EEOC Year-End Countdown

Sixth Circuit Affirms Dismissal Of EEOC Credit Check Case And Rejects “Homemade” Method Of Determining Race By “Eye-Balling” Photos

Posted in Motions for Summary Judgment

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

Today, less than three weeks after oral argument, the Sixth Circuit affirmed a lower court order granting summary judgment in favor of Kaplan in one of the EEOC’s most high profile cases – - EEOC v. Kaplan Higher Education Corp., No. 13-3408 (6th Cir. April. 9, 2014).

The EEOC brought suit against Kaplan for using credit checks in its hiring process – “the same type of background check that the EEOC itself uses” the Sixth Circuit pointed out – claiming that the practice had a disparate impact on African Americans. Id. at 2.

On January 28, 2013, Judge Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio granted summary judgment in favor of Kaplan, finding that the EEOC’s statistical evidence of disparate impact was not reliable and not representative of Kaplan’s applicant pool as a whole. (Read more about that ruling here.) 

The Sixth Circuit found no abuse of discretion. The EEOC’s “homemade” methodology for determining race – by asking its “race raters” to label photographs – was, in the Sixth Circuit’s words, “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.” Id. at 7.

Background

The EEOC filed suit against Kaplan alleging that Kaplan’s use of credit checks causes it to screen out more African-American applicants than white applicants, creating a disparate impact in violation of Title VII. Id. at 2. 

In support of its allegations, the EEOC relied on statistical data compiled by Kevin Murphy.  Because Kaplan’s credit check process was race-blind, the EEOC subpoenaed records regarding Kaplan’s applicants from state departments of motor vehicles. Id. at 3. Thirty-six states and the District of Columbia provided color copies of approximately 900 drivers’ license photos. 

Murphy assembled a team of five “race raters” and directed them to review the photos and classify them as “African-American,” “Asian,” “Hispanic,” “White,” or “Other.”  Murphy also provided the raters with applicant names. Id. at 3-4. 

Based on the results of this “race rating,” Murphy opined that, in a sample of 1,090 (out of 4,670 applicants), the percentage of black applicants who were flagged for review based upon their credit histories was higher than the percentage of white applicants who were flagged.  Id. at 4.

The district court excluded Murphy’s testimony as unreliable for two reasons. First, the EEOC presented “no evidence” that Murphy’s methodology satisfied any of the factors that courts typically consider in determining reliability under Federal Rule of Evidence 702; and second, as Murphy himself admitted, his sample was not representative of Kaplan’s applicant pool as a whole. Id. at 2. The district court granted summary judgment in favor of Kaplan, and the EEOC appealed.

The Sixth Circuit’s Opinion

The Sixth Circuit affirmed. The Sixth Circuit noted that, as the proponent of expert testimony, the EEOC bears the burden of proving its admissibility. Id. at 5. It determined that the district court did not abuse its discretion in finding that the EEOC failed to make such a showing.   

The EEOC argued that the district court erred in finding that it had “wholly fail[ed]” to provide evidence that its technique had been tested or had any “known or potential rate of error.” Id. The EEOC contended that it provided such support in the form of “anecdotal corroboration.” That is, as to 57 applicants, Murphy cross-checked his raters’ classifications with racial identifications provided by a DMV or Kaplan. Id.

The Sixth Circuit noted that the EEOC’s cross-check yielded an 80% match – “an unimpressive correlation in case where a few percentage points (in credit-check fail rates for blacks and whites) might make the difference between significant liability and none.” Id. In any event, as Murphy himself conceded, a mere 57 instances of anecdotal corroboration is “not enough” to establish the reliability of his photo rating methodology. Id. at 5-6. 

As the Sixth Circuit found, “[t]he EEOC’s case goes downhill from there.” Id. at 6. The EEOC failed to present evidence that its technique was subjected to peer review or publication, failed to show that Murphy employed standards to control “the technique’s operation,” and presented no evidence that Murphy’s race-rating methodology was “generally accepted in the scientific community.” Id. at 6-7. “[T]he raters themselves had no particular standard in classifying each applicant; instead, they just eyeballed the DMV photos.” Id. at 6.

Finally, as an independent ground for excluding Murphy’s testimony, the district court found “no indication” that Murphy’s group of 1,090 applicants was representative of the applicant pool as a whole. Id. at 7. The Sixth Circuit noted that, “[i]nstead there is a strong indication to the contrary: Murphy’s group had a fail rate of 23.8%, whereas the GIS applicant pool had a fail rate of only 13.3%.” Id. It held that an unrepresentative sample “by definition” might skew the respective fail rates of black and white applicants in the larger pool – “and thus is not a reliable means to demonstrate disparate impact.” Id.

Implications

In its opinion, the Sixth Circuit staunchly critiqued the EEOC’s “do as I say, not as I do” litigation tactics. It noted (in the first line of its opinion) that the EEOC “sued the defendants for using the same type of background check that the EEOC itself uses.” Id. at 2. It also noted, as the district court observed, that “the EEOC itself discourages employers from visually identifying an individual by race and indicates that visual identification is appropriate ‘only if an employee refuses to self identify.’” Id. at 7.

