EEOC Year-End Countdown

More Mach Mining: Court Denies The EEOC’s Motion For Reconsideration Of Discovery Order

Posted in EEOC Litigation

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

Seyfarth Synopsis: In the remand of the high profile Mach Mining litigation that was before the Supreme Court in 2015, a district court denied the EEOC’s motion for reconsideration of a discovery order pertaining to the scope of the EEOC’s investigation, and denied the EEOC’s motion to amend its complaint to add as defendants seven entities who did not receive actual notice or an opportunity to conciliate.

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After the remand of the Mach Mining litigation from the U.S. Supreme Court, this hallmark case regarding the scope of review of the EEOC’s pre-suit duties under Title VII  is still evolving and shaping the landscape of EEOC litigation.  In EEOC v. Mach Mining, LLC, No. 11-CV-00879 (S.D. Ill. Aug. 22, 2016), Judge Gilbert of the U.S. District Court for the Southern District of Illinois recently denied the EEOC’s motion for clarification or reconsideration of a prior discovery order, while granting in part and denying in part the EEOC’s motion to amend its first amended complaint by adding several entities as defendants.

It is imperative that employers facing Title VII lawsuits brought by the EEOC follow this game-changing litigation, which provides insight into how the EEOC’s compliance with its pre-suit conciliation obligations shapes the parameters of EEOC litigation.  For further analysis of the Supreme Court’s decision and subsequent proceedings, check out our previous blog posts here and here.

Case Background

The EEOC brought suit on behalf of a class of female applicants who had applied for non-office jobs at Mach Mining.  Id. at 1.  The EEOC claimed that Mach Mining had never hired a single female for a mining-related position and did not even have a women’s bathroom on its mining premises.  The complaint alleged that Mach Mining’s Johnston City, Illinois, facility engaged in a pattern or practice of unlawful employment practices since at least January 1, 2006, in violation of Title VII, by engaging in sex discrimination.

In its answer, Mach Mining asserted the affirmative defense that the EEOC failed to conciliate in good faith.  The issue was ultimately resolved before the U.S. Supreme Court, which held “that a court may review whether the EEOC satisfied its statutory obligation to attempt conciliation before filing suit. But we find that the scope of that review is narrow, thus recognizing the EEOC’s extensive discretion to determine the kind and amount of communication with an employer appropriate in any given case.”  Id. at 2 (quoting Mach Mining, LLC v. EEOC, 135 S.Ct. 1645, 1649 (2015)).

Following the Supreme Court’s decision, Mach Mining filed a renewed motion for partial summary judgment, which the Magistrate Judge denied.  Mach Mining then filed a motion for a protective order requesting that the Court preclude the EEOC, “from conducting discovery related to Mach’s relationship with other entities — entities which EEOC failed to include in the investigation and conciliation stage that prompted this action.”  Id. at 2.  Following a hearing, the Magistrate Judge denied Mach Mining’s motion for a protective order, and Mach Mining filed Rule 72 objections to the order.

Per Rule 72, the Court found that the ruling was not clearly erroneous or contrary to law.  However, the Court sua sponte reconsidered the motion and granted in part Mach Mining’s motion, finding that “[t]he EEOC had the opportunity to request any and all documents — including those on related entities —during its investigation of Mach Mining.  There are no allegations that Mach Mining failed to cooperate with that investigation or that Mach Mining did not disclosure all requested information. As such, the EEOC has had ample opportunity to seek information and include any related entity in its investigation of Mach Mining.”  Id.  Thus, in its January 21, 2016 order, the Court limited the EEOC from seeking discovery beyond the entities named in its Letter of Determination.

Thereafter, the EEOC moved for clarification or reconsideration of that order.  Prior to hearing arguments, the Court noted that the January 21, 2016 order did not intend to bar the EEOC from seeking discovery from any third party that may have relevant information pertaining to any issue in this matter.  Id. at 3.  Rather, the Court explained that the holding of the January 21, 2016 order was that the EEOC was barred from additional discovery for the purpose of adding parties where no notice and attempt at conciliation had been made.

The Court’s Decision

The Court denied the EEOC’s motion for clarification or reconsideration of the January 21, 2016 order.  The EEOC argued that Mach Mining had, “a web of complex corporate relationships” and that Mach Mining did not have physical control over the mining location and/or physical facilities.  Id. at 4.  These facilities are owned by other entities from whom the EEOC was attempting to obtain discovery.

The Court explained that it did not seek to bar discovery from property owners and that the EEOC was free to seek discovery from third parties.  Nonetheless, the Court noted that “such discovery is limited to Mach Mining’s hiring/firing and/or lack of female facilities. EEOC can conduct any discovery with regard to the merits of this case and/or discovery to third parties for legitimate purposes. The only discovery that was barred was discovery with regard to adding defendants that have not had notice and an opportunity for conciliation.”  Id. at 4.  As a result, the Court concluded that, “there is no basis for the Court to reconsider its January 21, 2016, ruling.”  Id.

