EEOC Year-End Countdown

Show Me the Money: The EEOC Secures Post-Trial Damages Victory In Religious Discrimination Case

Posted in Remedies

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

In EEOC v. Consol Energy, Inc. et. al., Case No. 1:13-CV-215 (S.D. W. Va. Aug. 21, 2015), a jury found in favor of the EEOC in its claim brought under Title VII that the employer denied an employee a religious accommodation involving an exemption from using a biometric hand scanner. Prior to trial the parties filed motions in limine concerning certain issues relating to damages, which was held in abeyance pending trial. Id. at 1. Given the EEOC’s trial verdict, the Court then decided the motions and what damages (other than compensatory which was awarded by the jury) should be awarded. Id. at 2. For good measure, the Court also entered a significant injunctive relief award.

The ruling ought to be required reading for any corporate counsel and human resources professional dealing with EEOC litigation issues.

The Court’s Decision On Damages

With respect to monetary damages, the parties disagreed concerning the level of back and front pay the Charging Party should receive. Namely, the EEOC argued that the pension benefits the Charging Party received should not be used as an off-set to any back or front pay award as they are collateral (not paid directly from and entirely by the employer, rather, by a third source). Id. at 3. The collateral source rule provides that compensation from a collateral source should be disregarded in assessing damages.  The employer argued that as the pension plan was 100% employer funded, it is a non-collateral source, and as such, should off-set any economic damages the Charging Party receives. Id. at 4.

The Court agreed with the EEOC and held that the pension benefits are a collateral source as “there has been no evidence that the fund is meant to be used as an indemnifying fund for potential litigation that is not in an employer’s favor” and “there has been no evidence that the applicable collective bargaining agreement contains a provision contemplating a set-off of benefits received in a case such as the one at hand.” Id. at 7.

The employer also argued that the Charging Party’s back and front pay award should be limited as he failed to adequately mitigate his damages. Id. at 11. Namely, that he failed to seek similar employment in the coal mining industry (he only attended a single job fair and didn’t seek similar employment as he did not want to lose his pension payments) and that he failed to apply for available openings in the coal industry that he was “likely aware.” Id. at 12.

The Court found that the Charging Party reasonably mitigated his damages given the limited available positions in the coal mining industry, his personal economic circumstances (he had a wife and two grandchildren to support at the time) and although he was skilled in certain industries, he was limited by his education for higher-paying jobs in his area as well as by his age. Id. at 18-20.

Given the Court’s ruling on damages, it awarded the Charging Party (before interest) $586,860.74 in economic damages. Id. at 39.

The Court’s Decision On Injunctive Relief

The EEOC also sought a company-wide permanent injunction that would dissolve after three years and prohibit the following:  any requirement or rule for the use of a biometric hand scanner will be in conformity with Title VII as long as absent undue hardship on the defendants; provide a complete exemption as an alternative for persons who need such an exemption as a reasonable accommodation; and provide training to all management personnel regarding Title VII within 60 days of the injunction being entered. Id. at 25. In support of its request, the EEOC argued that once a plaintiff prevails in a Title VII case, “injunctions are presumptively appropriate.” Id.

The Court agreed with the EEOC and issued the permanent injunction it sought as “defendants have not met their heavy burden of proving that future discrimination will not occur.” Id. at 33. Although the Court noted that the employer had taken steps to eradicate any discrimination, that is not enough to warrant a denial of the injunction. Id. at 33. Furthermore, the Court found the scope of the injunction reasonable as it targets religious discrimination based on precedential case law and the biometric hand scanning device – which was at issue in the underlying lawsuit. Id. at 35.

Implications for Employers

This decision serves as a good primer on the factors that courts will rely upon in determining what damages are available (and, even if available, should be reduced). Although the Court ruled in favor of the EEOC in this case, employer access to specific types of claimant information can make a critical difference in mounting key defenses, testing claimant credibility, and limiting available damages.

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

Court Rejects The EEOC’s Novel Attempt To Impose Disparate Treatment Liability Without Any Injury

Posted in Motions for Summary Judgment

scales-of-justice-tippedBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Autozone, Inc., Case No. 14-CV-5579 (N.D. Ill. Aug. 4, 2015), Judge Amy St. Eve of the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of the defendant and against the EEOC in a case in which the EEOC brought a disparate treatment discrimination suit on behalf of an individual who did not suffer an adverse employment action as a result of alleged discrimination.

This decision is an important victory for employers, as it represents a rejection of the EEOC’s novel theory that an employer can be liable for limiting, segregating, or classifying employees in a purportedly discriminatory way even absent any adverse employment action. In addition, the Court rejected the EEOC’s theory that an alleged discriminatory transfer is per se an adverse employment action.

Case Background

Kevin Stuckey (“Stuckey”), an African-American, was employed by AutoZone from January 2008 to July 2012. Id. at 1-2. During this period, Stuckey was transferred four times to different AutoZone locations. Id. In each such transfer, Stuckey was placed in the same position and had the same job duties and rate of pay that he had at his prior location. Id.

After Stuckey was transferred for the fourth time, Stuckey refused to report to his new location, and instead filed an EEOC charge on August 13, 2012, claiming he was transferred to the new location due to his race. Id. at 2. According to Stuckey, he was transferred out of the third AutoZone location where he worked because AutoZone’s district manager wanted to make the third location “predominantly Hispanic.” Id. at 2-3. The EEOC thereafter filed a disparate treatment suit on Stuckey’s behalf. AutoZone moved for summary judgment, arguing that, because Stuckey did not suffer an adverse employment action as a result of his transfer, he did not have a claim for disparate treatment discrimination.

The Court’s Decision

The Court began by pointing out that Title VII makes two types of racial discrimination unlawful. Id. at 4. First, under 42 U.S.C. § 2000e-2(a)(1), it is unlawful to refuse to hire, to discharge, or to discriminate against individuals with respect to compensation or other terms of employment on the basis of race. Id. Second, under 42 U.S.C. § 2000e-2(a)(2), it is unlawful “‘to limit, segregate, or classify . . . employees . . . in any way which would deprive . . . any individual of employment opportunities or otherwise adversely affect his status as an employee’” on the basis of race. Id. (quoting 42 U.S.C. § 2000e-2(a)(2)).