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

Fourth Circuit Upholds Decision In Favor Of EEOC: Age Was “But-For” Cause Of Disparate Treatment Of Older Employees’ Retirement Plan Contributions

Posted in EEOC Litigation

By Matthew Gagnon and Gerald L. Maatman, Jr.

The EEOC has taken some high-profile hits lately, see here and here, but in EEOC v. Baltimore County, No. 13-1106 (4th Cir. Mar. 31, 2014), the EEOC scored a victory against Baltimore County, Maryland, which had an employee retirement benefit plan that the EEOC alleged unlawfully discriminated against older workers in violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634. The Fourth Circuit held that it is unlawful to require older employees to contribute a larger percentage of their salaries to a retirement plan that bases retirement eligibility on years of service rather than meeting a specified retirement age. 

Background

In 1945, Baltimore County established a retirement benefit plan that provided that employees were eligible to retire and receive pension benefits at age 65, regardless of the length of their employment. Baltimore Cnty., at 4. The plan was funded, in part, from contributions by employees who contributed a fixed percentage of their annual salaries to the plan. Id. at 5. To ensure that all employees received the same level of benefits, contribution rates were based on, among other things, the number of years that an employee would contribute to the plan before being eligible to retire at age 65. Id. Older employees therefore ended up paying a greater percentage of their salaries to the plan. Id. at 6.

Over the years, the County modified its plan so that correctional officers became eligible to retire after only 20 years of service, regardless of age, or at age 65 with five years of service. Id. at 6-7. Two correctional officers filed charges of discrimination with the EEOC, alleging that the disparate contribution rates discriminated against them on the basis of age. Id. at 7-8.

The County actually won on summary judgment back in 2009. The District Court held that the plan’s disparate contribution rates were not motivated by age, but rather by the number of years remaining until an employee reached retirement age. The different contribution rates were permissible because older new-hires had less time to accrue earnings on their contributions and because of the “time value” of money. EEOC v. Baltimore Cnty., No. 07-CV-2500 (D. Md. Jan. 21, 2009). The Fourth Circuit vacated that judgment, holding that the District Court had considered only the age-based retirement eligibility requirement, and had failed to consider the plan’s separate provision for service-based eligibility. EEOC v. Baltimore Cnty., No. 09-1688 (4th Cir. June 25, 2010). On remand, the District Court granted partial summary judgment in favor of the EEOC. EEOC v. Baltimore Cnty., No. 07-CV-2500 (D. Md. Oct. 17, 2012).

Fourth Circuit Decision

The County’s primary argument on appeal was that the District Court had failed to apply the factors identified by the Supreme Court in Kentucky Retirement Systems v. EEOC, 554 U.S. 135 (2008). But the Fourth Circuit held that that case was inapplicable to the District Court’s analysis because it presented a different question: whether “pension status” unlawfully constituted a “proxy for age.” In that case, the plan treated employees differently based on their pension status rather than on their age. But Baltimore County’s plan required different contribution rates explicitly in accordance with employees’ ages at the time of their enrollment in the plan. The employee’s eligibility to retire (i.e., “pension status”) therefore had no bearing on the disparate treatment in that case, i.e., that older employees were required to contribute a higher percentage of their salaries to the plan than younger employees. Baltimore Cnty., at 13-15.

An employer violates the ADEA by relying on a facially discriminatory policy where age is the “but-for” cause of disparate treatment of older employees. Accordingly, the only question in Baltimore County was whether the disparate contribution rates were lawfully based on a reasonable factor other than age. Id. at 15. While there may have been some basis for such disparate treatment at the plan’s inception – when the only basis for reaching retirement eligibility was reaching retirement age – that justification disappeared when the plan was modified to allow employees to retire based solely on a set number of years of service. Id. 

Under the terms of the plan, correctional officers were eligible for retirement after 20 years of service. So a 20-year-old and a 40-year-old would both be eligible to retire after 20 years, but the 40-year-old would still have to contribute more of his or her income to the plan over the same twenty years to receive the same retirement benefits. Because the plan required older employees to contribute more of their income to the plan regardless of whether they chose to retire after reaching retirement age or after working the required number of years, the number of years until retirement age could not be the basis for the disparate rates. Id. at 15-16. Accordingly, the disparate rates were not motived by anything other than age, and were a violation of the ADEA. Id.

Implications For Employers

This case demonstrates the complexities and potential pitfalls employers face while trying to navigate the ADEA. It often makes sense to treat older and younger employees differently under a retirement plan in order to ensure that all employees receive the same level of plan benefits. But employers must be aware that any such differences will be considered facially discriminatory and therefore must be based on a reasonable factor other than age. The plan must be carefully structured so that any age-based disparities are actually justified by the different financial considerations that might apply to older employees when calculating plan benefits and contributions.

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

Alabama District Court Dismisses EEOC Claims Challenging Employer’s No Dreadlocks Policy

Posted in Defenses to Pattern or Practice Cases

By Gerald L. Maatman, Jr. and  Kathryn “Chris” Palamountain

Employing reasoning adopted by a number of other courts, the U.S. District Court for the Southern District of Alabama recently dismissed the EEOC’s claim that an employer’s policy prohibiting employees from wearing dreadlocks violated Title VII – the case of EEOC v. Catastrophe Management Solutions, No. 13-00476-CB-M, 2014 WL 47758 (S. D. Ala. Mar. 27, 2014). In its ruling, the Court confirmed that “employers’ grooming policies are outside the purview of Title VII,” and it further rejected the EEOC’s argument that the definition of race under Title VII should be read expansively to encompass more than immutable physical characteristics unique to a particular group.   