Thereafter, the Court granted in part the EEOC’s motion to amend the complaint.  The EEOC argued that it should be permitted to add as defendants two entities named in the Letter of Determination, which the EEOC asserted had notice and an opportunity for conciliation, and seven entities as defendants for relief purposes only who did not have actual notice and an opportunity for conciliation.  Id. at 5.  In regards to the seven entities to which the EEOC acknowledged at the hearing that did not have actual notice and an opportunity for conciliation, the Court found that the EEOC failed to demonstrate that these entities could provide relief unavailable through Mach Mining.  Id. at 6.  As to the two entities named in the Letter of Determination, the Court held that if the EEOC could demonstrate that these entities had actual notice and an opportunity for conciliation in compliance with EEOC’s rules and regulations, the EEOC was granted leave to amend the complaint and to join those two entities as defendants.  Accordingly, the Court granted the EEOC’s motion to amend its complaint to add two entities as defendants, while denying the remainder of its motion to amend in regards to the seven entities who had no actual notice or opportunities for conciliation.  Id. at 7.

Implications For Employers

The Mach Mining litigation is a benchmark case for pattern or practice litigation brought by the EEOC, given its ramifications on the scope of review of the government’s pre-suit Title VII obligations.  This ruling illustrates that in instances where the EEOC does not provide parties actual notice or an opportunity to conciliate, courts will likely not allow those parties to later be added as defendants.  Nonetheless, it remains unlikely that courts will conduct in-depth reviews of such conciliations.

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

EEOC Loses Landmark Transgender Discrimination Case

Posted in Motions for Summary Judgment

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

Seyfarth Synopsis: In one of the first two ever transgender discrimination cases brought by the EEOC, a federal court in Michigan granted the employer’s motion for summary judgment, finding the employer met its burden in demonstrating that it is exempt under the Religious Freedom Restoration Act, while the EEOC failed to suggest a less restrictive alternative in its challenge of the employer’s gender-specific dress code policy.

In one of the first two ever transgender discrimination cases brought by the EEOC, the government alleged that a funeral home wrongfully terminated its former funeral director for being transgender, for transitioning from male to female, and/or for not conforming to the employer’s gender-based preferences regarding its dress code.  The funeral home argued it was exempt under the Religious Freedom Restoration Act (“RFRA”).  In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., No. 14-13710 (E.D. Mich. Aug. 18, 2016), after the EEOC and employer R.G. & G.R. Harris Funeral Homes, Inc. (“the Funeral Home”) both moved for summary judgment, Judge Cox of the U.S. District Court for the Eastern District of Michigan granted the Funeral Home’s motion and denied the EEOC’s motion.  The court also dismissed the EEOC’s claim that the Funeral Home engaged in an unlawful employment practice by providing work clothes only to males, noting that the EEOC had not done a full investigation of this claim that it uncovered during its wrongful termination investigation.

Although transgender discrimination litigation is not yet explicitly covered under Title VII, this ruling is monumental in terms of shaping the landscape for an evolving area of law that will profoundly impact employers in years to come.

Case Background

The Funeral Home is a closely-held, for-profit corporation operating three funeral homes in Michigan.  Id. at 7.  Owner and operator Thomas Rost has been a Christian for over sixty-five years.  Id. at 15.  While the Funeral Home does not officially affiliate with a religion, its website contains scripture and various bible verses are dispersed at its locations.  Id.  The Funeral Home has a strict employee dress code policy with several requirements, including that men must wear suits and women must wear jackets and skirts/dresses.  Id. at 8-9.

The claimant was hired in 2007.  Id. at 9.  In 2013, the claimant provided the Funeral Home with a letter stating he intended to begin transitioning his gender to female following return from a vacation.  Id. at 10.  Although the claimant intended to abide by the gender-specific dress code by wearing a skirt during the transition, Rost fired the claimant, stating “this is not going to work out.”  Id. at 11.

The claimant filed a charge of sex discrimination with the EEOC.  During its investigation, the EEOC discovered that male employees at the Funeral Home were provided with work clothing and that female employees were not.  The EEOC filed suit against the Funeral Home on September 25, 2014, asserting two claims.  Id. at 12.  First, it asserted a wrongful termination claim, alleging the claimant was fired because the claimant is transgender, because of the claimant’s transition from male to female, and/or because the claimant did not conform to the Funeral Home’s sex or gender-based preferences, expectations, or stereotypes.  Second, the EEOC alleged that the Funeral Home engaged in an unlawful employment practice by providing work clothes to male but not female employees.  The parties filed cross-motions for summary judgment.

