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U.S. Supreme Court Rejects The Government’s Position In The Largest EEOC Fee Sanction Case Ever

Posted in EEOC Litigation

supremecourtBy Gerald L. Maatman, Jr., Christina M. Janice, and Alex W. Karasik

Seyfarth Synopsis: In a landmark case for EEOC litigation involving fee sanctions, while employer CRST successfully argued that a ruling “on-the-merits” is not necessary to be a prevailing party, the SCOTUS remanded the case back down to the Eighth Circuit to determine whether a preclusive judgment existed and if the EEOC should be responsible to pay over $4.5 million in fees as a sanction.

Today, the U.S. Supreme Court issued its much anticipated ruling in EEOC v. CRST Van Expedited, Inc., unanimously ruling in favor of the employer. 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, here, here, here, here, here, and here.

At stake was the largest fee sanction award ever levied against the EEOC — nearly $4.7 million.  While the SCOTUS remanded the case back to the U.S. Court of Appeals for the Eighth Circuit for further proceedings, and therefore did not directly rule on the appropriateness of the record fee sanction, the Supreme Court nonetheless held that a favorable ruling on the merits is not a necessary predicate to find that a defendant is a “prevailing party” for purposes of recovering legal fees under Title VII.

Though a procedural ruling, EEOC v. CRST Van Expedited, Inc. is apt to have significant practical implications for the future of EEOC litigation.

Case Background

Finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on the employer and the judicial process, the U.S. District Court for the Northern District of Iowa granted CRST’s motion for an award of attorneys’ fees and costs, directing the EEOC to pay CRST a record fee sanction of nearly $4.7 million.  On the EEOC’s appeal, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that the District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations “[did] not constitute a ruling on the merits,” and that “[t]herefore, CRST is not a prevailing party as to these claims.”  Accordingly, the Eighth Circuit’s holding provided the EEOC some breathing room in terms of complying with its Title VII pre-suit obligations.

In its Supreme Court brief, CRST asserted two arguments as to why the Eighth Circuit’s decision was improper.  First, CRST argued that the Eighth Circuit’s rule that a prevailing defendant may recover fees only when a case is decided “on the merits” has no basis in the statute, conflicts with Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978), and severely undermines the policy of Section 706(k) of Title VII.  Second, CRST posited that even if the “on the merits” standard applied, CRST was successful on the merits when it defeated certain claims by demonstrating that the EEOC did not investigate, find reasonable cause for, or attempt to conciliate any of these claims as required by the statute.  In essence, CRST asserted that the EEOC never identified the allegedly injured workers prior to filing its lawsuit; instead, it filed suit and then fished for the identities of the claimants by using discovery.

In its response, having abandoned its original contention that only a dismissal “on the merits” may be the subject of an attorneys’ fee award, the EEOC argued that the District Court’s finding that the EEOC failed to satisfy Title VII’s administrative preconditions to filing a lawsuit did not authorize an award of attorneys’ fees under 42 U.S.C. 2000e-5(k), because such a dismissal does not make the defendant a “prevailing party.”  The EEOC further noted the District Court’s original dismissal was not “with prejudice,” and that the later agreed-upon “with prejudice” dismissal did not and could not modify the District Court’s earlier dismissal of the claims at issue here, which had already been affirmed by the Eighth Circuit.  Finally, citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1656 (2015), the EEOC also contended that the award of attorneys’ fees and costs in this litigation was improper because the Commission’s suit was not “frivolous, unreasonable, or groundless.”

During the oral arguments on March 29, 2016, the Supreme Court asked nearly twice as many questions to the EEOC’s counsel than the Justices did to CRST’s counsel.  The grilling of the government is best summarized with a notable quote from Chief Justice Roberts, who opined that conciliation without the threat of fees would not necessarily incentivize the EEOC to abide by Title VII obligations, “But if they were subject to fees because they ignored their duty to conciliate, it seems to me that might give them some incentive to get it right the first time.”  Our blog post on that argument is here.

The Supreme Court’s Ruling

In vacating the judgment of the Eighth Circuit, the Supreme Court ­unanimously held that a favorable ruling on the merits is not a necessary predicate to find that a defendant is a “prevailing party” in order to recover attorneys’ fees under Title VII.

After thoroughly detailing the intricate procedural history of this ten-year litigation, the Supreme Court initially noted the question of whether the petitioner was a prevailing party was the central issue presented by the decision of the Eighth Circuit.  Id. at 3.  The Supreme Court opined that “[c]ommon sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits . . . The defendant may prevail even if the court’s final judgment rejects the plaintiff ’s claim for a non-merits reason.”  Id. at 12.  The Supreme Court reasoned that this is so because while a plaintiff seeks a “material alteration in the legal relationship between the parties that is in its favor, a defendant seeks to prevent that material alteration.  Where the defendant succeeds and the plaintiff’s challenge is “rebuffed,” the defendant prevails.  Id.

Looking beyond the letter of Title VII to Congressional intent in enacting a fee shifting statutory scheme, the Supreme Court noted that “Congress must have intended that a defendant could recover fees expended in frivolous, unreasonable, or groundless litigation when the case is resolved in the defendant’s favor, whether on the merits or not. Imposing an on-the-merits requirement for a defendant to obtain prevailing party status would undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available.”  Id. at 13.  Accordingly, the Supreme Court held that neither the text of the fee-shifting statute nor the policy which underpins it counsels in favor of adopting the Eighth Circuit’s on-the-merits requirement.  Id. at 14.

Turning to the EEOC’s specific arguments, the Supreme Court observed that the EEOC had abandoned its defense of the Eighth Circuit’s requirement that a party prevail on the merits, and instead urged the Supreme Court to hold that a defendant must obtain a “preclusive” judgment in order to prevail.  Id.  The Supreme Court declined to decide this issue, and noted in an implied bench-slap how the EEOC “changed its argument between the certiorari and merits stages… [and] [a]s a result, the Commission may have forfeited the preclusion argument by not raising it earlier.”  Thus, the Supreme Court took issue with the EEOC’s strategy of advancing new arguments at the “11th hour,” and further noted that this tactic resulted in inadequate briefing on the issue.  Id. at 15.

In addition, the Supreme Court avoided consideration of the EEOC’s argument that even if CRST was the prevailing party, the EEOC should prevail upon the fee request because its claim that it had satisfied its pre-suit obligations was not frivolous, unreasonable, or groundless.  Noting that the Court of Appeals had not decided this “fact sensitive issue,” the Supreme Court declined to address it.  Id.

By remanding the case for further proceedings consistent with its holding that a party need not prevail “on the merits” to be eligible to recover attorney fees under Title VII, the Supreme Court left the door open for the EEOC to continue to defend against CRST’s fee petition. That being said, the record and the circumstances in the case suggest rough sledding for the EEOC on remand and the likelihood of having to face a record-setting fee sanction for its litigation tactics.

Implications For Employers

In the context of potential fee sanction motions brought by employers mired in improper EEOC litigation, the Supreme Court’s holding that a favorable ruling “on the merits” is not a necessary for an employer to seek an award of legal fees in EEOC-initiated Title VII litigation can certainly be beneficial to employers.

In practice, the SCOTUS decision may well have the significant practical effect of forcing the EEOC to “come clean” during conciliation and to provide fulsome information about the identities, number, and alleged injuries of claimants rather than threatening employers with the costs and adverse publicity of a systemic lawsuit. Clearly, a litigation strategy based on “fishing for claimants” after filing a lawsuit is a process that is likely to be deemed inconsistent with the proper utilization of taxpayer dollars for enforcing Title VII.

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

Lesson On EEOC Language Litigation: Employer Denied Summary Judgment After Terminating Non-English Speaking Employees

Posted in Motions for Summary Judgment

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

Seyfarth Synopsis: Court denied employer’s motion for summary judgment in EEOC race and/or national origin discrimination case involving the termination of non-English speaking employees.

In EEOC v. Wisconsin Plastics, Inc., No. 14-C-663 (E.D. Wis. May 5, 2016), the EEOC brought an action alleging discrimination in the workplace based on race and/or national origin after Wisconsin Plastics, Inc. (“WPI”) laid off a number of non-English speaking Hmong and Hispanics employees.  WPI moved for summary judgment, arguing that neither the EEOC nor the individually aggrieved intervening Plaintiffs provided any evidence of prohibited discrimination.  Judge Griesbach of the U.S. District Court for the Eastern District of Wisconsin denied WPI’s motion, finding that the mass termination of mostly non-English speaking employees, coupled with the subsequent hiring of primarily English-speaking Caucasian employees, precluded the employer from obtaining summary judgment.

