EEOC Year-End Countdown

Another Message To The EEOC On Wellness Plans: Targeting Incentives Is Inconsistent With The Affordable Care Act

Posted in Regulatory / Guidance Issuance

By Paul H. Kehoe

On January 29, 2015, the U.S. Senate Committee on Health, Education, Labor & Pensions held a hearing on employer wellness plans. While bipartisan sentiment may be difficult to find in Washington, it is clear that both Republican and Democrat Senators view wellness plans favorably, recognize the crucial role that wellness plans play in lowering health care costs, and are concerned with the Equal Employment Opportunity Commission’s litigation challenging wellness plans, especially in the absence of an articulated policy by the EEOC.

The issue is fairly straightforward. Under the Affordable Care Act (“ACA”), and its implementing regulations issued by the Departments of Labor, Treasury and Health and Human Services, employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and/or reaching certain health outcomes in a wellness plan (and up to 50% for smoking cessation programs). Read more here. Under the Americans With Disabilities Act (“ADA”), medical examinations and/inquiries (including biometric screening) are not permitted unless such inquiries are either job related and consistent with business necessity or voluntary.

Late last year, the EEOC filed litigation against Honeywell International seeking a preliminary injunction to stop it from implementing its wellness plan, which required employees to undergo biometric testing. Employees who chose not to participate forfeited a contribution to a health savings account of up to $1,500, were assessed a $500 surcharge, and were potentially subjected to a $1,000 nicotine surcharge. Ultimately, the EEOC’s theory was that Honeywell’s incentives offered through its wellness program made participation non-voluntary under the ADA even if the incentives complied with the ACA and its implementing regulations. The EEOC lost the first round of motions in the case (here is our post on that litigation). Given the seemingly inconsistent position between the ACA, regulations issued by three Cabinet-level agencies, and the EEOC’s litigation position, some employers have limited their wellness programs and related incentives, or have even chosen not to offer them.

From both sides of the aisle, the tenor of the hearing was clear – Congress permitted incentives for wellness plans that now the EEOC is litigating against. Senator Alexander (R-TN) remarked (link here) that “EEOC is sending a confusing message to employers – reliance on Obamacare’s authorization of wellness programs does not mean you won’t be sued.” Ranking Member Murray (D-WA) said “[I]t has been exciting to see businesses nationwide to respond to incentives included in the [ACA].” In addition, Sen. Mikulski (D-MD) noted that she was “very frustrated to hear that we are now arguing over the EEOC giving regs and rules… [G]iven the uncertainty of the law, the wellness programs are going to pull back.”

These sentiments follow a clear articulation by the White House on December 3, 2014 that the EEOC’s position “could be inconsistent with what we know about wellness programs and the fact that we know that wellness programs are good for both employers and employees.”

Implications For Employers

The Senate HELP Committee clearly expects the EEOC to issue regulations on the issue. Indeed, such regulations have been included on the EEOC’s most recent Regulatory Agenda. However, all stakeholders like to ask for clarity unless the clarity they receive is not the clarity that they want. As such, when proposed regulations are published, it will be critical for employers interested in offering wellness plans to consider submitting comments to reflect their support of wellness plan incentives up to the limits authorized by Congress. We will keep you updated on any additional developments regarding wellness plans and forthcoming EEOC proposed regulations.

Readers can also find this post on our Workplace Class Action blog here.

Showdown At The Fifth Circuit Continues: The EEOC Files Its Opposition Brief In Texas’ Challenge To Criminal Background Guidance

Posted in EEOC Litigation

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

Last year, the U.S. District Court for the Northern District of Texas dismissed a high profile lawsuit brought by the State of Texas against the EEOC regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.”  The District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

Texas filed an appeal with the U.S. Court of Appeals for the Fifth Circuit seeking to overturn the dismissal of its novel lawsuit.

On January 8, 2015, the EEOC filed its opposition brief in the Fifth Circuit and it is a “must read” for all employers caught in the crosshairs of the EEOC’s aggressive litigation approach concerning its criminal background guidance.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories. In November 2013, Texas took the unprecedented step of suing the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.”

The District Court dismissed Texas’ lawsuit due to lack of subject matter jurisdiction. Because Texas did not allege that any enforcement action had been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance, the District Court held that there was not a “substantial likelihood” that Texas would face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance. As standing to bring suit cannot be premised on mere speculation, the District Court held that Texas lacked the necessary standing to maintain its suit against the EEOC.