The Decision

The court granted summary judgment in favor of the Funeral Home as to the wrongful termination claim, and dismissed the EEOC’s claim regarding the work clothes being provided only to males.  Id. at 55-56.  First, the Funeral Home asserted that its enforcement of its sex-specific dress code cannot constitute impermissible sex stereotyping under Title VII.  The court rejected this argument, opining that “[t]his evolving area of the law – how to reconcile this previous line of authority regarding sex-specific dress/grooming codes with the more recent sex/gender-stereotyping theory of sex discrimination under Title VII – has not been addressed by the Sixth Circuit.”  Id. at 25-26.

On the heels of the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014), the Funeral Home also argued that the RFRA prohibited the EEOC from applying Title VII to force the Funeral Home to violate its sincerely held religious beliefs.  Id. at 26.  The RFRA prohibits the “‘Government [from] substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability’ unless the Government ‘demonstrates that application of the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.’”  Id. at 27 (quoting 42 U.S.C. §§ 2000bb–1(a), (b)).  The EEOC conceded that the Funeral Home’s religious beliefs were sincerely held.  Id.  Accordingly, citing Rost’s testimony that permitting employees to dress inconsistent with their biological sex would violate his religion and pressure him to relinquish his business, the court found that “the Funeral Home met its initial burden of showing that enforcement of Title VII, and the body of sex-stereotyping case law that has developed under it, would impose a substantial burden on the ability of the Funeral Home to conduct business in accordance with its sincerely-held religious beliefs.”  Id. at 32.

After finding that the Funeral Home demonstrated that enforcement of Title VII would be a substantial burden to its religious exercise, the EEOC then needed to meet its two-part test: (1) application of the burden is in furtherance of a compelling government interest; and (2) is the least restrictive means of furthering that compelling government interest.  The court assumed without deciding that the EEOC met its first burden, therefore proceeded to analyze the least restrictive means burden.  Id. at 36.  Quoting Hobby Lobby, the court noted that the “least-restrictive means standard is exceptionally demanding.”  134 S. Ct. at 2780.

Rejecting the EEOC’s conclusory argument that Title VII is narrowly tailored, the court noted that the EEOC did not provide “a focused ‘to the person’ analysis of how the burden on the Funeral Home’s religious exercise is the least restrictive means of clothing gender stereotypes at the Funeral Home under the facts and circumstances presented here.”  Id. at 38.  Further, noting the EEOC had been proceeding as if gender identity or transgender status was protected under Title VII, the court opined that the EEOC appeared to have taken the position that the only acceptable solution would be for the Funeral Home to allow the claimant to wear a skirt while working as a funeral director.  Id. at 39.

Finding that the EEOC failed to offer or even explore any solutions that could have worked under the facts of this case, the court rejected the EEOC’s approach and questioned “[i]f the EEOC truly has a compelling governmental interest in ensuring that [the claimant] is not subject to gender stereotypes in the workplace in terms of required clothing at the Funeral Home, couldn’t the EEOC propose a gender-neutral dress code (dark-colored suit, consisting of a matching business jacket and pants, but without a neck tie) as a reasonable accommodation that would be a less restrictive means of furthering that goal under the facts presented here?”  Id. at 38-41.  Accordingly, the court held that the EEOC did not meet its demanding burden, thus entitling the Funeral Home to RFRA exemption from Title VII.

As to the second claim, the EEOC alleged that the Funeral Home violated Title VII by providing a clothing allowance and/or work clothes to male employees but failing to provide such assistance to female employees.  Id. at 45.  Relying on EEOC v. Bailey, 563 F.2d 439 (6th Cir. 1977), the Funeral Home argued that the EEOC may include in a Title VII suit only claims that fall within an “investigation reasonably expected to grow out of the charge of discrimination.”  Id. at 45-46.  Applying Bailey, the court concluded that the EEOC investigation here uncovered possible unlawful discrimination (1) of a kind not raised by the claimant; and (2) not affecting the claimant.  Id. at 54-55.  Thus, the court instructed that the proper procedure would be the filing of a charge by a member of the EEOC and for a full EEOC investigation of that new claim of discrimination.  Accordingly, the court dismissed the EEOC’s clothing allowance claim without prejudice.  Id. at 56.

Implications For Employers

With an increasingly diverse workforce employing more transgender employees, employers would be wise to adopt an inclusive mentality in order allow their business to nurture a broader range of perspectives while also protecting against potential discrimination liability.  As this was a favorable ruling for the employer, businesses with sincerely held religious beliefs can use this as a template to seek protection under RFRA exemptions when defending against various discrimination claims, including those brought on behalf of transgender employees.  Until Title VII eventually incorporates transgender discrimination, the EEOC will continue to bring sex discrimination claims on behalf of transgender employees, but will use this opinion to remedy flaws in their strategy, for instance, in their approach to the least restrictive means test for gender-based dress code policies.