Background To The Case

The case arose after Chastity Jones, an African-American applicant received an offer of employment from defendant. At the time of the job offer, the employer had a grooming policy, which provided in part that “hairstyles should reflect a business/professional image” and prohibited “excessive hairstyles or unusual colors.” Id. at 1-2. The employer interpreted the policy as prohibiting the wearing of dreadlocks, and thus it conditioned its offer on Jones cutting off her dreadlocks. When Jones declined to do so, defendant withdrew the offer of employment. The EEOC filed suit, alleging that application of the policy to prohibit dreadlocks violated Title VII and that defendant intentionally discriminated on the basis of race. Id. at 2. The employer moved to dismiss for failure to state a claim upon which relief can be granted. 

The EEOC’s Arguments

The EEOC argued that the employer had refused to hire Jones because she was black and that a policy that prohibits dreadlocks is racially discriminatory on its face because dreadlocks were determinant of racial identity. The EEOC also urged the Court to adopt an expansive definition of race under Title VII that would encompass “both physical and cultural characteristics, even when those cultural characteristics are not unique to a particular group.” Id. at 8. As an apparent fallback position, the EEOC argued that dismissal was inappropriate because it should be allowed to present expert testimony on three factual predicates:  1) “that Blacks are primary wearers of dreadlocks”; 2) that dreadlocks are “a reasonable and natural method of managing the physiological construct of Black hair”; and 3) that dreadlocks have a “socio-cultural racial significance” for blacks. Id. at 9. 

The Court’s Ruling

The Court rejected the EEOC’s arguments and dismissed the EEOC’s complaint. First, the Court identified a number of decisions addressing policies that restricted hairstyles and finding that such policies were non-discriminatory. Id. at 6-7. Agreeing with these decisions, the Court held that a “hairstyle, even one more closely associated with a particular ethnic group, is a mutable characteristic.” Id. at 8. The Court also rejected the EEOC’s arguments regarding “socio-cultural racial significance,” noting that culture and race are different concepts and that “Title VII does not protect against discrimination based on traits, even a trait that has socio-cultural racial significance.” Id. at 10. 

Implications For Employers

This decision further reinforces an employer’s right to establish and enforce grooming policies and describes some parameters on the application of those policies. In addition, when facing EEOC charges which attempt to expand race discrimination under Title VII beyond immutable characteristics, this decision provides support for a defense that mutable characteristics, including traits that have purported “socio-cultural racial significance,” may not be protected as a matter of law. 

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

Victory At Last: Fourth Circuit Orders EEOC To Pay Up On Hefty Attorneys’ Fees Award

Posted in EEOC Litigation

By Christopher DeGroff, Gerald L. Maatman, Jr., and Lily M. Strumwasser

This week the Fourth Circuit put its foot down on a decision almost eleven years in the making, ordering the government to pay Propack Logistics $189,113.50 in attorneys’ fees.  This welcome news brings the EEOC’s long battle in EEOC v. Propak Logistics Inc., Case No. 13-CV-1687 (4th Cir. 2014) to an end. 

After the EEOC took a stunning eight years to investigate a charge of discrimination, the Commission finally filed suit in 2009, which the U.S. District Court for the Western District of North Carolina subsequently dismissed in August 2012.  Ever since, the EEOC and Propak have battled over attorneys’ fees and costs.  After all is said and done, Propak came out on top yet again:  defeating both the EEOC’s discrimination claims and securing hefty attorneys’ fees.

Background

We first reported on this case here in 2012.  By way of background, in EEOC v. Propak Logistics, Inc., Case No. 09-CV-311 (W.D.N.C. Aug. 7, 2012), the EEOC claimed Propak refused to hire non-Hispanic applicants and employees for non-management positions at a Wal-Mart distribution center.  Before the lawsuit was filed, and beginning in 2003, the EEOC investigated a discrimination charge from an applicant.   The investigation included an initial interview with the Charging Party in August 2003, an interview of Propak’s witness in August 2003, several requests for information from Propak from May 2003 to September 2008, interviews with Propak’s management in April 2004, interviews of potential class members in May and June 2006, and subpoenas issued by the EEOC to third-party entities in late 2007.  Id. at 12-13.

Nearly five years after the initial charge was filed, the EEOC issued a right to sue letter to the Charging Party in February 2008.  Curiously, the letter was issued before the EEOC completed its the investigation into the Charging Party’s allegations.  This is rare because as a result, the EEOC made no finding as to the allegations contained in the Charging Party’s Charge of Discrimination at the time it issued the right to sue letter.  Id. at 7.  The Charging Party later filed suit, and the Court dismissed his claims.  Shortly thereafter, the EEOC concluded its investigation and issued a letter of determination finding reasonable cause of discrimination, and “conciliation failure” as declared by the Commission. The EEOC then filed its lawsuit in August 2009 — almost a full year after it declared conciliation failure, and seven years after the Charging Party filed a charge of discrimination. Id.