EEOC’s Opposition Brief

In its Fifth Circuit brief, the EEOC sets forth several reasons why the District Court correctly dismissed Texas’ the suit for a lack of subject matter jurisdiction. Specifically, the EEOC asserts:

  • The guidance document is not judicially reviewable because it “has no legal consequences [as it is not a final agency action], nor does it impose any obligations on Texas, its-state agencies, or other employers.”
  • Texas lacks standing as it has not demonstrated that is has already, or will suffer any injury based on the Guidance.  To this end, the EEOC labels Texas’ concerns as “purely speculative.”
  • Texas’ challenge is not ripe for review because “because the Guidance has not caused Texas any injury, nor is injury imminent, there is no sufficiently ripe case or controversy upon which to base Article III jurisdiction.”

Id. at 11-13.

Next up in the case will be Texas’ reply brief, and then the Fifth Circuit will set the case for oral argument.

Implications For Employers

The EEOC continues to hang its hat on the argument that federal courts lack jurisdiction to hear such a case because the guidance is not legally binding and does not constitute a final agency action. This case remains “one to watch” given the stakes involved and the extent to which the EEOC has “gone to the mat” defending its criminal background guidance document. We will be sure to keep our readers informed as this case makes its way through the appeals process. Stay tuned!

Readers can also find this post on our Workplace Class Action blog here.

U.S. Supreme Court Hears Oral Argument In Mach Mining v. EEOC

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

This morning the U.S. Supreme Court heard oral arguments in Mach Mining v. EEOC.

Mach Mining v. EEOC may be one of the most important cases on EEOC litigation issues in years. The stakes are high for employers and workers alike (see pre-argument media reports here).

The precise issue the case presents is whether federal courts can review and enforce the EEOC’s statutory obligation to try to negotiate an end to an employer’s alleged unlawful employment practices before suing for a judicial remedy; in this context, it concerns the parameters of the Commission’s obligation to engage in good faith conciliation as required by Title VII.

We were there at the SCOTUS today (as Seyfarth filed an amicus brief on behalf of the employer – a copy is here), and witnessed the lively questioning by the Justices. Here is our analysis of the course of the arguments (a copy of the hearing transcript is here).

A Thumbnail Sketch Of The Key Facts Of The Case

Title VII requires that before filing suit, the EEOC to “endeavor to eliminate” alleged unlawful employment practices by “informal methods of conference, conciliation, and persuasion.” It may only file suit if it “has been unable to secure . . . a conciliation agreement acceptable to the Commission.”

In this case, Mach Mining and the Commission spent nearly two years litigating whether the EEOC’s alleged failure to conciliate in good faith was a sufficient ground for dismissing the case. Following discovery and disputes over the scope and significance of the EEOC’s investigation and conciliation efforts, the EEOC moved for summary judgment on the issue of whether the alleged failure to conciliate was an affirmative defense to its suit. The District Court denied the motion, but certified the question for interlocutory review. The U.S. Court of Appeals for the Seventh Circuit reversed. It rejected the company’s defense notwithstanding its recognition that its decision made it the first federal circuit to do so. Other federal circuits have adopted differing approaches to reviewing the sufficiency of conciliation efforts, with some circuits (the Second, Fifth, and Eleventh) undertaking a multi-part inquiry into the sufficiency of the process, and others (the Fourth, Sixth, and Tenth) requiring instead that the Commission’s efforts meet a minimal level of good faith. The SCOTUS accepted the case to determine this circuit split.

The Employer’s Position

Mach Mining’s briefing pointed to Title VII’s statutory language, its legislative history and statutory scheme, as well as public policy, to support its arguments that the EEOC’s obligation to conciliate should be subject to judicial review. In the defense’s view, the statutory language creates a mandatory condition precedent to litigation. Title VII’s legislative history reflects that originally, the EEOC’s only enforcement authority was the ability to engage in conciliation; cooperation and voluntary compliance remained the preferred means for achieving the goal of equal employment opportunity even after the statute was amended in 1972 to authorize the EEOC to bring suit. Mach Mining’s briefing further argued that pre-conditions to suit such as the conciliation requirement are presumptively enforceable absent clear congressional intent to the contrary, and that no such congressional intent is evident here.

Mach Mining also attacked the Seventh Circuit’s opinion below that Title VII’s confidentiality provision – which prohibits anything said or done during conciliation to be made public or used as evidence in a subsequent proceeding absent written consent – precludes review. In Mach Mining’s view, disputes over the sufficiency of the conciliation process can be resolved while preserving confidentiality (for example, by placing the relevant evidence under seal). Mach Mining cited to other contexts in which federal courts and other adjudicative bodies have reviewed conciliation obligations, including the National Labor Relations Act’s requirements that employers bargain in good faith.  Mach Mining also offered out a number of principles that, it suggested, could provide a basis for objective review of the sufficiency of the EEOC’s conciliation efforts.