After pointing out that disparate treatment claims brought under Title VII generally require a plaintiff to prove that he or she suffered an adverse employment action, the Court addressed the EEOC’s argument that there is no need for an adverse employment action to maintain a claim under 42 U.S.C. § 2000e-2(a)(2). Id. at 4-5.

The Court first indicated that the Seventh Circuit has consistently required an adverse employment action in § 2000e-2(a)(2) cases. Id. at 5-6. It then addressed the EEOC’s argument that, in Kyles v. J.K. Guardian Sec. Serv., Inc., 222 F.3d 289 (7th Cir. 2000), the Seventh Circuit held that a defendant could be liable under  § 2000e-2(a)(2) even in the absence of an adverse employment action. In Kyles, the Seventh Circuit held that employment discrimination “testers” – individuals who, without an intent to accept an offer of employment, pose as job applicants in order to gather evidence of discriminatory hiring practices – had standing to sue under Title VII, even though they were not genuinely interested in the employment they were denied.  Id. at 6-7. The Court reasoned that the holding of Kyles was that a plaintiff has standing to bring suit for a statutory violation if he or she suffers an injury contemplated by the statute even if a plaintiff was not harmed apart from the statutory violation. Id. at 7. It thus held that Kyles did not support the EEOC’s position. The Court thereby concluded that an adverse employment action is required in § 2000e-2(a)(2) cases.

The Court also considered the EEOC’s argument that Stuckey had suffered an adverse employment action in that he “suffered dignitary harm and humiliation because AutoZone maintained a racially segregated workplace.” Id. at 9. While agreeing that a materially adverse employment action could include an action that subjected an employee to “an objectively humiliating or degrading workplace,” the Court could not find any reason that transfer to another AutoZone location “resulted in an objectively humiliating or degrading change in work conditions.” Id. at 9-10. The Court thus granted summary judgment to Autozone.

Implications For Employers

This case represents a significant win for employers. The Court rejected the EEOC’s attempt to create liability for disparate treatment discrimination under § 2000e-2(a)(2) of Title VII without any proof of an adverse employment action. Moreover, the Court found that an allegedly discriminatory transfer does not automatically create an objectively humiliating or degrading workplace and thus is not necessarily an adverse employment action. Despite this setback, we expect the EEOC to continue its attempts to create new Title VII liability using novel and untested theories.  Stay tuned.

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

Court Awards The EEOC Attorneys’ Fees And Contempt Fines In Post-Judgment Discovery Dispute

Posted in Remedies

gavel on white backgroundBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Northern Star Hospitality, Inc., No. 12-CV-214 (W.D. Wis.), a case we have blogged about previously here, Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin imposed contempt sanctions on an employer for failure to cooperate in post-judgment discovery and granted the EEOC’s request for attorneys’ fees for the time it spent bringing the contempt motion.

The ruling is a cautionary tale for employers, and shows how the EEOC can seek attorneys’ fees despite the fact that its attorneys do not bill a client, and demonstrates that the EEOC will pursue collection of even small judgments against unsuccessful defendants.

Case Background

Dion Miller, an African-American, was a cook for Northern Star Hospitality, Inc. d/b/a Sparx Restaurant (“Sparx”).  On October 1, 2010, when Miller arrived at Sparx to begin his shift, a co-worker told him to look in the kitchen cooler.  In the cooler was a one-dollar bill with a noose drawn around President Washington’s neck and a sketch of a hooded Klansman on horseback with “KKK” written on the hood.  Also in the cooler was a picture of the late Gary Coleman.

Miller had a co-worker take a photograph of the display in the cooler and lodged a complaint with the restaurant’s general manager.  The general manager learned that two of Miller’s superiors – the kitchen manager and kitchen supervisor – admitted that they were responsible for the display.  As a result of the complaint, the kitchen supervisor was given a warning, with the kitchen manager receiving no discipline at all.

After Miller’s complaint, the kitchen manager and supervisor began to criticize Miller’s performance.  Miller was then terminated less than one month after the display was put up.

On March 27, 2012, the EEOC filed suit against Sparx on Miller’s behalf, claiming that he was the victim of racial harassment and that he was wrongfully terminated for opposing that harassment.  On February 25, 2014, after a jury verdict in favor of the EEOC, the Court entered a $64,795.50 judgment against Sparx.  That judgment was upheld by the Seventh Circuit on January 29, 2015.

After the judgment was affirmed, the EEOC served interrogatories on Sparx, seeking information about its assets.  Deeming Sparx’s responses insufficient, the EEOC moved to compel Sparx to provide adequate answers to its interrogatories and for attorneys’ fees expended in seeking adequate interrogatory answers.  The Court granted the motion on June 16, 2015, ordering Sparx to provide further interrogatory answers and to pay the EEOC attorneys’ fees for time spent preparing the motion to compel.

Despite the order, Sparx failed to pay the EEOC’s fees and failed to provide updated interrogatory answers.  On July 27, 2015, the EEOC moved for sanctions for contempt of the Court’s order on the motion to compel.  It also sought attorneys’ fees for the time it spent preparing the motion for a finding of contempt.

The Court’s Ruling

The Court granted the EEOC’s motion for a finding of contempt.  It ordered Sparx to pay a $1,000 per day fine starting three days following the finding of contempt for each day Sparx did not provide updated interrogatory answers and did not pay the EEOC’s fees for the motion to compel.  It further awarded the EEOC $1,000 in fees for the two-and-a-half hours it spent drafting the motion for a finding of contempt.

Implications For Employers

This case will provide further support for the EEOC’s position that, despite the fact its attorneys do not bill any client for their time, it should be entitled to attorneys’ fees in the right circumstances.  Moreover, the case indicates that the EEOC will pursue judgments, no matter how small, that it has won.