For employers considering terminating non-English speaking employees, this ruling illustrates that even where there is no direct evidence of discrimination, courts will consider other contextual factors when assessing potential illegal discrimination claims.

Case Background

Between October 2012 and January 2013, WPI laid off 38 of its 114 production operators.  Of the 114 production operators working for WPI as of September 2012, some 85, or about 75%, were of Asian descent and 6 (5%) were Hispanic.  Twenty-eight of the fired employees, or about 74%, were of Asian descent, and 3 of them (8%) were Hispanic.  The EEOC subsequently brought an action alleging discrimination in the workplace based on race and/or national origin.  Thereafter, the aggrieved individuals were granted permission to intervene in the Commission’s lawsuit.  Id. at 1.

WPI initially conceded the prima facie factors required to show a case of illegal discrimination, including (1) the employees were members of a protected class (Hispanic or Hmong); (2) the employees were terminated; and (3) the employees were living up to the employer’s expectations.  Specifically, WPI also conceded that the job of production operator may be performed adequately by people who do not speak or read English.  WPI asserted that its legitimate reason for selecting these individuals for termination, i.e., their inability to speak English, was the “but for” cause of their termination.  Id. at 3.  Despite conceding that English was not required to perform the job, WPI viewed the inability to speak English as a negative factor and used that factor to dictate the termination decision. Thus, WPI moved for summary judgement, among other motions.

The Court’s Decision

The Court denied WPI’s motion for summary judgement.  Initially, the Court discussed how “[i]n some cases the lack of English language proficiency might not be a legitimate, non-discriminatory reason for termination, but that is essentially a question of fact that will turn on the particular circumstances of every case.”  Id.  Further, the Court opined that all things being equal, an employee who speaks fluent English is more valuable than one who does not because that employee has the potential to provide added value to the corporation in other capacities such as productivity and morale.  In other words, although the specific job at issue might not have required English proficiency, an employer’s preference for such a proficiency could be a legitimate consideration.  Nonetheless, Judge Griesbach noted this “does not mean a court can conclude, as a matter of law, that the ability to speak English is necessarily a legitimate, non-discriminatory reason” to terminate an employee.  Id.

While WPI cited English speaking as its legitimate, non-discriminatory reason for the terminations, the Court found that WPI did not provide a substantial justification for that reason, which was not surprising given WPI’s concession that English was not required to perform the job adequately.  Id. at 3-4.  WPI argued that because an inability to speak English was not the legal analog to race or national origin, the EEOC’s case must be dismissed.  The Court rejected this argument, noting that while it is “true that language ability per se is not the legal equivalent to a protected class like race or national origin, language can sometimes serve as a proxy, or stalking horse, for discrimination against a protected class.”  Id. at 5.

The Court further noted that “[o]n top of the unusual fact that the employer’s stated reason is conceded to be irrelevant to the employees’ job performance, the Plaintiffs point to the fact that during the same period the employer was hiring people — 88 people, of whom 62 were Caucasian.”  Id.  The Court found that the net effect of the firings and hiring resulted in a flip of the ethnic profile of the workplace, where Asians, who had been a significant majority of the assembly workforce, now constituted only a plurality.  Accordingly, the Court held that “[a] reasonable jury, faced with this evidence, might draw the conclusion that the company was reconstituting itself by race or national origin — particularly if that jury heard that language ability (WPI’s stated reason) did not affect job performance.”  Id.

Further, the Court took issue with WPI providing different reasons for the terminations at various times.  Id. at 6.  Early on, WPI suggested that employee performance was the problem, citing flunked performance improvement plans.  Later, WPI told the EEOC that the firings were done for economic reasons, despite the fact that WPI hired a substantial number of new assemblers during the same period, which happened to be its best sales years.  Finally, many WPI witnesses denied that language was a factor in the terminations, but during litigation, WPI seized on language as the reason for all of the terminations.

Finally, the intervening Plaintiffs argued that the WPI’s admissions were tantamount to direct evidence of discrimination, since language is closely linked to national origin.  Id. at 8.  WPI argued that Plaintiffs did not identify any memo, document, or oral testimony that suggested the reason for the firings was discriminatory on the basis of race or national origin.  Id. at 6.  While the Court noted the truth in WPI’s assertion, it nonetheless opined “[s]eldom is there a ‘gotcha’ moment (at least in cases that get this far) where an employer admits that race (for example) was the true reason for the termination.  Human resources staff are savvy enough to avoid putting things like that in writing, and so the mere fact that there isn’t direct (or even circumstantial) evidence of discrimination is merely to say that this is a case, like most, that relies on the indirect method established in McDonnell Douglass.”  Id.  Accordingly, the Court denied WPI’s motion for summary judgment.  Id. at 9.

Implications For Employers

While this ruling does not necessarily preclude employers from preferring English speaking employees, it does illustrate how courts will look at other factual circumstances when assessing whether terminations of non-English speaking employees could have amounted to discrimination.  Employers considering terminating such employees must be cognizant that other factors, such as the national origin and/or race of employees hired after the terminations, will be considered.  Accordingly, employers should exercise caution and thoroughly evaluate surrounding circumstances when considering a large scale termination of non-English speaking employees.

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

No Knocking Necessary: Court Rules EEOC Can Enter Employer’s Premises Without Warrant Or Consent

Posted in Investigation Tactics and Administrative Subpoenas

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

Seyfarth Synopsis: Court ordered enforcement of the EEOC’s subpoena and authorized the Commission to conduct an on-site investigation without the employer’s consent.

The EEOC has conducted on-site inspections of employers’ business premises for decades, federal courts rarely have explored the authority of the Commission to conduct a warrantless, non-consensual search of such private commercial property.

In EEOC v. Nucor Steel Gallatin, Inc., No. 15-CV-53 (E.D. Ky. Apr. 28, 2016), the EEOC sought a ruling authorizing it to enter the private commercial property of defendant employer Nucor Steel Gallatin, Inc. (“Gallatin”), without Gallatin’s consent and without an administrative warrant, to investigate a hiring discrimination claim.  Judge Van Tatenhove of the U.S. District Court of the Eastern District of Kentucky ordered enforcement of the EEOC’s subpoena and authorized the Commission to conduct the on-site investigation of Gallatin’s property.

This decision arms the EEOC with precedent that it may conduct on-site investigations regardless of whether an employer consents, something employers should consider when contemplating whether to deny the EEOC access to its business during an investigation.

Case Background

On October 1, 2014, a Gallatin applicant filed a charge of employment discrimination with the EEOC alleging that Gallatin unlawfully rescinded a job offer after discovering his record of disability.  He also suggested that in his initial interview, a representative of Gallatin told him the job — titled Hot Rolling Department Shift Manager — would require only “hands off” work.  Gallatin answered the charge by stating that it rescinded his offer only after the occupational doctor who conducted his post-offer, pre-employment medical examination determined that he could not safely perform the essential functions of the highly safety sensitive position, with or without reasonable accommodation.

After issuing a Request for Information, the EEOC eventually procured a list of the persons involved in the applicant’s recruiting and interview process.  In an email sent to Gallatin on March 5, 2015, the EEOC’s investigator informed the company that “the next step in my investigation is to conduct an on-site visit and conduct interviews with individuals that I think will have relevant information to aid in my investigation.”  Id. at 2.  In its April 16, 2015 response, Gallatin replied, “we simply do not feel that coming onsite is necessary []or relevant to your investigation.”  Id.  Instead, the company offered to provide the individuals requested for interviews at the EEOC office or an alternative offsite location.

Shortly thereafter, the EEOC issued a subpoena requiring Gallatin to permit on-site access “to conduct witness interviews, examine the facility, and obtain/request any additional information as it pertains to the Rolling Shift Manager position.”  Id.  On May 5, 2015, Gallatin filed a Petition to Revoke and/or Modify the Subpoena with the EEOC, claiming that on-site interviews were not relevant nor material, placed an unnecessary burden on the employer, and required a judicial warrant.  The EEOC denied Gallatin’s petition in June 2015, directing Gallatin to permit an on-site examination of its facility within ten days of the receipt of the Determination.  In a letter sent to the EEOC a few days later, Gallatin informed the EEOC that it would not consent to an on-site visit “without a court order and/or valid warrant.”  Id. at 3.