The Government’s Position

The EEOC’s briefing asserted opposite conclusions from the same statutory language, history, and context cited by the defense. In the government’s view, the statute’s plain language does not specify any particular process for agency conciliation and leaves the adequacy of the conciliation process to the Commission’s sole discretion. Moreover, the EEOC contended that Title VII’s confidentiality provision precludes judicial review of what transpired during the conciliation negotiations. In the EEOC’s view, analogous statutory schemes also preclude review. For example, the EEOC’s informal conciliation process would not be reviewable under principles established under the Administrative Procedure Act. Moreover, it argued that judicial review of the adequacy of conciliation efforts would undermine effective enforcement efforts because, if employers believe that litigation is likely, they would have an incentive to treat every communication during conciliation as a potential exhibit in a dispute over the adequacy of conciliation. Judicial review also would chill full and frank settlement discussions. The EEOC posited that if the SCOTUS were to endorse judicial review of conciliation, employers would have incentives to raise inadequate conciliation argument defenses as a matter of course. Those arguments would burden the federal courts with mini-trials on this collateral issue, and would delay, and sometimes avoid, adjudications on the merits.

Today’s SCOTUS Oral Argument

Both sides encountered lively questioning from the Justices at this morning’s hearing.

If a questioning scorecard is indicative of the issues, it broke out this way by our rough tally:

Questions To Mach Mining – 31 in the opening argument and 7 questions in the rebuttal argument [questions by Justice - Ginsburg (10), Kagan (8), Scalia (6), Sotomayor (6), Kennedy (4), Breyer (3), and Roberts (1)]

Questions To The EEOC – 40 in the opposition argument [questions by Justice - Scalia (13), Roberts (12), Breyer (5), Kennedy (4), Sotomayor (3), Kagan (2), and Ginsburg (1)]

The most pressing questions fell on the Government and its position that the EEOC’s actions are not judicially reviewable. As Chief Justice Roberts asked, “Can the employer get judicial review if the EEOC lies about conducting conciliation”? When counsel for the EEOC assured the SCOTUS that such would never happen, the Chief Justice retorted, “well, that assumes the EEOC is always right…’ and that he “was very troubled by the EEOC’s position” in saying “just trust us….”  Justice Breyer also cast criticism on the Government’s position, remarking that “I thought it was hornbook law that agency conduct was judicially reviewable.” And Justice Scalia was even more direct, insofar as he asserted that the EEOC’s argument – that “you want to be exempt from judicial review” – “is extraordinary.”

The Justices also pressed both sides to explain the indicia or rudiments of the review a federal judge might conduct of the conciliation process. Justices Kagan, Ginsberg, and Sotomayer were particularly troubled by the confidentiality concerns attendant review of settlement negotiations. Justices Breyer and Kennedy also questioned how searching any review might be given the broad discretion afforded the EEOC under the statute.

Employers have criticized the Commission’s position in systemic litigation of conciliation by “take-it-or-leave-it” demands (i.e., “we are suing on behalf of a group of workers, and give us millions of dollars and we will distribute it as we deem appropriate…”). This issue also came up in the SCOTUS argument. In this context, Justice Roberts asked “how can the EEOC conduct conciliation without providing the names and damages” of allegedly injured workers? The Government argued that the Letter of Determination typically gives that information, and that any review of the conciliation process would prompt mini-trials that detract from the “main event” of the case – i.e., to try the issue of discrimination. With respect to that suggestion, Justice Roberts remarked that the EEOC’s position failed to take account of Title VII”s preference for conciliation before litigation, and settlement as a priority over litigation.

What’s Next

A future SCOTUS ruling should resolve a split in the lower federal courts about whether an employer can secure the dismissal of a suit on the basis that the EEOC failed to engage in good-faith conciliation before filing suit and what the parameters of that duty may look like in terms of the rudiments of the conciliation process.

Reading the tea leaves at the Supreme Court is fraught with hazard. The themes of the Justices’ questioning, however,  left no doubt but that most of the Justices seem to ascribe to the notion that the Commission’s conduct ought to be reviewable. We expect a decision in a month or two, so stay tuned.

Readers can also find this post on our Workplace Class Action blog here.

