By Christopher DeGroff, Reema Kapur, and Gerald L. Maatman, Jr.

We are pleased to offer a year-end bonus for all of our loyal readers of our blog – a pre-publication preview of our annual study of EEOC litigation is here: the launch of our book entitled EEOC-Initiated Litigation: Case Law Developments In 2013 And Trends To Watch For In 2014. Distribution of the report is set for early January 2014.

This publication focuses exclusively on EEOC-related litigation; and it covers more decisions than ever before.  The attached Executive Summary excerpted from our book explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2013 and in the near term. As we did last year, this publication will be offered for download as an eBook. To order a copy, please click here

Further, as in the past, this year we selected a short list of what we consider the five most intriguing EEOC-related decisions handed down in 2013. See previous blog postings here and here for past year’s rulings of note. 

So what are the 5 most intriguing decisions? Here are our picks:

1.    EEOC v. Mach Mining, LLC, No. 13-2456, 2013 WL 6698515 (7th Cir. Dec. 20, 2013).   

In recent years, the EEOC has become increasingly aggressive in its enforcement efforts, even as its resources have dwindled. With mounting pressure to “do more with less,” the EEOC is re-imagining itself.  Some argue (convincingly) that the agency appears to be moving away from its mandate to combat discrimination by encouraging employers’ voluntary compliance and, instead, is focused on a “scorched earth” litigation agenda. Especially troubling are instances where the EEOC has rushed to file high-profile lawsuits that splash allegations of systemic discrimination across headlines, only to have its claims dismissed altogether or whittled down to a single claimant.  In some instances, courts have stepped in to right the balance and sanctioned the EEOC for failing to do its homework.  (See e.g., EEOC v. The Original Honeybaked Ham, EEOC v. CRST Van Expedited, Inc., EEOC v. Bloomberg LP, and EEOC v. Peoplemark, Inc., where courts sanctioned the EEOC for conducting haphazard and questionable investigations and conciliation efforts in its rush to court.)

Against this backdrop, the Seventh Circuit decision in EEOC v. Mach Mining, LLC, is stunning. On December 20, 2013, the Seventh Circuit broke from a majority of the U.S. Courts of Appeal when it held that the EEOC’s pre-suit conciliation efforts are not subject to judicial review, at all. This ruling has stark implications for employers in the Seventh Circuit – it arguably extinguishes the traditional failure to conciliate defense to an EEOC lawsuit.

The Seventh Circuit’s reasoning is puzzling. It brushes aside the agency’s mandate to encourage voluntary compliance with employment laws, noting: “[t]he statutory directive to the EEOC to negotiate first and sue later does not implicitly create a defense for employers who have allegedly violated Title VII.” It defers entirely to the agency’s ability to police itself and rejects the notion that “EEOC field offices are so eager to win publicity or to curry favor with Washington by filing more lawsuits that they will needlessly rush to court.” The 27-page opinion does not delve into the facts that recently have lead numerous courts to chastise the agency for precisely the type of conduct the Seventh Circuit characterizes as implausible. 

The Mach Mining decision, in effect, condones the EEOC’s questionable tactics. Because of the legal importance of the issues involved and the Circuit split on this issue, we expect that it is only a matter of time before the U.S. Supreme Court accepts a certiorari petition and weighs in on the issue. In the interim, all employers, and not just those in the Seventh Circuit, should expect the EEOC to enter 2014 vigorously challenging employers’ ability to challenge the sufficiency of conciliation efforts.

2.    EEOC v. Abercrombie & Fitch Stores, Inc., 731 F.3d 1106 (10th Cir. 2013). 

Abercrombie’s “Look Policy,” which requires its employees to dress in a manner that “exemplifies a classic East Coast collegiate style of clothing” has been intensely scrutinized, both in the courtroom and in the public arena.  Indeed, the Look Policy has been challenged in several lawsuits, one of which recently culminated in a Tenth Circuit ruling clarifying an employer’s duty to accommodate religious practices where an employer has notice that the practice conflicts with a job requirement or work policy.  We followed the case closely as it wound its way through the courts, taking sometimes unpredictable turns. The district court granted summary judgment for the EEOC, but the Tenth Circuit did an about face, not only reversing the district court’s judgment, but also granting summary judgment to Abercrombie.  On December 4, 2013, the EEOC filed a Petition for Rehearing En Banc seeking review of the Tenth Circuit decision.