The EEOC then petitioned the Court to order Gallatin to show cause why it should not be compelled to comply with the subpoena issued upon it.  The Court ordered the parties to convene for an oral argument, which was held on January 6, 2016, and thereafter directed the parties to file additional briefing.  In its April 28, 2016 ruling, the Court ordered (1) Gallatin shall permit an investigator of the EEOC to perform an on-site inspection of Gallatin’s business premises; and (2) the investigator shall limit his or her inspection to evidence directly related to the Hot Rolling Department Shift Manager position and its associated responsibilities.  Id. at 17.

The Decision

Before reaching the warrant issue, the Court addressed the threshold question raised by Gallatin.  Although Gallatin only objected to the EEOC’s warrantless entry in its initial briefing and at oral argument, the company tangentially claimed that the EEOC simply does not have the statutory authority to conduct any on-site examination of commercial property, regardless of whether an owner consents to that entry.  Id. at 3.  The Court rejected this argument, noting that Gallatin’s position failed to account for the EEOC’s long and untroubled history of conducting myriad on-site investigations of private commercial property throughout the United States.  Id. at 3-4.

Further, the Court addressed Gallatin’s argument that, regardless of whether the EEOC has the statutory right to enter private commercial property, that entry cannot take place without an administrative warrant.  To address this argument, the Court noted its present task was to (1) consider the “probable cause” standard for issuing an administrative warrant, and (2) compare that standard to the pre-compliance review procedures embedded in the EEOC’s enabling statute and implementing regulations.  Id. at 8.  The Court noted that to be consistent with the Fourth Amendment, the EEOC’s statute and implementing regulations must permit the Court to ensure that (1) the EEOC’s request for access flows from specific evidence of an existing violation, and (2) the investigator’s search bears an appropriate relationship to the violation alleged in the complaint.  Id. at 8-9 (quotations omitted).  Further, when the EEOC seeks enforcement of a subpoena, reviewing courts must determine whether the subpoena is within the agency’s authority, the agency has satisfied its own due process requirements, compliance would be unduly burdensome, and the information sought is relevant to the charges filed.  Id. at 10 (quotations omitted).  Ordering Gallatin to submit to the on-site investigation, the Court found that “[j]ust as the warrant process requires courts to identify ‘specific evidence of an existing violation’ and order only those inspections that bear ‘an appropriate relationship to the violation,’ the Commission’s statutory and regulatory schemes permit only those inspections that are ‘relevant to the charges filed’ and ‘not unduly burdensome.’”  Id. at 10-11.

Having concluded that a formal judicial warrant was not required here, the Court then addressed Gallatin’s five specific challenges to the EEOC’s subpoena.  First, the Court rejected Gallatin’s argument that it provided the EEOC more than sufficient information concerning the allegations, and agreed with the EEOC’s position that it cannot merely accept employer declarations as true without conducting appropriate investigations.  Id. at 12.  Second, the Court dismissed Gallatin’s argument that an on-site investigation would be “irrelevant,” noting that an on-site visit would aid in determining (1) the amount of time spent performing the function, (2) the consequences of not requiring performance of the function, and (3) the current work experience of incumbents in similar jobs.

Third, Gallatin claimed the EEOC’s subpoena was overbroad given that it did not state with any specificity what was being sought.  The Court found that the subpoena’s nebulous request to ‘examine the facility,’ without any limitation to those areas of the facility that specifically relate to the job functions in dispute, was overbroad; at the same time, the Court held that Gallatin’s related claim that the subpoena should “state with . . . specificity what is being sought” was unpersuasive.  Id. at 13.  In view of these two competing considerations, the Court ordered that the EEOC’s investigator may only inspect those areas of the facility that he or she reasonably believes to be relevant to the charges filed.  Id. at 14.  Specifically, the Court directed the investigator to focus his or her inquiry on those items of evidence directly relevant to the position at issue, noting that “[a]lthough the investigator cannot anticipate with particularity every piece of relevant information that he or she may uncover at the facility, this uncertainty does not provide the Commission with an unmitigated license to roam the property in search of relevant information.”  Id.

Fourth, Gallatin asserted that the amount of time necessary for the investigator to gain a reliable understanding of the essential functions of the shift manager position would be unduly burdensome and disruptive to business operations.  The Court rejected this argument, finding that Gallatin did not persuasively explain how the presence of an investigator at the facility would actually impose an undue burden.  Id.  Finally, Gallatin claimed that permitting the EEOC to enter the facility would raise safety concerns related to the inherent dangers of the work environment and industrial equipment machinery.  Id. at 16.  The Court dismissed this argument, noting that the EEOC is well-equipped to take reasonable precautions before inspecting potentially dangerous worksites.  Id. at 16-17.

Accordingly, the Court ordered (1) Gallatin shall permit an investigator of the EEOC to perform an on-site inspection of Gallatin’s business premises; and (2) the investigator shall limit his or her inspection to evidence directly related to the Hot Rolling Department Shift Manager position and its associated responsibilities, and that “[t]he investigator may not generally or indiscriminately search the facility for evidence relevant to [the] claims, and must only inspect those areas that he or she reasonably believes will provide evidence relevant to the position.”  Id. at 17.

Implications For Employers

Most employers are well aware that the EEOC routinely conducts on-site investigations.  For employers who may have considered challenging that governmental authority, this ruling is instructive in demonstrating how courts will likely enforce EEOC subpoenas to conduct such investigations.  Further, if the EEOC ever did have any hesitance about conducting an on-site investigation without an employer’s consent, this ruling likely alleviates any such concern.  Accordingly, employers should choose their battles carefully when thinking about opposing an EEOC on-site investigation.

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

History Repeats Itself: The EEOC Scores Big Judgment Against Absent Party

Posted in EEOC Litigation

th7OX71VIZBy Julie G. Yap and Alison H. Hong

Seyfarth Synopsis: The EEOC obtains a multi-million dollar default judgment against an out-of-business company in a case alleging “human trafficking” discrimination claims.

In a ruling on April 26, 2016, in EEOC v. Global Horizons, Inc., Case No. 2:11-CV-03045 (E.D. Wash. Apr. 26, 2016), Judge Edward F. Shea of the U.S. District Court for the Eastern District of Washington entered a default judgment of over $7.6 million in the EEOC’s favor against an essentially defunct business, Global Horizons, Inc.  This multi-million dollar judgment harkens back to the $8.7 million default judgment entered in favor of the EEOC against this same defendant (and another out-of-business defendant) less than two years ago in the U.S. District Court for the District of Hawaii, the agency’s biggest judgment in 2014.  This Judgment – most likely symbolic, as it is apt to be uncollectable – finally closes the door on five years of litigation arising from the EEOC’s purported pursuit of “human trafficking” discrimination claims.

Background To The Case

In 2011, the EEOC brought claims against Defendant Global Horizons, Inc. (“Global Horizons”), among others, in federal district courts in both Hawaii and Washington, alleging a pattern or practice of unlawful discriminatory employment practices against foreign migrant workers based on their Asian race and/or Thai national original.  The EEOC also asserted claims for harassment and hostile work environment, retaliation, and constructive discharge.  The Asian and Thai workers were employed by Global Horizons under the U.S. Department of Labor H2‑A guest worker program to provide farm labor at various locations in California, Hawaii, and Washington.  The Commission had additionally sued other companies that had contracted with Global Horizons to supply workers to their farms and operations.  Subsequent to the litigation, Global Horizons went out of business.

By 2014, the EEOC litigation initiated in Hawaii had largely resolved, with most of the companies securing dismissals of the EEOC’s claims against them or reaching resolutions.  In December 2014, the EEOC obtained default judgment against Global Horizons and another out-of-business defendant in the amount of $8.7 million. It was the largest judgment obtained by the Commission that year.

In early 2015, in the U.S. District Court for the Eastern District of Washington, the EEOC sought default judgment against Global Horizons.  The other companies the Commission had sued in Washington obtained dismissal of the EEOC’s claims against them and were awarded attorneys’ fees and costs just shy of $1 million against the EEOC.