Year-Starting Stumbles: The EEOC’s Aggressive Tactics Shot Down Twice In The First Week Of 2015

Posted in EEOC Litigation

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

As we reported in our recent Annual EEOC Report (found here), the EEOC prides itself on its aggressive litigation theories and strategies.  But just one week into 2015, the EEOC’s envelope-pushing tactics have already been shot down twice.  In  EEOC v. Performance Food Group, Inc., No. 1:13-CV-01712 (D. Md. Jan. 6, 2015), the U.S. District Court for the District of Maryland denied the EEOC’s efforts to impose harsh sanctions on an employer that the agency believed was late in complying with its discovery obligations.  And in EEOC v. Royal Caribbean Cruises, Ltd., No. 13-13519 (11th Cir. Jan. 6, 2015), the EEOC failed yet again to enforce an overbroad subpoena after having lost on that issue on three separate occasions: first before the Magistrate Judge, then before the District Court Judge, and then again on appeal before an Eleventh Circuit panel.

If these decisions are any indication, it will be another year in which the agency pushes the limits of the legal envelope in terms of tactical advantage, leaving it to the Courts to police the boundaries of what is reasonable.  Here is our take of these two early 2015 cases and what employers can learn from them:

EEOC v. Performance Food Group, Inc., No. 1:13-CV-01712 (D. Md. Jan. 6, 2015)

In EEOC v. Performance Food Group, Inc., the EEOC sought sanctions against a foodservice distribution company in a gender discrimination case for allegedly failing to meet discovery deadlines.  Specifically, the EEOC argued that the company had failed to produce paper applications for some of its facilities and certain employee data that the agency had subpoenaed from the company’s third-party vendors.  The company argued that sanctions were unwarranted because it had provided most of the requested information within the time frame set by the Court and had been acting in good faith to produce the remaining documents and information.  According to the company’s filings, it was working to gather and produce all requested information and had kept the agency informed of its progress.  The company also produced approximately 300,000 pages of additional documents along with and immediately after filing its response brief to the EEOC’s motion.  The EEOC was unimpressed by these efforts and asked the Court to impose severe sanctions.  In addition to asking the Court to require the company to pay the EEOC’s attorneys’ fees for the filing of the motion, it also requested that the Court impose a daily monetary penalty for each day that the company fails to produce the requested documents.  The agency even criticized the company’s delayed production, arguing that the document “dumps” were disorganized and that they made it impossible to ascertain whether the company had complied with its discovery obligations.

The District Court of Maryland flatly rejected the EEOC’s motion.  The Court acknowledged that the company’s document production was late, but concluded from its own review of the record that sanctions were not warranted.  The Court cautioned the employer, however, noting that while it understood that the document production would be voluminous and would cover an extensive period of time and many different facilities, it still expected the company to comply with its discovery obligations in a timely manner.  The Court also appeared to warn the EEOC, noting that in the case of anticipated delays in production, it expected that counsel would engage in an open and cooperative dialogue to resolve the dispute and would only bring it to the attention of the Court if it was necessary to do so.

Employers should read the Performance Food Group case as a cautionary tale:  the EEOC can and will take unreasonable – and at times draconian – positions in discovery disputes, even in the face of reasonable efforts by an employer.  This case highlights the EEOC’s troubling view that business records and evidence are ready-made for litigation; even information and records that were never contemplated to be produced in later government-initiated litigation.

EEOC v. Royal Caribbean Cruises, Ltd., No. 13-13519 (11th Cir. Jan. 6, 2015)

In EEOC v. Royal Caribbean Cruises, Ltd., the Eleventh Circuit denied for the second time the EEOC’s attempt to enforce a subpoena against Royal Caribbean that could only charitably be called “overbroad.”  This termination case arose out of a single charge of disability discrimination.  The EEOC’s subpoena sought, among other things, a list of all employees who were discharged and applicants who were not hired, including relevant identifying information as well as employment applications and other related documents.  At the District Court level, the Magistrate Judge recommended that the subpoena be denied because the information sought was not relevant to the charge and that compliance with the disputed portions of the subpoena would be unduly burdensome.  The District Court affirmed and adopted that recommendation.  The EEOC appealed in August, 2013.  On November 6, 2014, a panel of the Eleventh Circuit upheld the District Court’s decision.  The EEOC petitioned for rehearing en banc on December 19, 2014.  That petition was denied on January 6, 2015.