Instead of taking a reactionary approach and waiting for Title VII to evolve or for the EEOC to remedy their case theories, employers should be proactive in revising their policies to be gender-neutral when possible and contemplative of any employment requirement that might affect transgender employees.  As both employees and laws change, employers should follow suit now before having to pay to defend one later.

Our loyal blog readers can also find this post on our Workplace Class Action Blog here.

After A Decade Of Mixed Results, EEOC Rebrands Its Systemic Discrimination Litigation Program

Posted in Strategic / Policy Initiatives

th7Y6M6GN7By Gerald L. Maatman, Jr., Christina M. Janice and Alex W. Karasik

Seyfarth Synopsis: With the publication of a ten-year review of its systemic discrimination program on July 7, 2016, the EEOC seeks to blunt employer and judicial scrutiny of the EEOC’s litigation practices by emphasizing its internal staffing and technological improvements, the gains it has made over time in number of people served, programmatic relief achieved, and monetary relief obtained, and its vision for the future as a nationwide law enforcement agency uniquely positioned to overcome challenges faced by the private bar in avoiding binding employment arbitration agreements and securing class-wide relief under Title VII.

As we have blogged about here  here,and here, the EEOC’s systemic discrimination program repeatedly has come under judicial scrutiny for its failure to satisfy Title VII’s jurisdictional requirements that it investigate, provide notice of, and attempt to conciliate claims before launching broad, expensive litigation against employers on those claims, as well as specific failures to bring legally sufficient or factually sustainable litigation. A 2006 Systemic Task Force Report to the Chair of the Equal Employment Opportunity Commission raised specific concerns about EEOC’s inconsistent investigations, lack of training and expertise, lack of capacity for data analyses, and an absence of incentives to properly implement a coordinated, nationwide systemic discrimination program.

Now under the leadership of Commissioner Jenny Yang, a former plaintiff’s class action lawyer for the Washington D.C. firm of Cohen, Milstein, Sellers & Toll, PLLC, the EEOC published on July 7, 2016 a ten-year a review of its efforts to improve its systemic discrimination litigation program and objectives.  Reporting an overall increase in litigation and raw dollars recovered from employers through litigation or conciliation, the EEOC review focuses on its internal efforts to grow its investigatory and litigation capacities and to transform itself into a “national law enforcement agency.”  Restating its purpose that “[t]ackling systemic discrimination — where a discriminatory pattern or practice or policy has a broad impact on an industry, company or geographic area — is central to the mission of EEOC,” the EEOC report signals employers, legislators, and courts alike that its systemic program will proceed undaunted by judicial challenges to its practices, and will continue to be driven by metrics that “incentivize” investigations, conciliations and systemic work.

Employers should pay particular attention to the metrics driving EEOC performance and the trajectory of its systemic litigation program.

Key Findings

From the fall of 2013 through August 2014, EEOC Commissioner Yang and her staff conducted a review of the EEOC’s systemic program since the implementation of the 2006 Systemic Task Force Report.  As a result of its review, the EEOC claims to have “made considerable progress in achieving a truly nationwide, coordinated, and strategic systemic program.”  Some of the key findings published in the report include:

– Investments in hiring and training staff focused on systemic work have produced a 250 percent increase in systemic investigations in the past five years.

– Concerted efforts to reach voluntary resolutions of systemic investigations have resulted in the conciliation success rate tripling from 21% in fiscal year 2007 to 64 percent in fiscal year 2015.

– The systemic litigation program has achieved significant impact, with a 10-year success rate of 94 percent for systemic lawsuits.

– The EEOC tripled the amount of monetary relief recovered for victims in the past five fiscal years from 2011 through 2015, compared to the relief recovered in the first five years after the Systemic Task Force Report.

Although EEOC does not define “success,” the report makes clear that EEOC measures success in three ways: numbers of employees who benefit from a systemic investigation and/or lawsuit, targeted programmatic relief, and the realization of dollars.

In 2014, less than 1,000 individuals were said to have benefited from successful EEOC systemic lawsuits, a sharp decline from the nearly 8,000 individuals in 2013.  However, the 2015 number soared past these figures, with nearly 10,000 individuals benefiting from successful EEOC systemic lawsuits, the most since 2008.  The EEOC reports that “significantly more individuals directly have benefited from EEOC systemic lawsuits that through individual or small multi-victim suits brought by EEOC.”

While the percentage of systemic lawsuits in the active litigation docket has remained roughly the same from 2013-2015, ranging from 22% to 25%, the EEOC reports that the percentage of resolutions with targeted equitable, or “programmatic” relief has jumped from 64% to 81.2% over the last three years.

In terms of monetary relief from the combined resolutions of systemic investigations and systemic lawsuits, the EEOC trumpets that its results have jumped from 15 resolutions totaling $5.99 million in 2006 to 296 resolutions totaling $80.28 million in 2015, with over 16,000 individuals receiving monetary relief that year.