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

 

Court Issues Preliminary Injunction Prohibiting Employer From Terminating Employee Pending Resolution Of EEOC Lawsuit

Posted in EEOC Litigation

CADNUS-District-Court-CaliforniaBy Laura J. Maechtlen and Courtney K. Bohl

On July 22, 2015, in Equal Employment Opportunity Commission v. Peters’ Bakery, Case No. 13-CV-045107 (N.D. Cal. July 22, 2015), Judge Beth Labson Freeman of the U.S. District Court for the Northern District of California, granted the EEOC’s request for a preliminary injunction enjoining Peters’ Bakery from terminating Claimant Marcela Ramirez’ employment pending resolution of the EEOC’s lawsuit.

While such injunctions are rare, this decision is a cautionary tale and must read for employers who may be considering terminating an employee after he or she files a charge of discrimination or a lawsuit under Title VII or similar state statutes.

Background

In September 2013, the EEOC filed suit against Peters’ Bakery alleging that it subjected Ramirez to harassment and discrimination based upon her race/national origin and that Peters’ Bakery had retaliated against Ramirez after she engaged in protected activity of filing a charge with the EEOC. The EEOC alleged that the owner of Peters’ Bakery, Charles Peters, allegedly subjected Ms. Ramirez to comments such as “Mexicans like you would rather lie than tell the truth” and “I never trusted your kind of people.” The EEOC also alleged that Mr. Peters terminated Ramirez’ employment in August 2011, but was forced to reinstate her after an arbitrator ordered him to do so in a union grievance proceeding.

A couple years after the lawsuit was filed, on June 30, 2015, Peters’ Bakery informed Ramirez that she was being fired effective Friday, July 3, 2015. When asked why, Mr. Peters allegedly stated that Ramirez “knew why,” that he did not have to give Ramirez “a f***ing reason,” that he doesn’t like her, and that he needed to fire her “before [he] f***ing lose[s] it and kill[s] someone.”

The EEOC filed an application for a temporary restraining order (“TRO”) and an order to show cause for entry of a preliminary injunction on July 2, 2015. The Commission sought to enjoin Peters’ Bakery from terminating, disciplining, threating, or harassing Ramirez. The Court granted the TRO in part, enjoining Peters’ Bakery from terminating Ramirez pending a hearing on the motion for preliminary injunction. On July 22, 2015, following oral argument, the Court granted the EEOC’s preliminary injunction in part, enjoining Peters’ Bakery from terminating Ramirez’ employment pending resolution of the lawsuit.

The Court’s Ruling

The Court first addressed Peters’ Bakery argument that the EEOC was seeking a mandatory injunction reinstating Ramirez, and thus the EEOC has a heavier burden. Id. at 4. The Court rejected this argument, noting it was not supported by the evidence because Ramirez had not been fired before the TRO of July 2, 2015. Rather, the Court found that Ramirez had been given notice that she would be fired effective July 3, 2015. Id. Additionally, the Court held that even if the EEOC was requesting reinstatement, the EEOC would be entitled to such relief under the Court’s broad authority to grant preliminary injunctive relief and due to the fact that reinstatement is a form of relief specifically provided for by Title VII. Id.

Next, the Court applied the four part test for a preliminary injunction set forth in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008). Under this four part test, a plaintiff seeking a preliminary injunctive relief must establish: (1) that he is likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Id. at 3. The Court found that the EEOC satisfied its burden to establish each of these four elements with regard to the threatened termination, but not with regard to the harassment and discipline. Id. at 7.

Threatened Termination

The Court found the EEOC established the first Winter factor — likelihood of success on the merits — because the EEOC submitted evidence that Mr. Peters previously terminated Ms. Ramirez in August 2011 without cause, refused to comply with an arbitrator’s order to reinstate her; used language on July 30, 2015 giving rise to an inference of improper motive; and gave no legitimate business reason for terminating Ramirez. Id. at 5. The Court also found that the EEOC satisfied the second factor — likelihood of irreparable harm — citing Ramirez’ declaration, which stated that if she was fired, Ramirez would not have enough money to pay her mortgage or keep her children in private Catholic school, she and her family would lose their healthcare benefits, she would lose the positive relationships she developed with coworkers over the last 14 years working at Peters’ Bakery, and she would lose her seniority in the union. Id. The Court also noted that terminating Ramirez may have a chilling effect on other employees who might wish to file charges with the EEOC and could interfere with the EEOC’s mission. Id. at 5-6.

As to the third and fourth Winter factors — the balance of equities and whether an injunction is in the public interest — the Court found that the equities tip in the EEOC’s favor. Id. at 6. Although the Court was sympathetic to Mr. Peters’ testimony that working with Ramirez affects his health and causes him stress, the Court noted that Mr. Peters is the owner of the bakery and his hours are within his own control. Id. Any inconvenience that would result from Mr. Peters changing his hours is far outweighed by the irreparable harm that would be imposed on Ramirez if she was fired. Id. The Court also noted that taken to its logical conclusion, Mr. Peters’ argument would mean that anytime an employee sues an employer, the employer could fire the employee to avoid being stressed. Id. The Court held such a result is not within the public interest. Id.

Harassment And Discipline

The Court denied the EEOC’s request for preliminary injunction to enjoin discipline and harassment. Id. at 7. The Court noted that the EEOC did not present specific evidence regarding the irreparable harm Ramirez would suffer if the harassment and discipline was not enjoined. Id. Further the Court  found the injunction would be hopelessly vague to the point of  threatening Peters’ Bakery’s due process rights. Id.

Implication for Employers

This decision is a reminder to employers that courts can, and sometimes do, enjoin employers from making termination decisions or require an employer to reinstate an employee pending the outcome of litigation alleging violations of Title VII or similar state statutes. If an employer is considering terminating an employee with a pending charge or lawsuit, that employer should ensure it has substantial justification for its decision.  Stress or mere inconvenience to an employer will likely not be sufficient to support a termination.

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

Where’s the Beef Part II: Court Refuses To “Butcher” EEOC’s Religious Discrimination Claim

Posted in EEOC Litigation

Raw, Inside Round Beef Roast -Photographed on Hasselblad H3-22mb CameraBy Gerald L. Maatman Jr. and Howard M. Wexler

Our loyal blog readers may recall a post we authored in October 2013 regarding EEOC v. JBS USA, LLC (the “Nebraska Case”), where Chief Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska entered judgment for the employer, JBS USA, in a hotly contested religious discrimination case, finding that the employer established the affirmative defense of undue hardship since “a religious accommodation for Muslim employees [at its Grand Island, Nebraska processing facility] within the parameters requested [by the EEOC], would have caused more than a de minimis burden on JBS and on its non-Muslim employees.”

