. We expect the defense to explore further appellate options (for a rehearing en banc, or possible Supreme Court review) and/or to attempt to make such showings in the district court and, depending on the magnitude of the resulting order, that the case once again might end up before the Eighth Circuit. We will keep you posted.

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