Propack filed a motion for summary judgment relying on the defense of laches.  To prevail on the equitable defense of laches, the Court reasoned that Propak was required to prove:  (1) lack of diligence by the EEOC, and (2) that Propak suffered undue prejudice as a result.  Id. at 16.  The U.S. District Court for the Western District of North Carolina granted the motion. The Court found that the EEOC dealt Propak “a double-fisted blow” and reasoned that the Commission’s delay in investigating the alleged discrimination was unreasonable.  The Court later granted Propak’s request for attorneys’ fees and ordered the EEOC to pay Propak $189,113.50 in fees and $61.20 in costs.  The Court’s decision reiterated its position that the EEOC was unreasonable in filing a case after an eight-year investigation.

The Fourth Circuit’s Decision

The EEOC appealed the District Court’s grant of attorneys’ fees and costs claiming that the District Court abused its discretion in reaching its decision.  The EEOC argued that it had a reasonable basis for believing it could defeat Propak’s defense, and that it had valid support for its position that the defense of laches did not bar the EEOC from filing is lawsuit.  Case No. 13-CV-1687 (4th Cir. 2014) at 9-10.  Thus, the EEOC claimed that it should not be required to pay Propak $189,113.50 in attorneys’ fees.

The EEOC struck out again when the Fourth Circuit concluded that the District Court did not abuse its discretion in holding that the EEOC acted unreasonably in initiating the litigation.  The Fourth Circuit explained that it “disagree[s] with the EEOC’s argument that the district court engaged in ‘hindsight logic’ in explaining its award of attorneys’ fees.”  Id. at 13.  The Fourth Circuit explained that the record lacks any description of the substance of the EEOC’s alleged interviews with potential class members, or of any other interviews that may have been conducted to identify the class of purported victims.  Id. at 16.  The record also failed to establish that any of the people who received contact letters from the EEOC fell within the EEOC’s definition of the target class.  Id. at 17.  For these reasons, the Fourth Circuit did not have a “definite and firm” conviction that the District Court mistakenly awarded Propak attorneys’ fees.  Accordingly, the three-judge panel affirmed the District Court’s judgment and grant of fees to Propak.

Implications For Employers

Employers across the nation can relate to the pains of dealing with such long investigations spearheaded by the EEOC.  In this case, the long hard fight was worth it for Propak – who eventually prevailed against the Commission.  Through challenging the EEOC’s investigative techniques, Propak also put a spotlight back on the EEOC’s often misguided tactics in pursuing systemic investigations.  The Fourth Circuit’s ruling gives employers one more piece of ammunition to use against the EEOC when it drags its feet for years during investigations – an all-to-common occurrence.

Court Issues $22,900 Sanction Award Against The EEOC For Spoliation

Posted in EEOC Litigation

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

In a case we previously blogged about, EEOC v. Womble Carlyle Sandridge & Rice, LLP, 13-CV-46 (E.D.N.C. Mar. 24, 2014), Magistrate Judge L. Patrick Auld held the EEOC liable for spoliation sanctions based on the “negligence, if not gross negligence” exhibited by the charging party it brought suit on behalf of – one Ms. Charlesetta Jennings (“Ms. Jennings”).  When served with the bill of costs by Womble Carlyle, the EEOC objected to the amount as unreasonable.  In his decision, Judge Auld rejected the EEOC’s argument and ordered the EEOC responsible for $22,900 as the reasonable costs incurred by Womble Carlyle.

Background

The EEOC filed suit on behalf of Ms. Jennings in 2013 alleging that Womble Carlyle failed to accommodate her disability and subsequently terminated her employment because of the disability in violation of the Americans With Disabilities Act (“ADA”).  Id. at 1.  As the EEOC sought back pay on behalf of Ms. Jennings, Womble Carlyle served document demands and interrogatories designed to determine whether she properly mitigated her damages by seeking alternative employment. While being deposed in September 2013, Ms. Jennings testified that she had previously maintained a detailed log chronicling her efforts to obtain alternative employment while she was receiving unemployment insurance benefits; however, once these benefits ended in February 2013, she shredded the log. Further, she testified that she discarded additional material regarding her efforts to obtain employment in June of 2013 – which was after the EEOC had already filed its lawsuit on behalf of Ms. Jennings in January 2013.

Based on Ms. Jennings’ destruction of these documents, Womble Carlyle sought sanctions for spoliation of evidence, which the Court granted and ordered the EEOC to reimburse Womble Carlyle its costs and fees associated with having to bring the spoliation motion.  Id. at 2.  As a result, Womble Carlyle submitted a Statement of Expenses totaling $29,651.  Id.  The EEOC contested the $29,651 amount as unreasonable on several grounds, including its position that Womble Carlyle attorneys “duplicated their efforts” during discovery and that it should not have to pay for the time spent by one attorney reviewing the work of another, where both attorneys are experienced litigators.  Id. at 3-4.