To quote former New York Yankee Yogi Berra, “It’s like Déjà vu all over again” for JBS, and this time, however, it was not as lucky. In EEOC v. JBS USA, LLC, Case No. 10-CV-02103 (d. Colo. July 17, 2015), Judge Philip A. Brimmer of the U.S. District Court for the District of Colorado denied JBS’ motion for summary judgment in connection with a similar case filed by the EEOC against JBS regarding a different facility, this one in Greeley, Colorado, which was based in part on JBS’ argument that its favorable decision in the Nebraska Case collaterally estopped the EEOC from advancing its claims. Judge Brimmer denied JBS’ motion and ordered that the case proceed to trial.

Background Facts

The EEOC filed the lawsuit based on a conflict between JBS and several hundred Muslim employees at a beef processing facility in Greeley, Colorado who sought accommodation from JBS for their religious beliefs.  Id. at 1-2.  The conflict reached its height during Ramadan 2008, when employees requested that JBS accommodate their need to leave the production line to pray at or near sundown. Id. at 2. The employees and JBS were unable to come to an agreement regarding the employees’ need to pray, leading to the suspension and termination of a large number of Muslim employees based on job abandonment. Id. On August 30, 2010, the EEOC filed suit claiming that JBS discriminated against its Muslim employees on the basis of religion by engaging in a pattern or practice of retaliation, discriminatory discipline and discharge, harassment, and denying its Muslim employees reasonable religious accommodations.  Id.

The Court bifurcated the case and the “Phase I” issues before the Court were: (1) the EEOC’s claim that JBS engaged in a pattern or practice of denying Muslim employees reasonable religious accommodations, (2) the EEOC’s retaliation pattern or practice claim, and (3) the EEOC’s discriminatory discipline and discharge pattern or practice claim. Id. At the close of “Phase I” discovery, JBS sought summary judgment on all three of EEOC’s Phase I claims. Id.

The Court’s Decision

JBS argued that Nebraska Case decision estopped the EEOC from: (1) claiming that its proposed accommodations of providing unscheduled breaks for prayer and moving scheduled breaks to sundown are non-burdensome; and (2) claiming that the termination and discipline of Muslim workers during Ramadan 2008 constituted a pattern or practice of retaliation and discrimination.  Id.  at 25.

In the Tenth Circuit, a party asserting collateral estoppel must satisfy four elements, including: (1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party, or in privity with a party, to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action. Id.

In opposing JBS’ motion for summary, judgment, the EEOC did not dispute that the accommodations it proposed were identical to those proposed in the Nebraska Case – which they were. Id. at 26-27. Rather, the question before the Court was whether EEOC was collaterally estopped from litigating the issue of whether those accommodations result in undue hardship at the Colorado facility given that they were held to pose an undue hardship at the Nebraska facility. Id. at 27.

In denying JBS’ request to estop the EEOC from challenging the undue burden defense, the Court focused on several differences between the two cases, including different staffing levels; different collective bargaining agreements between the two facilities with different break-time clauses; and different employee requests. Id. at 27-30. Accordingly, the Court held that, “although both cases involve application of the same rule of law and involve claims that are closely related, JBS has failed to establish that the factual differences between this case and the Nebraska case are legally insignificant and the Court further finds that the balance of considerations weighs against finding that the identity of issue element is satisfied.” Id. at 30.

The Court then turned to the aspect of JBS’ motion and went through the record in painstaking detail and reached the decision that there were genuine disputes of material fact which prevented JBS from obtaining summary judgment on its undue hardship defense as well as their retaliation and discrimination claims. Although the Court acknowledged similarities between the Nebraska and Colorado facilities, “genuine disputes of material fact exist as to the feasibility of the EEOC’s proposed accommodations…thus the…EEOC has raised a genuine dispute of material fact as to the effectiveness and facial reasonableness of its proposed accommodations” as well as whether granting such accommodations would have posed an undue burden. Id. at 50 & 62.

Implications For Employers

Employers faced with a claim of religious discrimination under Title VII who refuse an accommodation request must be prepared to come forward with specific evidence demonstrating the “undue burden” that granting the request would cause. Employers must be prepared to demonstrate that the proposed accommodations pose an undue hardship in order to escape liability. That JBS obtained summary judgment in the Nebraska case, however, was not able to do so in the Colorado case, is a perfect example of the case-by-case analysis that courts utilize in deciding these type of accommodation cases, especially when an employer argues the undue hardship defense to a failure to accommodate claim under either Title VII or the ADA. A “one size fits all” approach will not pass muster and will result in employers ending up on the chopping block.

Court Shoots Down The EEOC At “Mach” Speed Based On “Sham” Conciliation Process

Posted in EEOC Litigation

gavel on white backgroundBy Gerald L. Maatman Jr. and Howard M. Wexler

Amid the flurry of major U.S. Supreme Court decisions that were decided towards the end of the 2014-2015 term, the landmark decision in Mach Mining v. EEOC, No. 13-1019 (U.S. April 29, 2015), seems like ancient history. As we previously blogged about, most recently here and here, the Supreme Court concluded in Mach Mining, in a unanimous opinion authored by Justice Kagan, that federal district courts have the authority to review the EEOC’s conciliation efforts.

After Mach Mining, class action practitioners were left to wonder how lower federal courts would view their job in reviewing the adequacy of the EEOC’s conciliation efforts. On June 29, 2015, Judge Gregory L. Frost of the U.S. District Court for the Southern District of Ohio applied Mach Mining and “bench-slapped” the EEOC, holding it failed to satisfy its obligation to pursue conciliation, and thus, stayed the case and ordered the EEOC to engage in good faith conciliation.

This decision appears to be the first post-Mach Mining decision to find that the EEOC failed to fulfill its conciliation obligation and boy, is it a doozy!