However, with respect to its claims against Global Horizons, the EEOC sought $300,000 for both compensatory and punitive damages for 66 individual claimants, submitting a 152 page supplemental table in support of its request as well as a number of declarations from the individual claimants.  In total, the EEOC sought entry of default judgment against Global Horizons in the amount of $19.8 million.  Based on those submission, the Court entered findings of fact and conclusions of law relative to the EEOC’s claims against Global Horizons on April 26, 2016 in a 30-page order.

The Court’s Ruling

The Court rejected the EEOC’s requests and entered an award of compensatory damages of $5,000 per month worked for Global Horizons to every claimant based on the Defendant’s default and uncontested liability for the pattern or practice of discrimination, a hostile work environment, and retaliation relative to the claimants that Global Horizons brought to work in Washington state.  In addition to compensatory damages, the Court also awarded each claimant $15,000 per month in punitive damages.  The Court further concluded that claimants who were detained by police for almost an entire day were each entitled to additional compensatory damages in the amount of $2,500 per claimant and additional punitive damages in the amount of $7,500 per claimant.  Based on these conclusions, the Court apportioned judgments to claimants ranging from $4,000 (for six days of work) to $210,000 (for ten months of work as well as police detention).  In total, the Court entered default judgment in the amount of $7,658,500.

It remains to be seen what to make of the judgment. It may be worth less than the paper on which it is written, as it is likely not collectable.

Implications For Employers

Since the judgment is likely not to be paid, the EEOC may still hope to use it as a basis for negotiation in like cases. Employers should be mindful of the Commission’s likely arguments as to the “value” of such cases.

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

Investigating Illegal Aliens’ Charges: Fourth Circuit Says EEOC Can Serve Subpoena On Employer

Posted in Investigation Tactics and Administrative Subpoenas

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

Seyfarth Synopsis: This Fourth Circuit ruling opens the door for the EEOC to investigate employers as a result of EEOC charges brought by unauthorized employees, even though an illegal alien worker may not be able to seek certain legal remedies.

Undocumented workers and immigration reform are part of the political debate for the upcoming Presidential election.

The Fourth Circuit’s recent validation of an EEOC enforcement subpoena regarding the government’s investigation of an employer’s alleged discrimination against an illegal alien is certainly an eye-opener for employers. It manifests that the Commission will vigorously investigate and litigate claims involving alleged workplace discrimination against unauthorized workers.

In EEOC v. Maritime Autowash, Inc., No. 15-1947 (4th Cir. Apr. 25, 2016), the Fourth Circuit reversed a ruling from the U.S. District Court for the District of Maryland that had denied an application for subpoena enforcement following an illegal alien’s EEOC charge brought against his employer.  This ruling opens the door for the EEOC to investigate employers as a result of EEOC charges brought by illegal alien employees, even though the charging parties may not even be able to seek certain legal remedies.

Case Background

In May 2012, Maritime Autowash, Inc. (“Maritime”) hired Elmer Escalante as a vacuumer at its carwash in Edgewater, Maryland.  At the time, Escalante lacked authorization to work in the United States.  On July 27, 2013, Escalante and other Hispanic employees complained to Maritime of unequal treatment and discrimination targeting Hispanics.  All of them were terminated the day they raised the complaint.  Escalante then filed charges with the EEOC on February 6, 2014 for discrimination on the basis of national origin and retaliation as prohibited under Title VII.   The complaint detailed the unequal employment conditions facing Hispanic employees at Maritime, including longer working hours, shorter breaks, lack of proper equipment, additional duties, and lower wages.  Ten other terminated Hispanic employees lodged similar complaints with the EEOC.  The Commission served Maritime with a notice of the charges on February 25, 2014.  Id. at 3-4.

In responding to the charges, Maritime denied all allegations of discrimination and stated that Escalante had been terminated for failing to appear for a scheduled work shift.  The EEOC served Maritime with a Request for Information (“RFI”) on May 27, 2014 seeking personnel files, wage records, and other employment data related to Escalante, the other charging parties, and similarly-situated employees dating from January 1, 2012 to the time of the request.  Maritime refused to provide records for any Hispanic employee other than Escalante, and further objected that certain of the agency’s requests were unduly burdensome, overly broad, and/or irrelevant. Faced with Maritime’s incomplete response to its RFI, the EEOC issued a subpoena on June 10, 2014, which focused only on Escalante’s charges.  Maritime produced none of the subpoenaed documents.  Id. at 4-5.

The EEOC filed an application to the District Court seeking to enforce the subpoena, which was denied.  Thereafter, the EEOC appealed to the Fourth Circuit, which reversed and remanded the District Court’s denial of the application to enforce the subpoena.

The Decision

The Fourth Circuit noted that it cannot yet know whether the agency’s investigation will uncover misconduct by the employer or ever ripen into a lawsuit, nor could it assess what causes of action or remedies might lie down the road.  Id. at 2.  As such, the only issue it considered was whether the EEOC’s subpoena, designed to investigate Escalante’s Title VII charges, was enforceable.  Id. at 6.  The Fourth Circuit noted that central to the EEOC’s authority to enforce Title VII’s provisions against employment discrimination “is the power to investigate charges brought by employees, including the right to access any evidence . . . that relates to unlawful employment practices covered by [the statute] … as well as the authority to issue administrative subpoenas and to request judicial enforcement of those subpoenas.”  Id. at 6-7 (internal quotation marks omitted).  Further, “The [judicial review] process is not one for a determination of the underlying claim on its merits … courts should look only to the jurisdiction of the agency to conduct such an investigation.” Id. at 7 (quoting EEOC v. Am. & Efird Mills, Inc., 964 F.2d 300, 303 (4th Cir. 1992)).

Noting that the jurisdictional question was central to the dispute here, the Fourth Circuit reasoned that the plain language of Title VII provides that jurisdiction is attained if there is a “plausible” or “arguable” basis for the EEOC’s subpoena.  Id. at 8-9.  Also at issue was Title VII’s definition of employee, which does not specifically bar undocumented workers from filing complaints.  Id. at 9.  Since the charging party was employed at Maritime’s car wash, his charge of discrimination rested squarely on one of the protected grounds.  Accordingly, the Court held that “[t]he EEOC’s investigation of Escalante’s charges was therefore at least plausibly and arguably related to the authority that Congress conferred upon the Commission.  Since Maritime challenged only the agency’s subpoena authority, the district court should have stopped at that point and enforced the subpoena accordingly.”  Id. at 9.

Maritime argued that a reviewing court must ascertain a valid charge of discrimination, which must incorporate a viable cause of action or remedy as a “jurisdictional prerequisite” to enforcing the agency’s subpoena.  Id.  The Fourth Circuit rejected this argument, opining that courts should not venture prematurely into the merits of employment actions that have not been brought.  Id. at 11.  Considering the pragmatic effect of the employer’s argument, the Fourth Circuit explained “Maritime’s challenge to the EEOC’s subpoena envisions a world where an employer could impose all manner of harsh working conditions upon undocumented aliens, and no questions could be asked, no charges filed, and no agency investigation even so much as begun.  The employer is asking the court for carte blanche to both hire illegal immigrants and then unlawfully discriminate against those it unlawfully hired.”  Id. at 14.  Accordingly, the Fourth Circuit reversed and remanded the District Court’s judgement, holding that when the EEOC  is investigating charges plausibly within its delegated powers, the courts should not obstruct.  Id. at 15.

Implications For Employers

This ruling absolutely belongs on the radar of any employer who may have undocumented workers in its labor force.  Even if those workers are unable to seek certain legal remedies, should they bring EEOC charges, the employer will likely have to cooperate with any governmental investigation.  Accordingly, employers should exercise caution in this context, as EEOC investigations can penetrate their walls regardless of the legal status of those employees.

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

Still Cookin’ In California Court: Bakery Employer Survives EEOC Motion For Summary Judgment

Posted in EEOC Litigation

thT9B6FHE7By Gerald L. Maatman, Jr. and Alex W. Karasik

In what has become an oft-used recipe in the EEOC cookbook of Title VII retaliation litigation, the government has once again utilized the strategy of taking an employer’s deposition and thereafter moving for summary judgment.