The Court’s Decision

As the EEOC objected to the number of hours spent by Womble Carlyle attorneys in relation to the spoliation motion, Judge Auld held it was up to Womble Carlyle to “document the need to have devoted the amount of time for which it seeks compensation” through the submission of “reliable billing records, and…exercise of billing judgment” to deduct time “not properly shown to have been incurred in pursuit of the matter at issue or that is otherwise not reasonable in amount of necessarily incurred.”  Id. at 3.

Judge Auld rejected the EEOC’s contention that Womble Carlyle attorneys unnecessarily duplicated their efforts in drafting discovery and that it should not be forced to pay for the time spent by one attorney reviewing the work of another attorney “where both attorneys are experienced litigators.”  Id. at  5.  In doing so, Judge Auld held that after his review, the billing records of Womble Carlyle’s attorneys were reasonable given the nature of the sanction motion and were not duplicative.  Id.

Additionally, Judge Auld rejected the EEOC’s request that the Court should reduce by two-thirds the amount of costs since the Court only awarded monetary sanctions and did not grant the other two forms of relief requested by Womble Carlyle: dismissal of the back pay claim, and an adverse inference jury instruction (which the court reserved judgment on until trial).  Id. at 6.  Judge Auld held that “the fact that the undersigned Magistrate Judge declined to recommend one form of sanction…should not reduce the amount of the recommended sanction of reasonable expenses.”  Id.

Judge Auld, however, did reduce Womble Carlyle’s cost application by $6,600 because it failed to demonstrate why it spent 12 more hours on an 11 page reply brief with 6 exhibits than it spent on an 18-page opening brief with 16 exhibits. Id. at 7.  Additionally, Judge Auld reduced the cost award by $151 based on certain block billing entries which were insufficient to meet Womble Carlyle’s burden to support its fee request. Id. at 9.  As a result, Judge Auld held the EEOC liable for a total of $22,900 of Womble Carlyle’s costs and fees associated with the spoliation motion.  Id. at 10.

Implications For Employers

As this case demonstrates, decisions made regarding the preservation of evidence issues at the beginning of, and even leading up to, litigation can have very serious implications, whether in the form of sanctions, an adverse inference at trial or even outright dismissal.  This decision (and Judge Auld’s prior decision) should be added to employers’ defense toolkits, as the preservation of documents and information is a two-way street that employees (and the EEOC) must also follow once litigation is reasonably foreseeable – or proceed at their own peril.

What’s Good For The Goose … Court Turns Table On EEOC In Subpoena Ruling

Posted in Investigation Tactics and Administrative Subpoenas

By Christopher DeGroff and Michael Fleischer

A Win For Transparency

Yesterday, in the U.S. District Court for the District of Massachusetts, the Court turned the tables on the EEOC on a controversial subpoena issue. The EEOC has traditionally used broad subpoenas attempting to extract sensitive and expansive information from employers in cases around the country. (Click here and here to read more.) But here, the EEOC attempted to limit the records the employer could obtain from subpoenas of its own. The Court, however, wouldn’t bite on the EEOC’s argument, and denied the EEOC’s Motion to Quash Chipotle’s subpoenas seeking employment records from claimant’s former and current employers to aid in its defense.

Case Background And Holding

Now for the details: in EEOC v. Chipotle Mexican Grill, Inc., Case No. 1:13-cv-11503-FDS (D.Mass.), the EEOC sued Chipotle on behalf of a former employee alleging that the employee was unlawfully terminated due to her disability. During discovery, Chipotle served several third party subpoenas on the claimant’s other employers seeking her personnel files, wage records, and other records pertaining to her employment (including applications and resumes). Chipotle sought these records in order to defend itself, in part, by demonstrating that the claimant failed to mitigate her damages. Although the EEOC admitted that its claimant’s wage records were relevant to a failure to mitigate defense, and provided the claimant’s W-2s to Chipotle, the EEOC nevertheless insisted that the Court throw out subpoenas as to the claimant’s personnel files, applications, and resumes.

At yesterday’s motion hearing in Boston, the EEOC argued that Chipotle’s subpoenas were overreaching, were not reasonably calculated to lead to the discovery of admissible evidence, and were not necessary for Chipotle’s failure to mitigate defense. Chipotle, on the other hand, stressed that the claimant’s applications and resumes were necessary to support Chipotle’s defense, as the documents would show the claimant’s employment qualifications, efforts to obtain employment, and would be an essential tool for its expert economist to determine what jobs Plaintiff was qualified for and how many of those jobs were available.

Although the EEOC argued that Chipotle could obtain this information during the claimant’s deposition, the Court refused to restrict Chipotle’s access to  only depositions and noted that the Federal Rules of Civil Procedure provided for broad discovery. The Court denied the EEOC’s motion to quash finding that Chipotle’s third party subpoenas for the Plaintiff’s employment records were relevant to Chipotle’s defense but declined to comment on their admissibility.

Implications For Employers

Employers are often frustrated by what they often view as an asymmetric playing field: the EEOC demands to be treated like any other litigant for some issues, but often argues that it should be treated differently (and more favorably) in others because it is a “law enforcement agency.” This case is a quiet but meaningful win for an employer attempting to obtain the same sort of discovery that it would from virtually any other private litigant.  Employers should be encouraged that some jurisdictions like the Court here will rule to keep the playing field even.