Background Facts

In August 2013, the EEOC filed a complaint alleging OhioHealth Corporation failed to reasonably accommodate a former employee in violation of the Americans With Disabilities Act. Id. at 1. OhioHealth filed a motion for summary judgment in which it argued, in part, that the EEOC failed to satisfy all required conditions precedent to filing its lawsuit, including good faith conciliation. Id. The Court held that this threshold issue of conciliation must be decided before reaching the merits since if it did otherwise, it would be “put[ting] the cart before the horse” Id.

The Court’s Decision

The Court described the EEOC’s duty under Mach Mining as two-fold: first, the EEOC must inform the employer about the specific allegation; and second the EEOC must try to engage the employer in some form of discussion so as to give the employer an opportunity to remedy the allegedly discriminatory practice. Id. at 3. In OhioHealth, the issue presented to the Court was whether the EEOC met its second required duty. Id.

In trying to demonstrate that it satisfied its conciliation obligation, the EEOC presented a sworn affidavit attesting to the agency’s conciliation efforts. Id. at 4. In relevant part, the EEOC’s affidavit indicated that it issued a determination on September 15, 2011, engaged in communications with OhioHealth until October 14, 2011, and only brought suit after OhioHealth rejected the EEOC’s conciliation proposal. Id.

OhioHealth came forward with its own declaration, the crux of which was that the EEOC presented its demand as a take-it-or-leave-it proposition, failed to provide OhioHealth with requested information and declared conciliation efforts failed even though OhioHealth made it clear they were “ready and willing to negotiate.” Id. at 4-5.

Preliminarily, the Court rejected the EEOC’s argument that OhioHealth waived its failure to conciliate defense by not raising it sooner because failure to conciliate is not an affirmative defense; rather, is a condition precedent for the EEOC brining suit which did not have to be raised prior to summary judgment. Id. at 5.

With respect to the merits, the Court held that the conciliation obligation was not satisfied because there were numerous conflicting facts which gave the appearance that the EEOC was “engaged in the production of bookend letters that failed to reflect a good faith conciliation effort” and thus,  “if the proceedings were for appearances only, then there never was a real attempt to engage in conciliation as the law requires.” Id. at 6.

The Court also found that conciliation failed because the EEOC indicated in its original determination letter that an EEOC representative would “prepare a dollar amount that includes lost wages and benefits, applicable interest, and any appropriate attorney fees and costs.” Id. at 6-7. Tellingly, nothing the EEOC presented to the Court demonstrated that it ever provided OhioHealth with such a proposal. Id. at 7. As viewed by the Court, “absent disclosure of this calculation to OhioHealth, the conciliation process could have been nothing but a sham.” Id. Absent this information, “the EEOC can hardly be said to have given the employer an opportunity to remedy the allegedly discriminatory practice.” Id. As such, the Court held that “an unsupported demand letter such as the one involved here alone cannot logically constitute an attempt to inform and engage in the conciliation process.” Id.

As a result of the EEOC’s failure to conciliate, the Court stayed the case pending the EEOC’s mandated efforts to obtain voluntary compliance. Id. at 8.

The Ruling’s Admonition

In closing, the Court took one final swing at the EEOC for its hubris. During a telephonic conference with the Court, the EEOC stated that because it had already filed a complaint, “only a public resolution would be possible,” or, “in other words…the EEOC simply would not reach a private resolution via conciliation. Id. at 8-9. In response to this position, the Court did not mince words and forcefully stated that:

This policy or position is of course contrary not only to the purpose of the workplace discrimination statutes upon which the EEOC bases this case, but is also directly contrary to the holding of Mach Mining. In that case, the United States Supreme Court expressly endorsed implementing a stay and ordering conciliation efforts when the EEOC has failed to engage in conciliation before filing suit. The EEOC’s position that resolution via conciliation is now impossible ignores controlling precedent…

The EEOC’s position is ridiculous. It defies the statutory scheme, binding case law, this Court, and common sense. Accordingly, if the EEOC continues down this dangerous path and fails to engage in good faith efforts at conciliation as ordered, this Court will impose any or all consequences available, including but not limited to contempt and dismissal of this action for failure to prosecute.

Id. at 9 (emphasis added).

Implication for Employers

This decision demonstrates the powerful tool that the Supreme Court provided to employers in Mach Mining. Because of the Supreme Court’s decision, the EEOC can no longer file suit against employers after paying mere lip-service to its conciliation efforts, and give them the back of the hand in response to requests for fulsome information about liability and exposure in a threatened lawsuit. Such a “sham” of a conciliation process is no longer countenanced. In OhioHealth, the EEOC did not even have the courtesy to give the employer a comprehensive settlement demand, as it had promised. Such conduct is diametrically opposed to the very employment discrimination statutes the EEOC is charged with enforcing and was flatly rejected in Mach Mining. As a result, we expect to see more and more decision like OhioHealth unless the EEOC meaningfully changes the way in which it conciliates. Stay tuned!

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

 

The EEOC Secures Favorable Ruling Over Discovery Of The Government’s Employment Practices

Posted in Discovery

gavel on white backgroundBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. DolGenCorp, LLC d/b/a Dollar General, No. 13-CV-4307 (N.D. Ill. May 5, 2015), Judge Andrea R. Wood of the U.S. District Court for the Northern District of Illinois decided several discovery issues that have become increasingly common in EEOC-initiated disparate impact litigation.  In contrast with other recent decisions by other district courts, Judge Wood decided most of these issues in the EEOC’s favor.

That the EEOC’s internal personnel procedures can be discoverable and relevant in disparate impact cases was first established in 2011 in EEOC v. Kaplan Higher Educ. Corp., No. 10-CV-2882, 2011 WL 2115878, at *4 (N.D. Ohio May 27, 2011), in a ruling we discussed here. This was the first time a federal court had ever so held, and as a result, many employers have tried a similar tactic in EEOC lawsuits over the past few years.