Targeting Enforcement

Statistically, the EEOC continued to focus heavily on disability and race claims. From 2011-2015, 32% of the successful conciliations of systemic investigations involved disability discrimination, with the next highest being race at 17%.  The EEOC’s challenges to employer hiring practices dominated with 23% of successful conciliations, followed by reasonable accommodation practices at 21%.  These areas can be expected to continue as target enforcement areas for the EEOC.

In terms of federal sector compliance, the EEOC reported issuing a series of federal sector decisions finding that discrimination based on gender identity and sexual orientation constitutes sex discrimination prohibited by Title VII.  The report signals the EEOC’s objective of increasing its activity in these developing areas of law.

The report also makes an unusually direct pitch for the EEOC to be the litigation partner of choice in overcoming mandatory employment arbitration agreements and the challenges to the plaintiffs’ bar of bringing statistical disparate impact cases under Title VII in the wake of the Supreme Court’s decision rendering class certification based on mere statistical evidence untenable in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)

What This Means For Employers

While it certainly is not difficult to imagine the EEOC or any entity positing its best numbers when publishing a self-review, employers absolutely need to pay attention  to these results. First, the data illustrates that the EEOC is putting more time and resources into systemic cases, and as a result, has increasingly become more aggressive in their pursuit of “big fish” employers. While the number of individuals said to have benefited from systemic lawsuits has teeter-tottered up and down the last few years, the report manifests an aggressive agenda to pursue these prime lawsuits.  Thus, employers should expect systemic investigations to continue on the uptick.

Given their success in the disability context, especially with regards to hiring and reasonable accommodation, the EEOC likely will not stray from what has worked.  Thus, employers facing challenges in this area need to focus on strategies of compliance and risk avoidance.  For businesses with nationwide operations, this will require heightened communication amongst various regions and sectors to ensure compliance with the law.

The EEOC trumpets that it has hired systemic investigators, social scientists and labor economists to support its systemic discrimination program in every district, and boldly states that “[t]hey have the expertise and training to effectively manage complex investigations, to analyze relevant data, and to develop statistical evidence.”  The EEOC reports that “[i]n most years since 2008, EEOC has provided systemic training to lead systemic investigators and systemic coordinators.”   While this reporting now leaves the EEOC with little to no excuse when facing judicial scrutiny for failing to comply with Title VII’s mandate of investigating, notifying employers of the claims against them and attempting to conciliate those claims as predicates to litigation, this reporting also signals that the EEOC has increased its trained resources to grow its program.

Further, the EEOC reports a significant investment in technologies that allow personnel to access and analyze employer, regional or industry workforce demographic data to inform charges and investigations on a nationwide basis.  Employers cannot presume that investigators will deal with charges individually without reviewing all EEOC charges and investigations against an employer, and industry data, for potential systemic opportunities.

Finally, the EEOC reports a slow but steady increase in the use of Commissioner’s Charges as a vehicle for enforcement.  Employers may expect the EEOC to continue to increase its reliance on this tool in their toolkit.

The EEOC’s report states that in the future it will focus on three key, although vaguely defined, objectives in order to expand the agency’s impact and better serve the public, including: (1) executing national strategies to address persistent and emerging systemic issues; (2) advancing solutions that promote lasting opportunity in the workplace; and (3) strengthening the agency’s technology and infrastructure. With increases in systemic program resources and incentives to generate big outcomes in terms of individuals benefited, programmatic relief obtained and dollars generated, employers can expect the EEOC to cast a wide range of nets across the county in hopes that some of their catches will result in the next big systemic lawsuit.

Our loyal blog readers can also find this post on our Workplace Class Action Blog here

 

Don’t Mess With Texas: EEOC’s Criminal Background Check Guidance Subject To Challenge

Posted in EEOC Litigation

texasBy Gerald L. Maatman, Jr., Pamela Q. Devata, Robert T. Szyba, and Ephraim J. Pierre

On June 27, 2016, the U.S. Court of Appeals for the Fifth Circuit handed a victory to the State of Texas in Texas v. EEOC , No. 14-10949 (5th Cir. June 27, 2016), by remanding back to the district court the case it dismissed in 2014.  Notably, Fifth Circuit held that the State of Texas has standing to challenge the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII” (“Guidance”), and that the Guidance was a final agency rule subject to court challenge.

As a quick recap, the EEOC issued the Guidance in April 2012, urging businesses to avoid blanket rules against hiring individuals with criminal convictions, reasoning that such a hiring check could violate Title VII if they create a disparate impact on particular races or national origins, and calling for a multi-factor individualized assessment of an applicant’s criminal history.