The Eleventh Circuit acknowledged that certain courts have construed the EEOC’s administrative subpoena power quite broadly.  But the Court reasoned that it could not be construed so broadly as to make the requirement that the subpoena be relevant to the underlying charge a mere “nullity.”  The court faulted the EEOC for not making it clear how the requested information bore on the subject matter of the individual complaint.  This was especially true here, where the employer actually stipulated that it had terminated the charging party due to his medical condition.  The Eleventh Circuit reasoned that it would not be necessary to introduce statistical data to determine whether a facially neutral explanation for an adverse employment action was merely a pretext for discrimination.  Nor did the court credit the EEOC’s argument that it should be entitled to expand its investigation to uncover other potential violations and victims of discrimination.  Although the Court allowed that such information would be “related” to the charge, it would not countenance expanding the investigation to include information that is “related” but not necessarily “relevant” to the charge.  This case joins several other instances (that can be reviewed here, here, and here) where the EEOC has doggedly pursued subpoenas.  As reported here, the EEOC stepped up its enforcement actions in FY 2014, and we expect this trend to continue in 2015.

Implications For Employers

These decisions demonstrate that the EEOC is far from giving up on the aggressive litigation tactics that have defined EEOC litigation over the past few years.  Although these are two favorable decisions for employers, the agency will undoubtedly win some of these disputes.  Employers would be well served to keep abreast of these developments so that they do not fall victim to these types of strategies in the future.

Readers can also find this post on our Workplace Class Action blog here.

2014’s Top 5 Most Intriguing Decisions In EEOC-Initiated Litigation (And A Preview Of Our Annual EEOC Litigation Report)

Posted in EEOC Litigation

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

Every year at this time we like to offer our loyal readers a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. That book, entitled EEOC-Initiated Litigation: Case Law Developments In 2014 And Trends To Watch For In 2015 is set for distribution in early January 2015. This publication focuses on EEOC-related litigation and explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2014, as well as our examination of what to expect in terms of enforcement litigation in 2015 and beyond. This publication will be offered for download as an eBook. To order a copy, please click here. 

As we look back at the last year, certain EEOC-initiated cases catch our eye as intriguing; intriguing either for their impact on the legal landscape, or for the fact that they offer a glimpse at the often puzzling and, at times, downright frustrating agency agenda.

With that, let’s take a look at the 5 most intriguing cases from 2014:

1.    EEOC v. BMW Manufacturing Co., LLC, Case No. 13-CV-1583, 2014 U.S. Dist. LEXIS 169849 (D.S.C. Dec. 2, 2014).   

BMW scored yet another win for employers in the EEOC’s long-running challenge to employers’ use of criminal and credit background checks in hiring and other employment decisions. As with other cases pursued by the agency under similar theories, the EEOC filed suit against BMW claiming the company’s criminal conviction background check policy had a disparate impact on black employees and applicants and was not job-related or consistent with business necessity. The EEOC has suffered some significant defeats pursuing this theory, including a stinging loss in the Sixth Circuit in the case, EEOC v. Kaplan Higher Education Corp., in which the Sixth Circuit harshly criticized the EEOC for using a “homemade” methodology for determining race to compile its statistical evidence. As we previously noted, the Sixth Circuit threw out the EEOC’s case after concluding that the agency’s methodology for determining race was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.” It was a stunning rebuke of the EEOC’s method for proving disparate impact in these types of cases.

Aside from the expert evidence, another concern for the Court in the Kaplan case and other similar cases has been the fact that the EEOC also uses criminal and credit history background checks in its own hiring practices. Naturally, it is difficult for the EEOC to argue that the use of those checks is not job-related and consistent with business necessity when it engages in the same practices itself. That was the issue that was decided against the agency yet again in EEOC v. BMW Manufacturing Co. BMW sought discovery into the EEOC’s personnel policies relating to the use of background checks. The Magistrate Judge originally ruled in favor of the agency, holding that BMW failed to explain how that information would prove that its own criminal conviction policy was job-related or consistent with business necessity. But District Court Judge Herlong disagreed, finding that the EEOC had failed to establish why its discovery objections were proper. Unless and until the EEOC changes its own personnel policies, the fact that the agency also uses credit and criminal history checks in its hiring decisions will continue to be a stumbling block as it tries to pursue other employers under this theory.

2.    State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014).

The EEOC’s focus on the use of credit and criminal history has also come under political scrutiny and criticism, including a case brought by the State of Texas to enjoin the enforcement of the EEOC’s guidance on this issue. As we previously blogged about here, on April 25, 2012, the EEOC issued its Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. Texas brought suit in the U.S. District Court for the Northern District of Texas in November 2013 seeking to enjoin the enforcement of that guidance, arguing that it interfered with Texas statutes that prohibit the hiring of felons in certain job categories.