However, in EEOC v. DolGenCorp., the Court ordered Dollar General to turn over the contact information of Dollar General’s job applicants, even though that information did not contain any information about the race or criminal background of the job applicants.  Also in contrast with a recent decision out of the U.S. District Court for the District of South Carolina we discussed here, the Court refused to compel the EEOC to turn over its internal background check policies, despite the fact that the EEOC is alleging that Dollar General’s background check policy creates disparate impact discrimination against African-Americans.  In a better ruling for employers, the Court agreed to examine the EEOC’s internal statistical analyses of Dollar General’s hiring decisions in camera to determine whether the analyses are protected by the deliberative process privilege or work product doctrine.

This case is important for employers because the EEOC will likely use this discovery ruling against employers when similar discovery disputes arise in the future.

Case Background

The EEOC filed suit against Dollar General, alleging that Dollar General’s use of criminal background checks for applicants is discriminatory because it has a disparate impact on African-American job applicants.  EEOC v. DolGenCorp, 13-CV-4307, at 1.  During the course of discovery, the EEOC asked Dollar General to turn over the “names, complete social security numbers, addresses, phone numbers, and complete dates of birth” of job applicants, arguing that such information would allow the EEOC to “link separate databases maintained by Dollar General and two of its vendors.”  Id. at 2.  Dollar General refused, arguing that the requested information was not relevant and was not needed for the EEOC to link the databases.  Id.

Also during discovery, Dollar General also sought discovery from the EEOC relative to its internal policies and procedures regarding its own use of criminal background checks in making employment decisions.  Id. at 8.  The EEOC refused to turn over the information, arguing that it was not relevant.  Id.  Dollar General also sought any statistical analyses the EEOC had regarding the purported disparate impact of Dollar General’s background check policy.  Id. at 6.  The EEOC refused to turn its analyses over, claiming that they were protected by the deliberative process privilege and work product doctrine.  Id.

Both parties moved to compel production of the requested documents.

The Court’s Decision

The Court first decided the EEOC’s motion to compel production of the personal information of Dollar General’s conditional hires.  The Court found that the requested information was discoverable because it was “calculated to lead to the discovery of admissible evidence” insofar as it would allow “the EEOC and its experts more effectively to analyze the statistical impact of Dollar General’s use of criminal background checks” by giving the EEOC the ability to link Dollar General’s databases.  Id. at 3.  While Dollar General argued that this linking could be done by other means, the Court found that the EEOC was not required to use those means when it could use the personal information to accomplish its goal.  Id. at 3 n.1.  The Court further found that Dollar General’s suggested linking method might not be “verifiably accurate,” further supporting the Court’s conclusion that the personal information requested by the EEOC was discoverable.  Id.

The Court next considered whether the EEOC’s policies and procedures on using background checks in its own hiring decisions were discoverable.  The Court pointed out that such information would only be discoverable if Dollar General could potentially use it to show that its use of criminal background checks was “job related for the position in question.”  Id. at 9 (emphasis in original).  While agreeing with Dollar General that a government agency’s employment policies can be discoverable in employment discrimination litigation, it found that such policies would not be relevant to Dollar General’s defenses in this case because Dollar General had not shown that “the functions performed by its employees are in any way comparable to those undertaken by the EEOC’s employees.”  Id.  The Court thus denied Dollar General’s motion to compel production of the EEOC’s background check policies and procedures.  Id.

The Court finally considered whether the EEOC’s statistical analyses of Dollar General’s background check policies were protected by either the deliberative process privilege or work product doctrine.  The Court pointed out that the EEOC argued that its statistical analyses were prepared “during the EEOC’s investigation to determine whether to issue a reasonable cause determination of discrimination,” and that they were thus protected by the deliberative process privilege.  Id. at 7.  The Court further pointed out that EEOC argued that its analyses were also protected by the work product doctrine because they were used by the EEOC’s attorneys in making the decision to sue Dollar General and because one of the analyses was provided to an EEOC investigator by an EEOC attorney.  Id. at 7-8.  The Court concluded that it could not determine whether the EEOC’s privilege and work product assertions were correct based on these arguments, and thus ordered the EEOC to produce the analyses to the Court for in camera review.  Id. at 8.

Implications For Employers

This case is significant for employers because it will undoubtedly be used by the EEOC when it seeks personal information that, while not relevant in itself, could arguably be used to find or create relevant evidence, and when the EEOC seeks to block production of its own hiring practices in disparate impact litigation.  Employers who are engaged in such litigation should anticipate this and try to preempt the EEOC’s use of this case by addressing the Court’s reasoning when responding to or bringing a similar motion to compel.  For example, employers seeking the EEOC’s background check policies should present arguments for why their employees perform similar functions as the EEOC’s employees.  In the meantime, we expect other courts to confront similar discovery disputes in EEOC-initiated disparate impact litigation and to provide further guidance to employers as they work through discovery in such cases.  Stay tuned.

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

SCOTUS Benchslaps The EEOC – An Analysis Of The Mach Mining v. EEOC Decision

Posted in EEOC Litigation

United-States-Supreme-CourtThe U.S. Supreme Court recently ruled on Mach Mining v. EEOC, No. 13-1019. We have blogged extensively about this case previously –  here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here. To recap, this case was initially brought by the EEOC, in which it claimed that Mach Mining had a pattern or practice of not hiring women for mining-related positions, or, in the alternative, maintaining a neutral hiring policy that has a disparate impact on women. The company asserted a number of affirmative defenses, including that the EEOC failed to conciliate in good faith before initiating litigation. The EEOC argued that its conciliation activities not subject to judicial review.

The Supreme Court deliberated on whether the EEOC satisfied its statutory obligation to attempt conciliation before filing suit, and whether its conciliation efforts are judicially reviewable by courts. On April 29, 2015, the Supreme Court issued its long-awaited decision and concluded – in an unanimous opinion authored by Justice Kagan – that federal courts have the authority to review the EEOC’s conciliation efforts.

Our blog editor, Gerald L. Maatman, Jr. (tweet him @g_maatman) discusses the SCOTUS decision and his take on what to expect from the EEOC and implications for employers going forward with Colin O’Keefe from LXBN TV (@LXBN) and Rick Bell from Workforce (@Workforcenews) in the videos below.