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

EEOC Social Media Meeting – Old Framework Applied To New Issues, Or Something Else?

Posted in Regulatory / Guidance Issuance

By Christopher DeGroff and Paul Kehoe

Yesterday, the EEOC held a public meeting entitled Social Media In The Workplace: Examining Implications for Equal Employment Opportunity Law.  The Commissioners welcomed five individuals to testify regarding how the ever-changing social media platforms impact the workplace in areas such as recruitment and hiring, harassment, records retention, and litigation.  The meeting was intended to be an information gathering session for the EEOC rather than a signal that the EEOC would consider adopting guidance regarding an employer’s use of social media information.   

Overall, those testifying from a management perspective stated that employers use social media as just one part of its recruitment activities, and generally less so when screening applicants.  Those testifying on behalf of workers, however, indicated that employers heavily use social media background investigations and make hiring decisions based on what they find.  One participant even suggested that states adopt laws prohibiting employers from using available social media information in employment decisions; a far cry from the current state prohibitions on employers seeking login and password information from current and potential employees. 

Both management and worker representatives sparred over the appropriate boundaries of obtaining social media postings during discovery.  Worker representatives considered employers’ attempts to discover social media postings as unproductive, seemingly regardless of whether the postings were relevant to mitigation of damages or other defenses.  Management representatives disagreed, noting that all relevant, non-privileged information was subject to discovery. 

The public/private debate loomed large both for those testifying and the Commissioners posing questions.  Whether using social or professional networking platforms, commenting on blogs, or posting photos and videos to YouTube or Snapchat, employees believe that their postings are private, and therefore, not subject to inspection by their current or potential employers.  On the other side of the spectrum, many attending the conference today have difficulty accepting claims of privacy where an individual has broadcasted information to hundreds of his or her family, friends, co-workers, and casual acquaintances.  Overall, the workers’ representatives noted that allowing employers to investigate a plaintiff’s or class member’s “private” social media postings may have a chilling effect on participation in litigation, unconcerned that employers are entitled to all relevant, non-privileged information in defending themselves against either a private plaintiff or the EEOC, regardless of whether one believes the information to be “private.” 

When it comes to social media, the line between public and private activities is blurred at best, and non-existent at worst.  While new EEOC guidance is currently not in the cards, employers need to take care to review its social media policies or consider adopting a narrowly tailored policy for many reasons, including seeking qualified candidates, promoting brand awareness, avoiding harassment claims, and more.

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

EEOC Suffers Significant Blow As District Court Dismisses EEOC’s Largest Pending Pattern Or Practice Lawsuit For Failure To Investigate

Posted in Motions for Summary Judgment

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

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., Case No. 08-CV-706 (W.D.N.Y. March 10, 2014), and dismissed the EEOC’s entire lawsuit with prejudice. It is a stunning defeat for the EEOC.

We previously highlighted Magistrate Judge McCarthy’s recommendation as one of the first significant decisions of 2014. (Read more here.) Magistrate Judge McCarthy recommended that the Court grant summary judgment in favor of Sterling because the EEOC failed to demonstrate that it investigated its claims of company-wide pay and promotion discrimination on a nationwide basis prior to filing a lawsuit. EEOC v. Sterling Jewelers Inc., Case No. 08-CV-706 (W.D.N.Y. Jan. 2, 2014).

Ruling just one business day after oral argument on the EEOC’s Rule 72 objections, Judge Arcara overruled the EEOC’s objections to Magistrate Judge McCarthy’s recommendation, entered summary judgment in favor of Sterling, and dismissed the EEOC’s case with prejudice. The case was the largest matter pending on the EEOC’s docket. 

Factual Background

Between May 2005 and November 2006, 19 female employees filed charges with the EEOC claiming that Sterling discriminated against them in pay and/or promotions based on their sex.  Id. at 1. The EEOC initially assigned the Charges to five investigators and, in June 2007, transferred and assigned them to a single investigator in its Buffalo office. Id. at 1-2. 

On January 3, 2008, the EEOC issued a Letter of Determination claiming that, through its investigation, it determined that Sterling subjected a “class of female employees with retail sales responsibilities nationwide to a pattern or practice of sex discrimination in regard to promotion and compensation.” Id. at 3. On September 23, 2008, the EEOC filed suit asserting similar claims, i.e., that Sterling “engaged in unlawful employment practices throughout its stores nationwide.” Id. at 4. 

Following discovery, including two depositions of the EEOC investigators, Sterling moved for partial summary judgment, claiming that the EEOC produced no evidence that it conducted a nationwide investigation of Sterling’s employment practices prior to commencing the action. Id. 

The Court’s Opinion

On January 2, 2014, Magistrate Judge Jeremiah McCarthy issued a 20-page Report, Recommendation, and Order recommending that Sterling’s motion be granted.

Magistrate Judge McCarthy rejected the EEOC’s contention that a court may not inquire as to the scope of the EEOC’s pre-lawsuit investigation. He ruled that, while courts will not review the sufficiency of the EEOC’s pre-suit investigation, “courts will review whether an investigation occurred” as well as the “scope of that investigation.” Id. at 6. 