In EEOC v. Peters’ Bakery, No. 13-CV-04507, 2016 U.S. Dist. LEXIS 54379 (N.D. Cal. Apr. 21, 2016), a case we previously blogged about here, an employee filed an EEOC charge alleging race and national origin discrimination and retaliation against her employer, Peters’ Bakery (“the Bakery”).  Thereafter, following the employee’s Internet postings accusing the Bakery’s owner, Charles Peters, of being racist, Mr. Peters filed a defamation charge against the employee, which subsequently led to the EEOC’s additional retaliation claim for subjecting her to that lawsuit.  After deposing Mr. Peters, the EEOC moved for partial summary judgment.  Judge Freeman of the U.S. District Court for the Northern District of California denied the EEOC’s motion for partial summary judgment, finding there was a disputed issue of material fact as to whether the employee’s filing of the EEOC charge was the but-for cause of Mr. Peters’ filing of the defamation action.

EEOC v. Peters’ Bakery illustrates how broadly the Commission views the concept of retaliation.

Employers facing retaliation claims should take account of this case when being deposed by the EEOC as, pursuant to its “recipe for retaliation claims,” the government will use any unfavorable deposition testimony as the “ingredients” in its likely forthcoming motion for summary judgment.

Case Background

The charging party, a Hispanic employee, had worked for the Bakery for several years.  On September 27, 2011, the employee filed an EEOC charge against the Bakery alleging discrimination based on race and national origin and retaliation based upon protected activity.  On November 3, 2011, the EEOC issued a Notice of Charge of Discrimination informing the employer of the charge asserted by the employee.  After Mr. Peters’ girlfriend found Internet postings by the employee accusing him of being racist, on April 19, 2012, Mr. Peters filed a defamation action against the employee in the Small Claims Division of the Santa Clara County Superior Court, alleging defamation occurring on November 3, 2011 (the date of the EEOC Notice of Charge of Discrimination).  Id. at *2.

On September 30, 2013, the EEOC filed its lawsuit against Peters’ Bakery, asserting two claims under Title VII against the Bakery based upon Mr. Peters’ conduct toward the employee.  The first claim alleged that Mr. Peters harassed and discriminated against the employee on the basis of her race and national origin.  The second claim alleged that the Bakery retaliated against the employee after she engaged in the protected activity of filing an EEOC charge by, among other things, subjecting her to the defamation action filed by Mr. Peters; refusing to pay her back wages and benefits following her reinstatement to employment pursuant to a labor arbitration; subjecting her to retaliatory discipline; and circulating a copy of her EEOC charge to her co-workers in an attempt to chill support for her.  Id. at *2-3.

The EEOC moved for partial summary judgment with respect to the second claim, specifically, that Mr. Peters’ defamation action against the employee constituted unlawful retaliation for protected activity.

The Decision

Judge Freeman denied the EEOC’s motion for partial summary judgment regarding the retaliation claim.  The Court noted that under the relevant provision of Title VII, 42 U.S.C. § 2000e-3(a), the elements of a prima facie retaliation claim are: “(1) the employee engaged in a protected activity, (2) she suffered an adverse employment action, and (3) there was a causal link between the protected activity and the adverse employment action.”  Id. at *4-5 (quoting Davis v. Team Elec. Co., 520 F.3d 1080, 1093-94 (9th Cir. 2008)).

In regards to the first element, the Court noted it was undisputed that the employee filed an EEOC charge against her employer, which constituted protected activity.  Id. at *5.  Addressing the second element, Defendant argued that the filing of his defamation action in this particular case did not dissuade the employee from pursuing her charge and, in fact, three of her co-workers showed up at her defamation hearing to support her.  The Court rejected this argument, noting the standard was objective and looks to whether a reasonable employee may be dissuaded from pursuing or supporting such charges.  Id. at *5-6.

Thereafter, the Court reasoned that the EEOC’s motion turned on the third element — the causal link between the employer’s conduct and the protected activity.  In order to establish this element, “a plaintiff making a retaliation claim under § 2000e-3(a) must establish that his or her protected activity was a but-for cause of the alleged adverse action by the employer.”  Id. at *6-7 (quoting Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2534 (2013).  The EEOC argued that the record evidence gave rise to only one inference, i.e., that Mr. Peters filed the defamation action against the employee because she filed an EEOC charge against the Bakery.  The EEOC supported this contention by noting that Mr. Peters’ defamation complaint stated on its face that the defamation occurred on November 3, 2011, the date of the EEOC Notice of Charge of Discrimination.

In opposition to the motion, the Bakery asserted that the EEOC excluded critical testimony from Mr. Peters’ deposition excerpt, and that the excluded testimony gave rise to a reasonable inference that Mr. Peters filed the defamation action at least in part because of statements that the employee published on the Internet.  Specifically, the EEOC excluded Mr. Peters’ testimony stating that after his girlfriend found the statements online, “I was very upset about being accused of being a racist on the [I]nternet.  So I filed a defamation lawsuit in small claims court.”  Id. at *8-9.  The EEOC objected to Mr. Peters’ deposition and declaration statements regarding his girlfriend’s discovery of the statements, asserting that the challenged statements constituted inadmissible hearsay under Federal Rule of Evidence 802 and were conclusory.  The Court rejected this argument, finding that they were not presented for the truth of the matter asserted and that the employee actually published the claimed statements to the Internet, which were personally viewed by Mr. Peters after his girlfriend discovered the statements.

As to the merits, the EEOC argued in reply to the Bakery’s opposition that the only reasonable inference to be drawn from Mr. Peters’ deposition testimony is that he filed the defamation action against the employee because she filed an EEOC charge against the Bakery.  To support this argument, the EEOC cited an affidavit submitted by Mr. Peters’ which asserted “She made allegations that weren’t true in the EEOC charge,” and deposition testimony where Peters conceded that the employee never posted derogatory comments about the Bakery.  Id. at *11-12.  Rejecting this contention, the Court found that while the EEOC’s evidence was “quite strong,” it was insufficient to establish as a matter of law that the employee’s filing of the EEOC charge was the but-for cause of Peters’ filing of the defamation action against her.  Id. at *13.  Further, the Court found that “the testimony in question states only that [the employee] never posted a bad comment about the Bakery.  That statement does not actually conflict with Mr. Peters’ assertion that he believed [she] had posted negative comments on the Internet about him.”  Id. at *14.  Accordingly, the Court denied the EEOC’s motion for partial summary judgment, finding there was a disputed issue of material fact as to whether the employee’s filing of the EEOC charge was the but-for cause of Mr. Peters’ filing of the defamation action.  Id. at *14-15.

Implication For Employers

Employers must be aware of this consistently utilized EEOC “recipe for retaliation claims”, where the government takes an employer’s deposition testimony and thereafter bakes it into a motion for summary judgment.  Accordingly, employers must be careful in how they approach these depositions so as to not give the EEOC the ingredients it needs to cook-up a successful summary judgment motion.  Further, when employers have non-retaliatory reasons for actions taken against employees who previously brought EEOC charges, it is crucial that they not only get this testimony into the record on deposition, but also highlight this information when responding to the EEOC’s likely forthcoming summary judgment motion, as the government will almost certainly neglect to use any employer-friendly ingredients in its summary judgment recipe for retaliation claims.

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

Dismissal Denied For Discussing Disability: EEOC Case Against Employer Survives

Posted in EEOC Litigation

Connecticut-sealBy Gerald L. Maatman, Jr. and Alex W. Karasik

Anti-discrimination laws command that “thou shall not retaliate…” The recent ruling in EEOC v. Day & Zimmerman NPS, Inc., Case No. 15-CV-01416 (D. Conn Apr. 12, 2016), is a case study in how employers can be taken to task for allegedly retaliating against workers who claim discrimination.

In this case, the EEOC brought an ADA action against the employer defendant, alleging it retaliated against an employee by sending a letter, which identified the employee and discussed his discrimination charge, to 146 other Day & Zimmerman NPS, Inc. (“DZNPS”) employees who belonged to the same union.  The EEOC also alleged that the letter interfered with the rights of 146 current and former employees under the ADA to communicate with the EEOC regarding potential unlawful discrimination.  After defendant moved to dismiss the ADA retaliation and interference claims, Judge Victor A. Bolden of the U.S. District Court for the District of Connecticut denied the employer’s motion to dismiss on the grounds that the EEOC’s allegations were sufficient to state plausible claims for retaliation and interference under Sections 503(a) and 503(b) of the ADA.