5 Minutes of Management: Assessing Mach Mining v. EEOC With Rick Bell At Workforce

LXBN TV: Supreme Court Benchslaps EEOC with Mach Mining Decision With Colin O’Keefe At LXBN TV

For more information on Mach Mining v. EEOC, our readers should check out the following posts:

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Don’t forget to reserve your copy of the 2015 Annual Workplace Class Action Litigation Report and the EEOC-Initiated Litigation: Case Law Development In 2014 And Trends To Watch For In 2015 today!

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

EEOC Denied Inspection Of Employer’s Premises

Posted in Discovery

door knockBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Vicksburg Healthcare, LLC, No. 13-CV-895 (S.D. Miss. Apr. 22, 2015), Magistrate Judge Michael T. Parker of the U.S. District Court for the Southern District of Mississippi denied the EEOC’s request to be allowed to inspect and observe the defendant’s facility in an Americans With Disabilities Act (“ADA”) action. As we have reported previously here, the EEOC has recently attempted to obtain discovery by invasive inspections of employers’ premises. Magistrate Judge Parker’s decision to deny the EEOC this access represents another setback for the EEOC as it ratchets up the intensity of its discovery efforts in workplace litigation. It also gives employers a case they can use when the EEOC or other workplace plaintiffs seek intrusive inspections.

Factual Background

The EEOC filed suit against Vicksburg Healthcare, LLC d/b/a River Region Medical Center (“River Region”), claiming that River Region terminated Beatrice Chambers because of a disability in violation of the ADA. Vicksburg Healthcare, 13-CV-895, at 3. Specifically, the EEOC claimed that Chambers could perform the essential functions of a Licensed Practical Nurse (“LPN”) despite the fact that, because of shoulder surgery, Chambers was unable to lift ten or more pounds.

During the course of the litigation, the EEOC served a request for entry onto River Region’s premises for three hours so that it could observe the work of LPNs, inspect the type of equipment in use at River Region, and collect measurements about the amount of force required to push and pull certain equipment. Id. at 3-4. In addition, the EEOC sought to interview River Region’s employees during the inspection. Id. at 6. River Region objected that the request was overly broad and intrusive, would reveal information protected by the physician-patient privilege and HIPPA, and would allow the EEOC to obtain statements from River Region’s employees without the protections in the Federal Rules for deposing witnesses. Id. at 4. Subsequently, the EEOC moved to compel River Region to allow the inspection. Id. at 4-5.

The Court’s Ruling

The Court began by noting that the EEOC did not identify any specific equipment that it wished to observe or measure. Id. at 6. The Court pointed out that this was problematic because a three-hour inspection would not reliably establish which tasks LPNs regularly performed or which equipment they regularly used given that the tasks LPNs performed were “not necessarily performed on any given day.” Id. at 6-7.

The Court reasoned that “the amount of force required to push, pull, and/or lift equipment such as gurneys, beds, and wheelchairs [would] depend on the weight of the patient in the gurney, bed, or wheelchair,” and that it was therefore not clear whether a three-hour inspection “would allow [the EEOC] to observe a representative sample of patients or duties.” Id. at 7. It thus found that the requested inspection “would likely be of limited use.” Id.

The Court further determined that the “possible disruption of patient care and the risk of compromising patients’ rights to confidentiality [were] significant concerns” that weighed against allowing the inspection. Id. at 8. With respect to disruption of patient care, the Court found that, because the EEOC would be testing equipment while the equipment was being used to treat patients, and because “River Region personnel would be subject to roving depositions while they attempt to perform their duties,” the proposed EEOC inspection would likely “significantly disrupt” River Region’s operations. Id.

With respect to confidentiality, the Court opined that the EEOC could receive confidential patient information as the result of the inspection. While the EEOC stated that it would not communicate with any patient or review medical records, the Court found that the “normal” operations of River Region “would likely include the communication or observation of patients’ confidential information.” Id.

Based on the foregoing, the Court concluded that it would not permit the requested inspection. Id. at 9. It further found that the EEOC could try to obtain the information it desired through other means, such as interviews of Chambers and depositions.

Implications For Employers

Employers who are the subject of discrimination litigation or an EEOC investigation can use this case for authority if the plaintiff or the EEOC seeks to investigate their premises. While the case will be especially useful for employers in the healthcare industry (given the Court’s concerns over patient confidentiality), other portions of the decision will be of use to employers in other industries. The Court’s concern that a time limited inspection might not allow an inspecting party to observe a “representative sample” of a position’s job duties would apply in many other industries, and the Court’s conclusion that an inspecting party could obtain information about essential job duties through other, less invasive means of discovery would apply in most, if not all, other industries. Employers should also take heart that the courts are becoming increasingly wary of the EEOC’s attempts to conduct invasive premises inspections.

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

Supreme Court Victory For Employers Today In Mach Mining v. EEOC

Posted in EEOC Litigation

as1859[1]By Gerald L. Maatman, Jr., Christopher Cascino, and Matthew Gagnon

On April 29, 2015, the U.S. Supreme Court issued its long-awaited decision in Mach Mining, LLC v. EEOC, No. 13-1019 (U.S. 2015), and concluded, in a unanimous opinion authored by Justice Kagan, that federal courts have the authority to review the EEOC’s conciliation efforts. In language that is sure to be repeated back to the EEOC for years to come, the Supreme Court held that “[a]bsent such review, the Commission’s compliance with the law would rest in the Commission’s hands alone.” This, the Supreme Court said, would be contrary to “the Court’s strong presumption in favor of judicial review of administrative action.”

While the Supreme Court did not rule that the intensive review that Mach Mining argued for was required, the case nevertheless represents a significant win for employers and resounding defeat for the EEOC. The EEOC will no longer be able to file suit against employers after paying mere lip-service to its conciliation efforts, and to give them the back of the hand in response to requests for fulsome information about liability and exposure in a threatened lawsuit. And employers will as a result be in a better position to settle meritorious claims  on reasonable terms before the EEOC files suit, thus saving employers from unnecessary litigation expense.

Case Background

This ruling 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 had far-reaching, real world significance to the employment community because it meant that the EEOC was virtually immune from review in terms of the settlement positions it takes – often: “pay millions or we will sue and announce it in a media release.”