Magistrate Judge McCarthy found no evidence that the EEOC investigated its claims against Sterling on a nationwide basis. He found that the charges themselves – asserted on behalf of the charging parties and “similarly situated women” – did not demonstrate that the EEOC investigated the charges, let alone the scope of any investigation that the EEOC might have conducted. Id. at 9. 

Magistrate Judge McCarthy also rejected the EEOC’s assertion that it satisfied its pre-suit obligation because it received nationwide statistical information from counsel for the charging parties (who commenced a separate lawsuit against Defendant). Id. at 10. He ruled that the EEOC has a statutory duty to make an independent investigation, and the mere gathering of information from others or parroting of information without independent analysis does not fulfill that obligation. Id. at 16.

Further, Magistrate Judge McCarthy ruled that, having invoked privilege to block Sterling’s efforts to discover whatever steps the EEOC might have taken to verify the information that it received from counsel for the charging parties, the EEOC could not reverse course and produce such information in response to Sterling’s motion for summary judgment. Id. at 13-14. 

Judge Arcara overruled the EEOC’s objections to Judge McCarthy’s recommendation, adopted the recommendation in its entirety, and granted Sterling’s motion for partial summary judgment. The Court dismissed the EEOC’s claims of a nationwide pattern or practice of employment discrimination with prejudice. 

Implications For Employers

The EEOC is continuing its initiative to prosecute systemic and large scale lawsuits against employers. The ruling in this case demonstrates that it cannot do so free of its statutory obligations. While the EEOC argued to Magistrate Judge McCarthy and Judge Arcara that the scope of its investigation was beyond judicial review, the Court soundly rejected that argument, recognizing that such a ruling would undermine “if not completely eviscerate Title VII’s integrated, multistep enforcement procedure.” Id. at 5. EEOC v. Sterling demonstrates that some courts will continue to provide an important check on the EEOC’s actions and hold the EEOC to its statutory requirements. 

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

Bass Pro Conciliation Decision Could Open A Can Of Worms For Both EEOC And Employers

Posted in Procedural and Jurisdictional Issues

By Christopher DeGroff and Julie Yap

Over the past year, the EEOC has been under fire for its failure to conciliate with employers before filing a case in federal court. Conciliation is a mandatory step the EEOC must take and employers view it as is an essential function of the agency. Conciliation goes to the core of the EEOC’s underlying mission to seek voluntary compliance with anti-discrimination laws as it gives employers an opportunity to fix potential problems before the government resorts to costly litigation. In a number of cases (here and here), courts have rebuked the EEOC for its failure to reasonably investigate its claims and participate in good faith in the conciliation process.

The U.S. District Court for the Southern District of Texas recently issued an Order in EEOC v. Bass Pro Outdoor World, LLC, Case No. 11-CV-3425 (S.D. Tex. Mar. 4, 2014), evaluating the sufficiency of the EEOC’s conciliation efforts.  The decision is a mixed bag for employers. While the Court held that the EEOC must apprise an employer of the basis for any type of claim it would intend to bring in a lawsuit, the Court also ultimately held the EEOC to a lower standard than that applied more recently by other courts. In doing so, the Court adopted in part the reasoning of a recent Seventh Circuit decision, EEOC v. Mach Mining, a decision one of the five Commissioners of the EEOC recently noted was the most important of 2013 because of its approval of the government’s minimal, pre-lawsuit conciliation efforts.  

The Background In EEOC v. Bass Pro Outdoor World, LLC

In EEOC v. Bass Pro Outdoor World, LLC, et al., the EEOC brought a lawsuit alleging discriminatory hiring practices  in violation of Title VII on behalf of: (1) a class of individuals allegedly discriminated against on the basis of their gender or race, both as a representative action (called a “706” action) and based on a pattern or practice theory (called a “707” action). Id. at 9. Defendants filed a motion for summary judgment, urging dismissal of the case based on the EEOC’s failure to attempt conciliation in good faith. Id. at 1.

As an initial matter, the Court concluded that the EEOC was obligated to conciliate both types of claims brought by the EEOC — the individual claims and the pattern or practice claims — because each type of claim is based on distinct theories and litigated using different standards. Id. at 9-12. In doing so, the Court expressly rejected the EEOC’s argument that it had no duty to conciliate each claim. Id. at 10-11. However, the Court also noted that “while the Commission cannot wholly ignore any of the claim it intends to eventually bring in court, and certainly must apprise the would-be defendant of some basis for any claim it will ultimately press in litigation,” it would not require the EEOC to “undertake separate and distinct conciliation processes for each of its claims.” Id. at 11-12.

The Court then concluded that the EEOC had sufficiently conciliated its pattern or practice claims based upon a number of letters exchanged and one in-person meeting over a five-month period. Id. at 12-15. The Court noted that it was clear from the beginning of the conciliation process that the EEOC intended to bring a pattern and practice claim based on statistical evidence. Id. at 13. Even though the EEOC refused to share its statistical model supporting the alleged “shortfall,” the Court found it sufficient that the employer had a broad outline of how the EEOC computed its statistical analysis and knew that the EEOC considered the “shortfall” to be. Id. at 16. More important to it analysis, however, appears to be the Court’s characterization of both the employer and the EEOC as “frustratingly obstinate.”  Id.  Even though the Court expressly noted it was not “particularly impressed by the EEOC’s conciliation efforts,” it ultimately concluded that it would “not require the EEOC to conduct Sisyphean negotiations to meet its statutory mandate to conciliate” where the parties proposals “were so divergent as to seem irreconcilable.” Id. at 19.