This ruling serves as a cautionary tale for employers facing discrimination charges brought by employees, and shows the breadth of anti-discrimination prohibitions on retaliation.

It illustrates how widespread internal communication regarding such charges could potentially be viewed as retaliation or interference under the ADA in the context of a motion to dismiss.

Case Background

In October 2012, a DZNPS employee, who was a member of Local 35 of the International Brotherhood of Electrical Workers (“Local 35”) filed a charge of discrimination with the EEOC, alleging that his employer failed to accommodate his disability reasonably and unlawfully terminated his employment.  In March 2014, the EEOC sought information from DZNPS as part of its investigation of the employee’s charge, including the names and contact information of other electricians who had worked for DZNPS at the Millstone Power Station in Waterford, Connecticut in the fall of 2012.

In June 2014, before providing the requested information to the EEOC, DZNPS sent a letter to approximately 146 individuals, all of whom were members of Local 35 and all of whom had worked or continued to work for DZNPS.  In the June 2014 letter, DZNPS identified the allegedly aggrieved employee by name and indicated that he had filed a charge of discrimination on the basis of disability.  The letter identified his union local, the medical restrictions on his ability to work, and the accommodation he had requested.  It further informed the recipients of their right to refuse to speak to the EEOC investigator and offered them the option to have DZNPS counsel present if they chose to speak to the EEOC.  Id. at 2-3.

On May 20, 2015, the EEOC issued a Letter of Determination to DZNPS, finding reasonable cause to believe that the ADA had been violated.  Following unsuccessful conciliation, the EEOC filed a complaint on September 28, 2015.  The EEOC alleged that since at least June 2014, DZNPS engaged in unlawful employment practices with respect to a group of electricians hired to work at the Millstone Power Station, in violation of Sections 503(a) and 503(b) of the ADA.  Id. at 3.  Thereafter, DZNPS moved to dismiss the complaint.

The Ruling

Judge Bolden denied DZNPS’s motion to dismiss without prejudice, holding that the EEOC’s claims of retaliation and interference under the ADA may proceed.  Pursuant to Section 503(a) of the ADA, the EEOC alleged that defendant unlawfully retaliated against the employee because he filed a charge of discrimination with the EEOC.  Id. at 4.  The Court noted that to plead a retaliation claim sufficiently in an employment discrimination context, the Second Circuit has held that “the plaintiff must plausibly allege that: (1) defendants discriminated—or took an adverse employment action—against him, (2) ‘because’ he has opposed any unlawful employment practice.”  Id. at 5 (quoting Vega v. Hempstead Union Free Sch. Dist., 801 F.3d 72, 90 (2d Cir. 2015)).  Defendant argued that the ADA retaliation claim should be dismissed because the EEOC’s claims failed on both prongs.  Id.  First, defendant argued that the EEOC had not alleged that DZNPS took any adverse employment action against the employee.  Second, defendant argued that even if the EEOC had plausibly alleged an adverse employment action, it did not allege facts showing that the action was caused by the employee’s protected activity.  Id. at 5.

The Court rejected both of defendant’s arguments.  First, the Court noted how case law authorities have routinely held that when an employer disseminates an employee’s administrative charge of discrimination to the employee’s colleagues, a reasonable fact-finder could determine that such conduct constitutes an adverse employment action.  Id. at 6.  As to the second prong, the Court held that the three-month gap between when the June 2014 letter was sent and when the EEOC contacted DZNPS to request names and contact information for other electricians who had worked for defendant in the Fall of 2012 provided sufficient temporal proximity to satisfy the causation prong.  Id. at 7-8.  Specifically, the Court found it was plausible that the first opportunity to retaliate against the employee, whom they had already terminated, was when the EEOC provided a list of fellow union members to whom defendant could disseminate the potentially damaging EEOC charge.  Id.  Accordingly, denying the motion to dismiss, the Court noted that it could not conclude as a matter of law that defendant’s disclosure of the details of the employee’s EEOC disability discrimination charge in the June 2014 letter could not plausibly have been a retaliatory act in violation of the employee’s rights under the ADA.  Id. at 8.

In regards to the ADA Section 503(b) interference claim asserted by the EEOC, the Court initially noted that neither the Supreme Court nor the Second Circuit has yet outlined a test for an interference claim under the ADA.  Id. at 9.  Thereafter, the Court found that while it was true that the EEOC did not allege any direct evidence of DZNPS’s intent behind the June 2014 letter, the issue of an employer’s intent is a question of fact that cannot be resolved on a motion to dismiss.  Further, the Court held that “the disclosure of sensitive personal information about an individual could well dissuade that individual from making or supporting a charge of discrimination under the ADA. Therefore, the Court reasonably could infer that the letter could have the effect of interfering with or intimidating [the employee] and the letter’s recipients with respect to communicating with the EEOC about potential disability discrimination by [d]efendant.”  Id. at 10.  Accordingly, the Court denied defendant’s motion to dismiss the retaliation and interference claims brought under the ADA, while also deferring to rule on DZNPS’s arguments regarding the available prayers for relief.  Id. at 13-14.

Implications For Employers

This ruling is instructive as to why employers should exercise restraint when considering whether to internally disclose information about charges of discrimination filed by an employee, especially on a widespread basis.  Courts may view such conduct as obstructive to employees’ rights to file charges with administrative agencies.  Accordingly, employers should carefully limit internal communication about such charges to avoid creating the perception that they are retaliating against employees who bring charges or interfering with other employees’ rights to file future charges.

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

U.S. Supreme Court Hears Oral Argument In EEOC v. CRST Van Expedited, Inc.

Posted in EEOC Litigation

moneyBy Gerald L. Maatman, Jr., Christina M. Janice, and Alex W. Karasik

Yesterday the U.S. Supreme Court heard oral arguments in EEOC v. CRST Van Expedited, Inc.

Involving the largest fee sanction award ever levied against the EEOC – nearly $4.7 million –  EEOC v. CRST Van Expedited, Inc. may be one of the most important cases on EEOC litigation issues in years.  The stakes are high for employers and the EEOC alike.

At issue in this case is whether and under what circumstances an employer can recover attorneys’ fees from the EEOC where the EEOC fails to satisfy its pre-suit investigation duties under Title VII.  Here is our analysis of the course of the arguments (a copy of the hearing transcript is here).

A Thumbnail Sketch Of The Key Facts Of The Case

Section 706(k) authorizes district courts to award attorneys’ fees to the “prevailing party” in a Title VII case.  In relevant part, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978), held that fee awards to a prevailing defendant are permissible only if the plaintiff’s lawsuit was “frivolous, unreasonable, or without foundation.”

After CRST successfully obtained the dismissal of the EEOC’s Title VII claims for sexual harassment, the District Court granted CRST’s motion for an award of attorneys’ fees and costs and directed the EEOC to pay CRST nearly $4.7 million, finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on both CRST and the District Court.

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

The Employer’s Position

In its briefing, CRST asserted two arguments as to why the Eighth Circuit’s decision was improper.  First, CRST argued that the Eighth Circuit’s rule that a prevailing defendant may recover fees only when a case is decided “on the merits” has no basis in the statute, conflicts with Christiansburg, and severely undermines the policy of Section 706(k).

Second, CRST posited that even if the “on the merits” standard applied, CRST was successful on the merits when it defeated certain claims by demonstrating that the EEOC did not investigate, find reasonable cause for, or attempt to conciliate any of these claims as required by the statute. Accordingly, CRST asserted that the precedent created by the Eighth Circuit’s decision would allow the EEOC to entirely abandon its pre-suit responsibilities with impunity, which would lead to one-sided and inefficient conciliations.

Following the briefs submitted by the EEOC, which clearly abandoned its argument that the Eighth Circuit’s rule that a resolution “on the merits” is a precondition for a fee award, CRST’s reply briefing requested that the SCOTUS abrogate the Eighth Circuit’s rule as being without any foundation under Title VII.  CRST also attacked the EEOC’s newly asserted theory that attorneys’ fees were unwarranted because only preclusive judgments in favor of defendants support “prevailing party” status.  CRST argued that because the EEOC did not raise this “prevailing party” argument at any time during the last six years of litigation, the argument had been waived.  CRST also asserted that the only substantive issue properly before the SCOTUS was whether the EEOC’s pre-suit conduct rendered its lawsuit “frivolous, unreasonable, or groundless” under Christianburg, and that the District Court acted within its discretion when it found that the EEOC abandoned its Title VII obligations.