As we recently discussed here, the Court dismissed the suit, holding that Texas lacked standing to challenge the guidance because the state had not alleged that there had been any enforcement action taken against it by the Department of Justice in relation to the EEOC’s guidance. This rendered the state’s attempts to establish standing mere speculation because it could not show that there was a “substantial likelihood” that Texas would face Title VII enforcement proceedings. Texas has appealed that decision to the Fifth Circuit and the briefing in that case is underway. The core of the state’s argument is that because the EEOC’s guidance is in direct conflict with state regulations and statutes, and because the EEOC’s guidance was expressly intended to preempt state law hiring policies, that should confer Article III standing on the state to defend its laws. This will be an interesting case to watch as the EEOC continues to struggle to gain traction in its push to restrict the use of criminal and credit history in employment decisions. Regardless, it certainly earns a spot on our list of the top 5 intriguing cases of 2014.

3.     EEOC v. Honeywell International, Inc., Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945 (D. Minn. Nov. 6, 2014).

On November 6, 2014, the EEOC lost its bid for a preliminary injunction against Honeywell International, Inc. that would enjoin the company from imposing penalties against employees who refuse to participate in the biometric screening component of the company’s corporate wellness program. The U.S. District Court for the District of Minnesota denied the EEOC’s request for a preliminary injunction because, among other things, the agency had failed to establish that irreparable harm would result if the injunction were not issued.

This case is “intriguing” because it reveals what may become a new focus for the EEOC on these types of wellness programs. Honeywell’s program allowed employees and their families the option of participating in a wellness program that was designed to inform participants about their health status and encourage improvements in some specific health goals. Employees who chose to participate would be subjected to biometric testing, and would receive certain financial incentives, including contributions to their Health Savings Accounts. Those who chose not to participate were subject to financial surcharges. The EEOC alleged that this program violated the Americans with Disabilities Act and the Genetic Information Non-discrimination Act because it discriminated on the basis of disability and the manifestation of disease or disorder in family members. This case will be one to watch as it develops because, as the District Court noted in its decision denying the injunction, there is considerable uncertainty about how the EEOC’s theory will interact with the ADA’s safe harbor provisions and the Affordable Care Act, which encourages employers to adopt these types of programs. You can read more about this interesting new development here.

4.    EEOC v. Sterling Jewelers Inc., 3 F. Supp. 3d 57 (W.D.N.Y. 2014).

On March 10, 2014, Judge Richard J. Arcara of the U.S. District Court for the Western District Of New York adopted Magistrate Judge McCarthy’s January 2, 2014 Report, Recommendation, And Order in EEOC v. Sterling Jewelers Inc.to dismiss the largest pattern or practice case in the country with prejudice. As we previously discussed here, the Court’s decision was based on the EEOC’s failure to investigate the expansive, nationwide pattern or practice case that it eventually brought. In that case, 19 female employees had filed charges with the EEOC. Those charges were assigned to a single investigator in New York. The EEOC brought suit in September 2008 alleging that Sterling “engaged in unlawful employment practices throughout its stores nationwide.” Sterling challenged, among other things, that the EEOC never investigated the expansive allegations that it put in its complaint.

The Court agreed with Sterling, rejecting the EEOC’s argument that it could not scrutinize the scope of the EEOC’s pre-lawsuit investigation. According to the Court, while courts should not review the sufficiency of the investigation, they could and should make a determination concerning whether an actual investigation occurred, and the scope of that investigation. Because the Court found no evidence that the EEOC investigated its claims on a nationwide basis, it held that the agency had not satisfied its pre-suit obligations. This case is now up for appeal before the Second Circuit.

5.    Tie: EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863, 2014 U.S. Dist. LEXIS 142937 (N.D. Ill. Oct. 7, 2014) and EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-1232, 2014 U.S. Dist. LEXIS 167333 (D. Colo. Dec. 2, 2014).

Our case #5 is actually a duet of related cases filed a country apart. This year, the EEOC asserted a new theory of liability based on language in employers’ separation agreements that the agency believes stands as an impediment to an employee’s right to file charges with the EEOC and participate in its investigations. In EEOC v. CVS Pharmacy, Inc. and EEOC v. CollegeAmerica Denver, Inc., the EEOC brought claims alleging similar theories of discrimination arising out of terminated employees’ separation agreements. You can read more about those decisions here and here. In essence, the EEOC claims that, among other things, the confidentiality and non-disparagement provisions found in those agreements deters the filing of charges and interferes with employees’ ability to communicate voluntarily with the EEOC and other federal and state agencies. This is an entirely new attack on employers’ use of those agreements.