In an unprecedented and novel action, the State of Texas filed suit against the Commission in November, 2013 seeking to enjoin the enforcement of the Guidance (which Texas nicknamed the “Felon Hiring Rule”) because it conflicted with Texas law that prohibited hiring felons for certain jobs.  On August 20, 2014, Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas dismissed the case under Federal Rule 12(b)(1) (which we reported here), finding that Texas lacked standing to maintain its suit because no enforcement action had been taken against it pursuant to the Guidance.  Texas, however, was not about to be messed with, and promptly appealed to the Fifth Circuit in November, 2014 (reported here).

Fifth Circuit Reverses And Remands

The Fifth Circuit’s decision is a stunner.

It found that Texas, in fact, has standing to challenge the Guidance because it presented “(1) an actual or imminent injury that is concrete and particularized, (2) fairly traceable to the defendant’s conduct, and redressable by a judgment in [Texas’s] favor.”  Id. at 5.  The Fifth Circuit pointed out that Texas, in its capacity as an employer, was an “object” of the Guidance because the Guidance was directed at all employers, including state agencies.  As an object of the Guidance, Texas did not need an enforcement action to establish a concrete injury.  Instead, it could establish two concrete injuries for purposes of Article III.  First, Texas pointed to the increased regulatory burden on it as an employer because of the hiring policies that the Guidance required.  Id. at 7-8.  Thus, the increased regulatory burden itself constituted a concrete injury.  Second, the Guidance forced Texas to “undergo an analysis, agency by agency, regarding whether the certainty of EEOC investigations stemming from the [] Guidance’s standards overrides the State’s interest in not hiring felons for certain jobs.”  Thus, “being pressured to change state law” constituted a concrete injury.  Id. at 8-9.  Therefore, regardless that there was no enforcement action, the Fifth Circuit concluded that Texas was deemed to have standing to challenge the Guidance.

The Fifth Circuit next determined that the Guidance was “final agency action” that is subject to challenge, finding that the Guidance was the “consummation of the agency’s decision-making process” “from which legal consequences would flow.”  Id.The challenge before the Fifth Circuit focused on whether the Guidance had any “legal consequences.”  The Fifth Circuit pointed out an important distinction for its analysis: Texas challenged the Guidance itself, not the prospect of investigation.  Rejecting the EEOC’s argument that it has no ability to enforce the Guidance and instead can only do so by referring a case to the U.S. Attorney General for prosecution (as it would have to with respect to a public entity), the Fifth Circuit found that the “legal consequence” of the Guidance is that the EEOC has committed itself to applying the Guidance to “virtually all public and private employers.”  Id. The EEOC’s staff is therefore bound by it to follow a certain course of action, and the only way to avoid a potential prosecution is by abiding by one of the two “safe harbor” provisions contained in the Guidance.  If Texas (or any other employer) does not fall into one of these safe harbor provisions — that is, it does not do what the EEOC says — it risks an enforcement action and potential liability, and thus the Guidance has a “legal consequence,” making it an final agency action that can be challenged in court.  Id.

The Dissent

Circuit Judge Patrick E. Higginbotham disagreed with the majority of the Fifth Circuit panel.  First, he opined that the Guidance was a mere expression of the EEOC’s view of what the law requires, which the EEOC has no authority to enforce without the Attorney General taking the case.  Judge Higginbotham also opined that the issue identified by Texas was not ripe for adjudication.  Because Texas presented no factual dispute, in the judge’s view the dispute was theoretical since any potential adverse effect identified by Texas was too remote and abstract.  In additional to disagreeing with the majority’s constitutional analysis, Judge Higginbotham opined that the Guidance also lacked a legal consequence because, again, it was an expression of the EEOC’s view of the law, and thus had no specific consequence for any specific party.

Implications For Employers

This case continues to be flagged as “one to watch,” especially now that the case is remanded to the district court, where the State of Texas is anticipated to challenge the “Felon Hiring Rule” created by the EEOC’s Guidance.  Likewise, the EEOC is anticipated to continue its staunch defense, positioning the parties for future clashes.  The EEOC’s positions, which thus far have included admissions that the Guidance is not “legally binding” and does not carry any “legal consequences,” stand to provide employers with additional defenses when faced with the EEOC’s own investigations or prosecutions relating to criminal background checks.  As this case continues in the district court, we will be continue our coverage of this important case.  Stay tuned!

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

A Call For Harmony Between The EEOC And NLRB’s Rules Concerning Prevention And Investigation Of Workplace Harassment

Posted in Regulatory / Guidance Issuance

th7Y6M6GN7By Christopher J. DeGroff, Matthew Gagnon, Andrew R. Cockroft, and Gerald L. Maatman, Jr.,

Seyfarth Synopsis: The EEOC’s Select Task Force on the Study of Harassment in the Workplace offers insight into how employers’ harassment prevention policies can change for the better and, in furtherance of this desire for change, calls for interagency clarification between the EEOC and the NLRB on how employers may investigate harassment while requesting confidentiality, how they may promote general civility through workplace harassment policies, and how employers may prevent and respond to harassment through social media. 