The Government’s Position

Having abandoned its contention that only a dismissal “on the merits” may be the subject of an attorney fee award, the EEOC argued that the District Court’s finding that the EEOC failed to satisfy Title VII’s administrative preconditions to filing a lawsuit did not authorize an award of attorneys’ fees under 42 U.S.C. 2000e-5(k), because such a dismissal does not make the defendant a “prevailing party.”

The EEOC further noted the District Court’s original dismissal was not “with prejudice,” and that the later agreed-upon “with prejudice” dismissal did not and could not modify the District Court’s earlier dismissal of the claims at issue here, which had already been affirmed by the Eighth Circuit.

Further, the EEOC also contended that the award of attorneys’ fees and costs in this litigation was improper because the Commission’s suit was not “frivolous, unreasonable, or groundless.”  Citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1656 (2015), which has become routine practice for the Government, the EEOC asserted that the District Court improperly found that the EEOC failed to satisfy its pre-suit obligations because it did not separately investigate, make a reasonable-cause determination, and conciliate with respect to each individual woman for whom it ultimately sought relief.

The SCOTUS Oral Argument

While both sides endured their fair share of questioning from the Justices at yesterday’s hearing, the questioning put to the Government was noticeably pointed and plentiful.

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

Questions To CRST – 46 in the opening argument and 5 questions in the rebuttal argument [questions by Justice – Kagan (16), Ginsburg (14), Sotomayor (13), Kennedy (6), Breyer (3), and Alito (0)]

Questions To The EEOC – 72 in the opposition argument [questions by Justice – Breyer (25), Roberts (21), Alito (9), Kagan (6), Kennedy (6), Sotomayor (4), and Ginsburg (1)]

The EEOC was noticeably pressed about why it should not be held responsible for bringing the lawsuit that was later dismissed.  Moments into the EEOC’s argument, Justice Alito asked “In your brief in opposition, you argued that the Eighth Circuit was correct; did you not?”  After admitting it did so, Justices Alito and Breyer followed up by asking if the EEOC had abandoned its positon.  After several attempts to dance around the question, the Government finally admitted to abandoning the Eighth Circuit’s view regarding the necessity of a disposition on the merits.  Justice Breyer then continued to hammer the Government, asking “So if they won, why isn’t that the end of it?  It says judgment — it says … the case is dismissed with prejudice.  Therefore, they won.  So why aren’t they the prevailing party?”  The EEOC’s responses hardly pleased the questioning Justice.

After constant grilling from several Justices, Justice Kennedy finally summarized the Government’s position in a question where his tone was certainly revealing: “your position that no matter how unreasonable the plaintiff has been, no matter how costly it’s been, no matter how long it’s taken, that you cannot award fees unless …  the case is dismissed, and the judge says you’re barred from bringing this claim in this suit, no fees; that’s your position.”  Not surprisingly, given its recent attitude that it can abandon the pre-suit Title VII obligations and seemingly litigate with impunity, the EEOC responded “that’s correct.”  The Government also asserted that the notion of “prevailing party” was a term of art.  As was the case with most of the Government’s responses, the Justices were left with more questions than answers.

In sum, the SCOTUS hardly seemed convinced by the Government’s ever-evolving arguments.  Justice Sotomayor did float the idea of the case being remanded to the Eighth Circuit.  But perhaps most tellingly, in light of the Government’s persistent use of Mach Mining as a crutch to avoid judicial scrutiny, Chief Justice Roberts posited the notion that conciliation without the threat of fees would not necessarily incentivize the EEOC to abide by Title VII obligations, “But if they were subject to fees because they ignored their duty to conciliate, it seems to me that might give them some incentive to get it right the first time.”

What’s Next

A future SCOTUS ruling should provide guidance regarding whether and under what circumstances an employer can recover attorneys’ fees from the EEOC when the EEOC fails to satisfy its pre-suit investigation duties under Title VII.

Reading the tea leaves at the Supreme Court, the Government offered little justification for its pre-suit conduct (or lack thereof).  The Supreme Court clearly seemed concerned with the Government’s abandonment of its duties, and while the Supreme Court may not go so far as to uphold the District Court’s award of attorneys’ fees to CRST, it would not be surprising to see a ruling that reflects the Supreme Court’s concerns about the EEOC’s pre-suit conduct.  We expect a decision within the next few months so stay tuned.

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

Truckin’ To The Top Court: CRST Files Final Reply Brief Before Supreme Court Argument Against EEOC

Posted in EEOC Litigation

scotusBy Gerald L. Maatman, Jr., Christina M. Janice and Alex W. Karasik

In high-stakes litigation brought by the EEOC against trucking company CRST Van Expedited, Inc., (“CRST”), CRST recently submitted its final reply brief before the U.S. Supreme Court hears oral argument in the case later this month.  At issue in EEOC v. CRST Van Expedited, Inc. is whether and under what circumstances an employer can recover attorneys’ fees from the EEOC when the EEOC fails to satisfy its pre-suit investigation duties under Title VII.

As our loyal blog readers who have been riding with us for the long haul know, we have covered every “pit-stop” of this litigation journey here, here, here, here, here, here, here, here, here, and here.  With the “end of the road” approaching as oral arguments are set for March 28, 2016, this case is a must-follow for all employers, especially those facing EEOC-initiated lawsuits.

The Context And The Stakes

After CRST successfully obtained the dismissal of the EEOC’s Title VII claims for sexual harassment, the District Court granted CRST’s motion for an award of attorneys’ fees and costs and directed the EEOC to pay CRST nearly $4.7 million, finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden upon both CRST and the District Court.

On the EEOC’s appeal, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that that District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations “[did] not constitute a ruling on the merits,” and that “[t]herefore, CRST is not a prevailing party as to these claims.”   The Eighth Circuit also held that CRST could not satisfy the standard of Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978), for the same reason: “[P]roof that a plaintiff’s case is frivolous, unreasonable, or groundless is not possible without a judicial determination of the plaintiff’s case on the merits.”

The U.S. Supreme Court granted CRST’s petition for certiorari on December 4, 2015.  Thereafter, in its merits brief, CRST asserted two arguments as to why the Eighth Circuit’s decision was improper: (1) the Eighth Circuit’s rule that a prevailing defendant may recover fees only when a case is decided “on the merits” has no basis in the statute, conflicts with Christiansburg Garment, and severely undermines the policy of Section 706(k); and (2) even if the “on the merits” standard applied, CRST was successful on the merits.  In its merits brief the EEOC pivoted away from its earlier argument that fees are recoverable only when dismissal is “on the merits”, and argued that the District Court’s finding that the EEOC failed to satisfy Title VII’s administrative preconditions to filing a lawsuit does not authorize an award of attorneys’ fees under 42 U.S.C. 2000e-5(k), because such a dismissal does not make the defendant a “prevailing party.”  The EEOC also contended that the award of attorneys’ fees and costs in this litigation was improper because the Commission’s suit was not “frivolous, unreasonable, or groundless.”

CRST’s Reply Brief

On March 10, 2016, CRST filed its reply brief, quickly observing the EEOC’s abandonment of the Eighth Circuit’s rule that a resolution “on the merits” is a precondition for a fee award, id. at 1, and requesting the Supreme Court to abrogate that rule as being without foundation in Title VII.  Id. at 3.

CRST then attacked the EEOC’s new theory that attorneys’ fees were unwarranted because only preclusive judgments in favor of defendants support “prevailing party” status, and that the judgment in this case did not preclude further litigation of the 67 claims at issue.  CRST argued that because the EEOC has not raised this “prevailing party” argument at any time during the last six years of litigation, the argument has been “thoroughly and repeatedly waived.”  Id. at 7.  Addressing the substantive argument raised by the EEOC, CRST asserted that the only substantive issue properly before the Supreme Court is whether the EEOC’s pre-suit conduct rendered its lawsuit “frivolous, unreasonable, or groundless” under Christianburg.  Id. at 17-18. CRST argued that during the course of its investigation, the Commission never made a reasonable-cause determination as to any common discriminatory practice, and never attempted to conciliate with CRST over any alleged common discriminatory practice. Id. at 20-22.  Accordingly, CRST contended that the District Court, which has overseen the case for years, acted well-within its discretion when it found that the EEOC abandoned the statutory process required by Title VII.