Both of these cases were ultimately decided on issues relating to the EEOC’s failure to conciliate the claims prior to bringing suit, rather than the merits of the allegations regarding separation agreements. So that issue remains a live concern for the EEOC about which there has yet to be a judicial determination. That makes these decisions two of the most interesting of the year. Not so much for what they held, but for what they may portend concerning the future of the EEOC’s focus in 2015 and beyond.

Interesting cases one and all. Once again, it was an exciting year of developments for EEOC-initiated litigation. We expect that 2015 will bring its own share of surprises and intriguing decisions. For additional reading, see our picks for the last few years in our previous blog postings here and here. We look forward to keeping our readers on top of all of these twists and turns in government-initiated litigation. Happy New Year to all of our followers!

Readers can also find this post on our Workplace Class Action blog here.

The CRST Saga Continues: Eighth Circuit Overturns $4.7 Million Fee Award Against EEOC And Remands

Posted in EEOC Litigation

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 Workplace Class Action blog here.

The EEOC Nets Its Biggest Judgment Of The Year In Hawaii

Posted in EEOC Litigation

By Gerald L. Maatman, Jr. and Laura Maechtlen

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

Background To The Case

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

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

The Court’s Ruling

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

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

Injunctive Relief Order

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

Implications For Employers

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

Readers can also find this post on our Workplace Class Action blog here.

Court Orders The EEOC To Produce Internal Hiring Policies Regarding Background Checks

Posted in Discovery

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

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

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

Case Background

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

The Court’s Decision

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

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

Implications For Employers

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

Readers can also find this post on our Workplace Class Action blog here.

Separation Agreement Attack Redux – EEOC Takes Another Swing At Employer’s Standard Release Language, And Loses On Key Claims

Posted in EEOC Litigation

By Chris DeGroff and Laura Maechtlen

Earlier this year, we blogged about the EEOC’s aggressive attack on CVS Pharmacy Inc.’s standard release agreement which contained terms more expansive in favor of employees than the EEOC’s own interpretive guidance, and agreements held enforceable by in key court decisions. The EEOC v. CVS case was eventually dismissed on procedural grounds because the EEOC had not met its obligation to conciliate the claims filed in that case, so failed to provide additional guidance on the EEOC’s aggressive theories. Unfortunately, it also failed to quell the EEOC’s thirst to pursue similar claims, as evidenced by the EEOC’s complaint against CollegeAmerica Denver, Inc. that alleges the private college’s separation agreements improperly prevented employees from filing age discrimination complaints — claims similar to those the EEOC made against CVS.

On December 2, 2014, Judge Lewis Babcock of the U.S. District Court for the District of Colorado granted in part the defense motion to throw out the EEOC’s lawsuit. The decision in EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-1232, 2014 U.S. Dist. LEXIS 167333 (D. Colo. Dec. 2, 2014), is well worth a read for corporate counsel.

Background To The Case

The CollegeAmerica action arose when the Charging Party, Debbi Potts, resigned her employment and afterwards entered in to a single settlement agreement with CollegeAmerica in which Potts agreed to:

(1.) … refrain from personally (or through the use of any third party) contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance that shall bring harm to CollegeAmerica ….

(3.) To not intentionally with malicious intent (publicly or privately) disparage the reputation of CollegeAmerica….

Following execution of the individual agreement, CollegeAmerica notified Potts that it considered emails she exchanged with another former employee to be in violation of the non-disparagement provision, and it demanded repayment of consideration paid to her. Potts responded by filing three charges of discrimination with the EEOC. After the first charge was filed, CollegeAmerica filed a state court action against Potts alleging breach of the agreement’s non-disparagement clause.

The EEOC investigated the claims, and issued a Letter of Determination that CollegeAmerica had violated the Age Discrimination in Employment Act (ADEA).  After the letter of determination was issued,  CollegeAmerica provided the EEOC with four Separation and Release Agreements (“Separation Agreements”) that it routinely used, for the purpose of clarifying that the settlement agreement signed by Potts was not CollegeAmerica’s “form” severance agreement, as the EEOC mistakenly believed.  All of those agreements included a release of claims provision and a non-disparagement clause.  After receiving copies of the “form” agreements, the EEOC did not revise or supplement its findings or otherwise notify CollegeAmerica that the scope of the investigation had expanded beyond Potts’ individual agreement. The parties’ efforts to resolve the issues set forth in the Letter of Determination through conciliation were thereafter unsuccessful.

The EEOC then filed a lawsuit, asserting three claims: (1) that Potts’ settlement agreement denied her the full exercise of her rights under the ADEA and interfered with the agency’s ability to investigate charges of discrimination under the ADEA; (2) through the “form” standard separation agreements used with employees other than Potts, CollegeAmerica denied employees full exercise of their rights under the ADEA; and (2) CollegeAmerica retaliated against Potts by filing the state court action alleging breach of her settlement agreement’s non-disparagement clause.