On June 20, 2016, the Equal Employment Opportunity Commission’s Select Task Force on the Study of Harassment in the Workplace released its final report. The report can be found here.  The report found that workplace harassment remains a persistent problem and that harassment often goes unreported. The Task Force urged that harassment prevention training must change as much of the training done over the last 30 years, which focused simply on legal compliance, has not been effective as a prevention tool. It should be noted that in reaching this finding, the Task Force admits that there are deficiencies in almost all of the empirical studies done on the effectiveness of training standing alone. However, the Task Force concluded that the existing reliable studies, along with the practical and anecdotal evidence provided by employers and trainers agree that training cannot stand alone, but must be a part of a holistic effort to prevent harassment.

The Task Force recommended that new and different training approaches should be explored to empower “bystanders” to intervene when they witness harassing behavior and training ought to be geared towards promoting respect and civility in the workplace generally, without necessarily focusing on protected characteristics. Additionally, the report suggests that employers may need to reassess their harassment reporting systems and find ways to ensure that employees believe there will be a genuine effort to resolve harassment when it is reported. The report offers recommendations and helpful tools to aid in designing anti-harassment policies, training curricula, implementing complaint, reporting and investigation procedures, and assessing and responding to workplace “risk factors” for harassment.

Additionally, employers will be happy to know that the report emphasized that the EEOC and the National Labor Relations Board should work together to harmonize the relationship between federal EEO laws and the NLRA. Employers have often struggled to comply with both federal EEO laws and the NLRA in preventing and investigating workplace harassment. This is especially true when employers craft their harassment prevention policies with a focus on workplace civility. See Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012) (finding that “Courtesy” rules in the employee handbook violated the NLRA because an employee may reasonably believe that such rules prohibited statements of protest or criticism of the employer); First Transit, Inc., 360 NLRB No. 72 (2014) (same).

The same is true when employers ask for confidentiality in the course of investigating harassment, something promoted in the report but in conflict with several rulings of the NLRB finding that requests for confidentiality may burden protected concerted activity under the NLRA. Likewise, because of the ever increasing use of social media and its effect on the workplace, employers are often in the difficult position of trying to stop online harassment while simultaneously complying with decisions of the Board finding that employers’ social media policies restrict Section 7 rights if they sweep too broadly.

The report recognizes the tension such rulings may create and their potential to undermine genuine harassment prevention. As such, the report issues the following recommendations in the hopes of getting employers out of this difficult bind.

  • The EEOC and the Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the National Labor Relations Act and federal EEO statutes with regard to the permissible confidentiality of the workplace investigations, and the permissible scope of policies regulating workplace social media usage.
  • EEOC and the National Labor Relations Board should confer, consult, and attempt to jointly clarify and harmonize the interplay of the NLRA and federal EEO statutes with regard to permissible content of workplace “civility codes.”

We believe that this is a positive development from the EEOC, and we know that loyal blog readers will appreciate any efforts at interagency cooperation. We hope that these steps will bring clarity to how employers may effectively address workplace harassment while complying with all aspects of federal labor and employment law.

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

Taking The EEOC At Its Word: Court Relies On Agency’s Own Declaration In Granting Summary Judgment

Posted in Motions for Summary Judgment

maryland state flagBy Gerald L. Maatman Jr. and Alex W. Karasik

Seyfarth Synopsis: Court granted EEOC’s partial motion for summary judgment on issue of pre-suit conciliation, finding that a declaration submitted by an EEOC official was sufficient evidence to show that the EEOC satisfied this obligation under Title VII.

In EEOC v. Dimensions Healthcare System, No. 15-2342 (D. Md. May 27, 2016), the Commission alleged that the defendant employer, Dimensions Healthcare System (“Dimensions”), unlawfully discriminated against one of its former employees on the basis of sex after it allegedly passed her over for a promotion due to her maternity leave. The EEOC filed two motions relative to the employer’s affirmative defense based on the Commission’s alleged failure to conciliate, including: (1) for partial summary judgment on the issue of pre-suit conciliation and (2) a motion to strike portions of Dimensions’ response in opposition to the EEOC’s summary judgment motion. On May 27, 2016, Judge Hazel of the U.S. District Court for the District of Maryland granted both of the EEOC’s motions.

The ruling, which heavily relied on the U.S. Supreme Court’s Mach Mining v. EEOC decision from 2015, held that a declaration submitted by an EEOC official was sufficient evidence that the government satisfied its Title VII pre-suit conciliation obligations. For employers seeking to challenge whether the EEOC met its Title VII pre-suit obligations, this ruling is instructive regarding the very low burden of proof the government needs to block the defense.