What’s Next

The Supreme Court is set to hear oral arguments on March 28, 2016.  As we discussed here, with the passing of Justice Scalia, CRST likely has one less vote in its corner.  Nonetheless, the outcome of the case still remains equally important for both employers and the EEOC, as it will likely provide guidance as to the EEOC’s accountability for satisfying its statutory obligations under Title VII.

We will be sure to keep our loyal blog readers updated on the developments of this crucial case.

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

Back On The Butcher’s Block: Court Chops Down Meat Packing Employer’s Witness List In EEOC Religious Discrimination Case

Posted in EEOC Litigation

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

In a pair of EEOC religious discrimination cases brought in Nebraska and Colorado against meat packing company JBS USA, LLC (which we have blogged about here, here, here, here, here, and here), the lawsuits alleged 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.  While JBS successfully obtained summary judgment in the Nebraska case (with the EEOC still being able to pursue individual claims, as we discussed here), in the ongoing Colorado litigation, EEOC v. JBS USA, LLC, Case No. 10-CV-02103 (D. Colo.), Judge Philip A. Brimmer of the U.S. District Court for the District of Colorado recently ordered that only 30 of the 103 witnesses that were untimely disclosed by the employer may be used in “Phase I” of the pending litigation.

While this Colorado case is still “a work in progress” in terms of the litigation process, this “slice” of an order is important for employers in that it illustrates how identification of witnesses during discovery can later lead to rulings “served cold” from the chopping block of unsympathetic courts.

Case Background

In 2010, the EEOC filed two similar lawsuits alleging that JBS, which does business as JBS Swift & Company, discriminated against a class of Somali Muslim employees at its facilities in Greeley, Colorado and Grand Island, Nebraska.  During Ramadan 2008, the employees requested that JBS accommodate their need to leave the production line to pray at or near sundown.  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.  In the Nebraska case, Chief Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska entered judgment for JBS, finding that the employer established the affirmative defense of undue hardship since “a religious accommodation for Muslim employees…within the parameters requested [by the EEOC] would have caused more than a de minimis burden on JBS and on its non-Muslim employees.”  However, that Court later ruled that its earlier findings did not necessarily preclude the EEOC from pursuing individual claims for religious discrimination or retaliation.

In the Colorado action, the Court bifurcated the case, resulting in the following “Phase I” issues: (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.  At the close of “Phase I” discovery, JBS sought summary judgment on all three of EEOC’s Phase I claims.  On July 17, 2015, Judge Brimmer denied JBS’ motion for summary judgment, which was based in part on JBS’ argument that its favorable decision in the Nebraska case collaterally estopped the EEOC from advancing its claims.

Relevant here, on October 27, 2011, the magistrate judge entered a scheduling order providing that under Section § 8(d)(2), “[Plaintiffs] will identify aggrieved employees for Phase I only by November 15, 2011. [Defendant] will identify Phase I witnesses by December 15, 2011.  Either party may amend list up to 60 days thereafter. Subsequent amendments may be made only on a showing of good cause, which shall not include lack of diligence.”  Id. at 2.

In February and March of 2013, JBS attempted to disclose 103 additional witnesses through three supplemental disclosures.  The EEOC moved to strike JBS’ additional witnesses, arguing their disclosure violated § 8(d)(2).  On March 25, 2014, the magistrate judge issued an order granting the EEOC’s motion to strike, to which JBS subsequently objected.  On May 7, 2014, JBS filed a motion to amend the Scheduling Order, arguing that good cause existed to allow JBS to disclose the 103 witnesses stricken by the magistrate judge’s March 25, 2014 order.  On March 17, 2015, the magistrate judge granted JBS’ motion, concluding that JBS established good cause to amend its Phase I witness list under § 8(d)(2).  On April 7, 2015, the EEOC filed an objection to the March 17, 2015 order.  Id. at 3.

Addressing both parties’ various objections and motions to amend the scheduling order, on March 16, 2016, Judge Brimmer entered an order that ultimately directed JBS to select and disclose to the EEOC a list of 30 of the 103 additional witnesses it seeks to add to its Phase I witness list, and that such witnesses shall be deemed timely designated on the dates they were originally disclosed to EEOC.  Id. at 25.  In addition, the Court ordered that any motion by the EEOC to reopen discovery is to be filed within two weeks of JBS’ disclosure, and should indicate for how long discovery will be reopened for the limited purpose of deposing JBS’ additional witnesses.  Id.

The Court’s Decision

The Court initially addressed JBS’ objections to the magistrate judge’s order granting the EEOC’s motion to strike the untimely-disclosed 103 witnesses.  First, JBS argued that the magistrate judge misapprehended its position by failing to consider its argument that Rule 26 permitted the additional witness disclosures.  Overruling this objection, the Court noted that under Rule 16, a scheduling order could properly modify the timing of Rule 26 disclosures.  Id. at 5.  JBS also argued that the magistrate judge’s interpretation of § 8(d)(2) was prejudicial to its case, but the Court also rejected this argument given JBS’ current position that it could now show good cause to add witnesses.  Id. at 7-8.  Finally, the Court rejected JBS’ argument that the magistrate judge failed to apply Burks v. Okla. Publ’g Co., 81 F.3d 975 (10th Cir. 1996), which JBS claimed was controlling Tenth Circuit precedent, since JBS never raised the argument before the magistrate judge and therefore it was deemed waived.  Id. at 9.

Next, the Court addressed the EEOC’s challenges to several aspects of the magistrate judge’s March 17, 2015 ruling that JBS showed good cause to allow it to amend its Phase I witness list under § 8(d)(2) of the Scheduling Order.  Id. at 10.  The parties disputed whether good cause was shown.  The EEOC argued that when examining JBS’ justifications for the untimely disclosure of each individual witness, as opposed to examining JBS’ justifications in the aggregate, JBS’ showing was insufficient to establish good cause.  While the Court acknowledged that JBS compiled a significant amount of information to establish good cause, including the dates and citations to relevant deposition testimonies and the identification of prior inconsistent statements, it held that JBS’ attempt to show good cause did not withstand scrutiny.  Id. at 13.

The Court further rejected JBS’ arguments concerning the difficulty of witness identification, which it alleged was caused by language barriers and employees only knowing other employees’ first names, holding that JBS did nothing to address these challenges which should have been apparent at the outset of the case.  Id. at 13-14.  Further, noting that JBS was required to conduct its own investigation of potential witnesses, the Court was unpersuaded by JBS’ argument that it did not uncover certain witness identities until the deposition stage.  Id. at 15.  In addition, in response to JBS’ argument that it had difficulty identifying certain witnesses due to either their discontinued employment or having common first names (i.e., employing over 40 people with the name “Jorge”), the Court again noted that JBS was not diligent in addressing these issues earlier.  Id. at 16.

In sum, the Court found that “[w]ith the exception of [a few] witnesses JBS designated as impeachment witnesses, JBS has largely failed to show that it acted diligently to disclose the additional witnesses. JBS may be correct that it could not have disclosed all of the additional witnesses by the February 2012 deadline, but it is equally clear that JBS could have, in an exercise of diligence, disclosed at least some of the additional 103 witnesses prior to February and March 2012.”  Id. at 19.  Further, the Court opined that “[r]eopening discovery to allow [the] EEOC to depose the additional witnesses would further delay trial in a case where pretrial proceedings have already stretched for more than five years.”  Id. at 22.  However, the Court concluded that denying JBS’ motion to amend the scheduling order would be too harsh of a sanction.  Accordingly, in what it deemed “the most equitable remedy,” the Court found “that good cause exists to amend the scheduling order to grant JBS leave to designate 30 additional witnesses of its choosing…from the 103 witnesses listed in the additional witness disclosures.”  Id. at 25.

Implications For Employers

This ruling is instructive regarding the upside of proactively identifying any potential Rule 26 witnesses as early as possible.  Waiting until the end of discovery to disclose witnesses creates the possibility that a court may preclude some of those individuals’ testimonies, as was the case here.  Finally, this case is yet another example of the EEOC’s recent aggressiveness in litigating religious accommodation claims on a large-scale basis.  Accordingly, employers should take seriously any and all employee requests for religious accommodations in order to avoid being found on the chopping block of an EEOC lawsuit.

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