Ruling On Motion To Dismiss

CollegeAmerica sought dismissal of all the EEOC’s claims and, in an Order issued this week, the Court agreed with a majority of the defense arguments.

CollegeAmerica first argued that there is not justiciable controversy over the first claim because it has never asserted, and would never assert, that Potts waived her ADEA rights via the individual settlement agreement. In support, CollegeAmerica provided evidence that it did not assert such a waiver in connection with her EEOC’s charges, or state court action, and provided an affidavit stating that the employer did not and would never assert that the individual settlement agreement constitutes a waiver of ADEA rights. The Court concluded that the claim was moot.

CollegeAmerica also argued that the Court lacked jurisdiction over the second claim because the EEOC failed to provide it with notice that the “form” separation agreements purportedly violate the ADEA or to engage in conciliation with respect to those Agreements. In response, the EEOC argued that notice and conciliation are not jurisdictional prerequisites to suit under the ADEA, trotting out the oft-cited case Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), in which the Supreme Court addressed whether Title VII’s definition of “employer” was an issue of subject matter jurisdiction or an essential element of Title VII.  (For those employers who have litigated this issue with the EEOC, this case is and old standby for the EEOC, overly relied upon, and easily distinguishable in many instances). For obvious reasons, the Court distinguished Arbaugh, and recognized that that the Tenth Circuit has held that exhaustion of administrative remedies, including conciliation, is a jurisdictional prerequisite to filing suit.  It then found that — because the EEOC was unaware of the existence or terms of the “form” separation agreements before it issued its findings in the Letter of Determination — it could not serve as notice to CollegeAmerica that the EEOC was alleging that the “form” agreements violated the ADEA. The Court also found that the EEOC failed raise concerns about the “form” separation agreements at the conciliation meeting; thus, the EEOC failed to conciliate the issue. As a result, the Court dismissed the second claim for lack of jurisdiction.

Finally, CollegeAmerica was unsuccessful in its bid to dismiss the third cause of retaliation. The Court found that the EEOC pled sufficient facts to support a reasonable inference that CollegeAmerica filed the state court action in response to the first charge of discrimination.

Implications For Employers

Employers are well advised to review the separation agreement terms at issue in the EEOC v. CollegeAmerica and EEOC v. CVS cases. While these employers were successful in dismissing claims on procedural grounds, the EEOC appears focused on continuing to litigate terms of individual and/or form separation agreements. In doing so, the EEOC’s position attempts to significantly alter existing authority governing terms of severance agreements, regardless of the Agency’s own guidance and leading case law interpreting such terms.

Readers can also find this post on our Workplace Class Action blog here.

Last Brief Filed Today With The SCOTUS in Mach Mining Case

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

As our loyal blog readers know, we have followed the course of the Supreme Court proceedings in Mach Mining v. EEOC , No. 13-1019 (U.S.) with keen interest. Our prior posts are here, here, here, and here. Simply stated, this case has the potential to be a real game-changer for employers.

This afternoon Mach Mining filed the last brief with the SCOTUS prior to the oral argument set for January 13, 2015. Mach Mining’s reply brief is here.

The Context And The Stakes

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the EEOC. That decision has had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes – “pay millions or we will sue and announce it in a media release – prior to suing employers.

We have analyzed this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed. Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations. Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Opening Brief And Amicus Briefs For The Defense

Mach Mining filed is opening brief on September 4, 2014. Subsequently, employer groups lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For our loyal blog readers interested in our amicus brief, a copy is here.

Mach Mining’s Reply Brief

The EEOC filed it opposition brief on October 27, 2014. Mach Mining’s reply brief takes the Government’s position to task. It argues that judicial review of the condition precedent for the EEOC instituting a lawsuit must be meaningful. It criticizes the EEOC’s contention that a simple letter of determination – attesting to the failure of conciliation – is perfunctory and a self-serving standard if that is all that Title VII requires. As Mach Mining put it, “[a]t best, the EEOC’s [proposed] letters would show that the Commission is satisfied that it has met its conciliation obligation[,…] but accepting an agency’s representation that it believes it has complied with the law amounts to no judicial review at all.” Reply Brief, at 2 (emphasis in original). Mach Mining asserts that nothing within Title VII “justifies such toothless review.” Id.

Implications For Employers

Next up is oral argument at the SCOTUS on January 13, 2015. Stay tuned.

Readers can also find this post on our Workplace Class Action blog here.