We have kept our blog readers up to date on this litigation as it wound through the lower courts and progressed at the Supreme Court. Readers can find the previous posts here, here, here, here, here, here, and here. In addition, Seyfarth filed an amicus brief supporting Mach Mining’s position, a copy of which can be found here. In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities was immune from judicial review, and the Supreme Court granted certiorari to determine whether that was correct and, if not, what standard federal courts should use to review the EEOC’s conciliation efforts.

The Supreme Court’s Ruling

The Supreme Court unanimously rejected the Commission’s position that its conciliation activities are beyond judicial review. It began by discussing the fact that Title VII of the Civil Rights Act requires the EEOC to “‘endeavor to eliminate [the] alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.’” Mach Mining, No. 13-1019, at 2 (quoting 42 U.S.C. § 2000e-5(b)). The Supreme Court observed that “Congress rarely intends to prevent courts from enforcing its directives to federal agencies,” and that, for that reason, the Supreme Court would “appl[y] a strong presumption favoring judicial review of administrative action.” Id. at 4.

The Supreme Court reasoned that “[c]ourts routinely enforce . . . . compulsory prerequisites to suit in Title VII litigation.” Id. at 5. As an example, the Supreme Court pointed to the fact that courts routinely dismiss discrimination complaints of parties that failed to file a timely charge of discrimination with the EEOC.  Id.  The Supreme Court found that this supported judicial review of the EEOC’s compliance with the conciliation requirement. Id. at 6.

The Supreme Court also rejected the EEOC’s argument that “Title VII provides no standards by which to judge the EEOC’s performance of its statutory duty,” thus showing that “Congress demonstrated its intent to preclude judicial review.” Id. at 6. The Supreme Court concluded that the EEOC’s position was incorrect because, while the lack of a standard might indicate Congress’s intent to give the EEOC wide latitude in conducting the conciliation process, it did not give the EEOC the authority to ignore the conciliation process. Id. at 6-7. Specifically, the Supreme Court opined that, if the Commission’s position were correct, the EEOC could file suit without any attempt at conciliation, and federal courts could do nothing to remedy the failure to engage in conciliation. Id.

The Supreme Court then addressed the proper scope of judicial review to determine whether the EEOC had met its conciliation obligation. The Supreme Court declined to adopt the standard offered by Mach Mining as well as the Commission. The Supreme Court started with the plain language of the statute, noting that Title VII describes the statutory obligation as requiring “conference, conciliation, and persuasion.” Id. at 7. Those specified methods must therefore involve communication between the parties, including an exchange of information and views about the alleged unlawful employment practice. In sum, the EEOC must “tell the employer about the claim – essentially, what practice has harmed which person or class – and must provide the employer with an opportunity to discuss the matter in an effort to achieve voluntary compliance.” Id.

In defining the scope of judicial review, the Supreme Court threaded a line between the EEOC’s position and the position of the defense. The EEOC argued for the most minimal review possible – facial examination of documents prepared and submitted by the agency itself.  In this case, the EEOC argued that the Supreme Court should be satisfied with two letters sent from the Commission to Mach Mining: (1) the reasonable cause letter, which informed the company that the EEOC would contact the party to initiate the conciliation process; and (2) a second, later letter, which simply stated that the conciliation process had occurred and failed.  Id. at 8. The Supreme Court rejected the EEOC’s proposed level of review, holding that it simply fails to prove what the government claims, namely, whether the agency actually did what it said it did.

Mach Mining argued for a more searching review. In its briefs, the company had argued that a federal court should satisfy itself that the EEOC had negotiated conciliation in good faith. Working off of a standard set forth in the National Labor Relations Act (“NLRA”), the company argued for some minimum prerequisites as to what “good faith” negotiation would look like, including setting forth the factual and legal basis for its positions and refraining from making “take-it-or-leave-it” offers. Id. at 9-10. The Supreme Court rejected that approach, holding that the NLRA is directed toward the process of negotiation itself. The law’s purpose is to create a sphere of bargaining to address labor disputes. Id. at *10. Title VII, on the other hand, is about compliance with the law. While the law favors cooperation and voluntary compliance, it gives the EEOC wide latitude to pursue that goal, holding that “Congress left to the EEOC such strategic decisions as whether to make a bare minimum offer, to lay all its cards on the table, or to respond to each of an employer’s counter-offers, however far afield.”  Id. at 11. Critically, the Supreme Court also held that the company’s proposed standard of review would fall afoul of Title VII’s protection of the confidentiality of the conciliation process. A detailed review of that process would necessitate public disclosure of information in violation of the statute’s non-disclosure obligations. Id. at 11-12.

The Supreme Court concluded by adumbrating the future of litigation over this issue. The Supreme Court held that a sworn affidavit from the EEOC stating that it has performed its obligations often should be enough to show that it met its conciliation efforts. Id. at 13-14. But if employers counter with a credible affidavit of their own or other evidence that demonstrates that the EEOC “did not provide the requisite information about the charge or attempt to engage in a discussion about conciliating the claim,” then a federal court must conduct the fact-finding necessary to decide that dispute. Id. at 14. If the EEOC’s efforts were inadequate, the federal court must then order the agency to undertake the necessary efforts to ensure that it has satisfied its conciliation obligations. Id.

Implications For Employers

The implications for employers as a result of this decision cannot be overstated. The EEOC has been arguing for years in courts across the country that its conciliation efforts — and other pre-suit obligations — are entrusted solely to its discretion and therefore are immune to any form of judicial review. That position has been squarely defeated.  While the scope of review articulated in the Supreme Court’s decision is a narrow one, the Supreme Court vigorously upheld the fundamental principle that judicial review of administrative action is the norm in our legal system. Given the often breathtaking scope of authority that the Commission seeks to carve out for itself, any reaffirmation of that principle comes as a welcome check on the EEOC’s activities. Further, the EEOC now has to present its position in a federal court, and its litigation strategies are apt to be very different when it must justify and show the basis for its conciliation positions before a neutral fact-finder. We will have to wait and see exactly how this issue is litigated in the lower federal courts. Suffice it to say, employers’ defense of “failure-to-conciliate” is still alive and well, and the EEOC’s litigation strategies are now likely to be in need of rebooting.

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