Case Background

The complainant was employed as a “Team Lead” by Dimensions, where she oversaw and managed several team members and performed various human resources tasks. Id. at 2. The complainant took maternity leave between January and April of 2014. On or around October 2014, she learned that Dimensions had promoted a less-experienced male employee, who was her subordinate, to a manager position. After learning of the promotion, the complainant met with a Dimensions executive. The executive told the complainant that while she was considered for the position, the male employee was selected instead because the complainant had been “on maternity leave for a while.” Id. Shortly thereafter, the complainant resigned and filed a charge of discrimination with the EEOC.

On May 11, the EEOC issued a reasonable cause determination to Dimensions. Id. at 2-3. According to the EEOC, the parties “engaged in communications” between May 11, 2015 and July 7, 2015 to provide Dimensions an opportunity to “remedy the discrimination practices described.” Id. at 3. Thereafter declaring the “communications” unsuccessful, the EEOC filed a lawsuit against Dimensions on August 10, 2015. In its answer to the complaint, Dimensions asserted the affirmative defense that the EEOC’s claims were barred to the extent it failed to properly conciliate, but later withdrew this defense.

While discovery was ongoing, the EEOC moved for partial summary judgement, arguing that Dimensions refused to stipulate that the EEOC fulfilled its pre-suit obligations. Id. at 4. Dimensions argued that there was a genuine dispute of material fact as to whether the EEOC failed to conciliate prior to filing its lawsuit. The EEOC moved to strike the specific allegations contained within Dimensions’ argument regarding the conciliation process. The Court granted the EEOC’s motion for partial summary judgment and its motion to strike.

The Decision

The Court began its analysis by discussing the U.S. Supreme Court’s decision in Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015), which examined whether and to what extent a federal district court can review the EEOC’s conciliation efforts. Id. at 5. Quoting Mach Mining, the Court noted that “[a] sworn affidavit from the EEOC stating that it has performed the [pre-suit] obligations . . . but that its efforts have failed will usually suffice.” Id. at 7. Further, the Court noted that “this ‘relatively barebones’ review is all that a court is permitted to inquire into when considering a failure-to-conciliate defense.” Id. Finally, discussing Mach Mining’s holding that the district court in that case erred by not striking from the record descriptions of the conciliation process, the Court opined that “[c]onfidentiality in the conciliation process is necessary.” Id.

Applied here, the Court noted that in support of its motion for partial summary judgment, the EEOC submitted the declaration of the Director of the Baltimore Field Office of the EEOC. Id. at 8. The declaration stated that after the EEOC determined there was reasonable cause to believe that Dimensions failed to promote the complainant because of her sex, it sent a letter of determination to Dimensions, and invited the employer to informally resolve the claim. Id. Further, the declaration explained that the EEOC “engaged in communications” with Dimensions and subsequently determined that further conciliation efforts would be unproductive. Id. at 8-9.

Granting the EEOC’s motion for partial summary judgment, the Court found that “[t]his evidence is sufficient for the EEOC to satisfy its burden to establish that it ‘endeavor[ed] to eliminate [the] alleged unlawful employment practice by informal methods’ prior to filing suit.” Id. at 9. Further, the “declaration establishes that the EEOC ‘tr[ied] to engage the employer in some form of discussion’ prior to filing suit.” Id. In opposition, Dimensions argued that the EEOC did not try in earnest to reach a resolution prior to litigating the case. Rejecting this argument, the Court held that “[t]hose details . . . are not only irrelevant to the scope of this Court’s review under Mach Mining, but also violate the confidentiality provision of Title VII.” Id. Accordingly, the Court granted the EEOC’s motion to strike the portions of Dimensions’ briefing regarding what was “said or done” during the conciliation process. Id.

Implications For Employers

This ruling is a very-pro Commission interpretation of the Mach Mining decision. It holds that merely mailing a demand letter and stating a settlement demand is enough. The practical realities of negotiation and give-and-take in the conciliation process are ignored. In this respect, it parts company with previous rulings on the Mach Mining issue that view the give-and-take of conciliation in a practical manner [see here].

As a result, this ruling gives employers an idea of how the EEOC will respond to challenges regarding whether it satisfied its Title VII pre-suit obligations: by submitting a declaration from one of its employees as to the mailing the determination, stating a settlement demand, and unilaterally deciding that further conciliation discussions are fruitless.

More importantly, this case illustrates how courts will likely find the EEOC’s declarations to be “sufficient evidence.” Id. Given that the EEOC only needs to submit a declaration to prove it satisfied its Title VII pre-suit obligations, employers can likely expect such conciliations to be far from fruitful if courts will now merely take the government at its word. Accordingly, employers engaged in future EEOC litigation likely have one less defense in their arsenal as a result of the Mach Mining decision.

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

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.