The Court next concluded that the EEOC had prematurely ended conciliation efforts with respect to the claim brought on behalf of a class of aggrieved individuals. Id. at 20-29. The Court noted that the EEOC was not required to conciliate each potential class member’s claim or to disclose the names of each and every member of the potential class.  Id. at 24-26. But, “the EEOC must share . . . the outline of the class and provide the employer with sufficient information to understand the basis of the allegations and fully engage in the conciliation process.” Id. at 28. 

But the Court held that “to dismiss the case would be too harsh a sanction.” Id. at 30. The Court relied heavily on EEOC v. Mach Mining, noting that dismissal “should be resorted to only in truly extraordinary cases” in order to ensure that “incentives for employers will [not] fall out of balance.” Id. at 35. The Court dismissed the idea that “imposing too high a hurdle for dismissal will incentive the EEOC to abandon conciliation altogether or misuse it,” asserting that internal issues give the EEOC “powerful incentives to conciliate.” Id. The Court went even further, disagreeing with the standard set in both CRST  and Bloomberg, reasoning that an “exacting standard may help to prevent employers from abusing the conciliation process.” Id. at 36.

Closing The Temporal Door On The EEOC Class

Finally, although only a small part of the Court’s written opinion, the dismissal of all post-conciliation claimants could have a significant precedential impact. In EEOC v. Bass Pro, the EEOC had, over the course of the case, identified a number of claimants on behalf of whom it sought relief. Many were discovered and identified for the first time in litigation. The Court held that the Commission could not possibly have learned about these individuals during its investigation and, therefore, could not possibly have conciliated their claims, dismissing all of those post-determination claimants. Id. at 38-39. Indeed, the Court noted that there was “no piece of information [the EEOC] could have shared that would have alerted Defendant to the existence of classmembers who had not even yet applied for employment.” Id. at 39. The fallout from this portion of the decision could be far-reaching. One could persuasively argue that this very intuitive and practical limitation should apply to all EEOC systemic cases, and could provide a guidepost for other judges faced with where to draw the line on the endpoint to an EEOC “class.”

Implications For Employers

The EEOC v. Bass Pro decision is a mixed bag for employers — certainly all would have preferred the case to have been dismissed outright. Instead, the Court took a “pox on both your houses” view of the conciliation efforts, noting that neither side had the high ground.  Employers entering the conciliation process should read EEOC v. Bass Pro, if only to see one Judge’s views on what could and should have been done differently. But the fact that the Bass Pro court examined the conciliation history in such detail is, itself, encouraging, given the EEOC’s view that conciliation should not be second-guessed by the courts at all. Finally, the dismissal of the post-determination claimants could serve as valuable ammunition for employers seeking to explain to the court that at some point, the EEOC’s expansive view of its class must be reined in.

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

EEOC-Initiated Litigation Webinar: Case Law Developments In 2013 And Trends To Watch For In 2014

Posted in Uncategorized

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

Calling all loyal blog readers – the EEOC-Initiated litigation webinar is scheduled for Tuesday, February 25, 2013. Click here to register and attend.

Our readers have given us wide-ranging feedback since the launch of our annual EEOC litigation study, EEOC-Initiated Litigation: Case Law Developments In 2013 And Trends To Watch For In 2014. This publication is a definitive source of information that focuses exclusively on EEOC-related litigation (click here to order a copy). Our webinar will provide a comprehensive review of these workplace litigation trends and provide attendees with updates on 2014 rulings. 

The book’s Co-authors Gerald L. Maatman, Jr. and Christopher J. DeGroff, co-chairs of the firm’s Complex Discrimination Litigation practice group, will lead this interactive discussion.

Some substantive trends to be discussed are:

• A Transforming Docket: Systemic Initiative– Evolution in the EEOC’s agenda to champion bigger, more complex, and more media-driven cases was prevalent in 2013.

• ADA Cases a Key Priority– Even though it is not expressly one of the EEOC’s “Big Six” national priorities, assertion of disability claims was a chart-topper for the EEOC in FY 2013.

• EEOC Focused on Pregnancy Discrimination– The EEOC is clearly focused on breaking the “maternal wall” with its litigation of pregnancy discrimination litigation and its declaration that it is a “widespread problem in the workplace, no matter the size of the employer.

• Religion Lawsuits on the Rise– Religious discrimination lawsuits filed by the EEOC rose 33 percent in 2013.

• 2013: Mixed Bag for Subpoena Enforcement Actions – EEOC filings dropped by nearly half, down from 33 in 2012 to 17 in 2013, but the EEOC v. Aerotek and EEOC v. HomeNurse opinions provide employers with critical “goal posts” delineating the scope of the EEOC’s subpoena authority.

The time and date of the webinar is Tuesday, February 25, 2014 at:

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

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

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

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

Speakers Christopher J. DeGroff  and Gerald L. Maatman Jr.

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