This is a significant, employer-friendly decision regarding the relative burdens in religious discrimination claims alleging a failure to accommodate. The Tenth Circuit placed the burden of notice squarely on the applicant or employee who is uniquely qualified to know whether a particular practice is religiously motivated, and whether a workplace accommodation may be necessary. It  noted that the EEOC itself warns employers against asking about an applicant’s or employee’s religious practices, which are intensely personal and individual-driven, or making assumptions about religious practices based on stereotypes. Further, it acknowledged a line of cases holding that an employer’s actual, particularized knowledge of a conflict between a religious practice and workplace policy may be enough to trigger an employer’s duty to engage in the interactive process, but ruled that no such facts were present in this case. 

The EEOC is seeking reconsideration of the Tenth Circuit’s ruling, arguing that something less than an employer’s particularized, actual knowledge should suffice. If this argument finds traction in the courts, it would put employers in an impossible position: an employer would be penalized for not acting on stereotypical assumptions regarding an applicant’s or employee’s religious beliefs, an outcome that is directly opposed to Title VII’s goals. As the final chapter in this saga has yet to be written; employers should watch this case closely in FY 2014.

3.    EEOC v. Kaplan Higher Learning Educ. Corp., No. 10-CV-2882, 2013 WL 322116 (Jan. 28, 2013).

In December 2010, the EEOC filed a lawsuit alleging that Kaplan’s use of credit checks in connection with employment decisions had an unlawful disparate impact on African-American individuals in violation of Title VII.  The lawsuit was one of the Commission’s highest profile cases concerning a national priority under the current Strategic Enforcement Plan — “target[ing] class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities.” 

On January 28, 2013, the court granted summary judgment to the defense and dismissed the EEOC’s suit. The EEOC’s claim faltered at the outset — its statistical evidence was unreliable. Specifically, the Court excluded the EEOC’s  expert reports and testimony of its expert as inadmissible because the EEOC failed to show that the expert’s methodology was reliable. The court tossed the entire case because without expert testimony, EEOC could not prove its disparate impact theory. 

Not only did Kaplan win the war (complete dismissal of the lawsuit), in the course of the litigation, it also won important battles including persuading the Court to compel the Commission to disclose its own consideration of credit history in connection with employment decisions. In doing so, Kaplan successfully turned the tables on the agency’s “do as I say, not as I do” litigation strategies. 

The court did not reach the merits of the EEOC’s underlying disparate impact theory; rather, it held that the methodology the EEOC chose to prove its claims was flawed. Indeed, the EEOC is appealing the ruling and in the summer of 2013 filed a new round of lawsuits attacking employers’ use of background screening tools based on the same disparate impact theories. Employers should expect that the EEOC to continue to aggressively litigate this theory in 2014.

4.    EEOC v. Boh Brothers Constr. Co., 731 F.3d 444 (5th Cir. 2013).  

The EEOC scored a significant win in the Boh Brothers case, when the Firth Circuit held that harassment based on gender-stereotypes can be actionable “because of sex” under Title VII. This case exemplifies the edge-of-the-envelope theories that the EEOC championed in 2013, in its drive to stretch the boundaries of existing law or make new law. 

In Boh Brothers, an ironworker was allegedly subjected to “almost-daily verbal and physical harassment.” The EEOC presented evidence that the supervisor thought the victim was not a “manly-enough man.” The Fifth Circuit held that the EEOC could prove that the same-sex harassment was “because of sex” by presenting evidence that the harassment was based on a perceived lack of conformity with gender stereotypes.

Almost immediately after the decision on appeal, the EEOC issued a press release touting the Fifth Circuit’s ruling. It remains to be seen whether other courts will adopt the Fifth Circuit’s reasoning. While Boh Brothers is arguably an extreme case of gender-stereotype discrimination, a colorful dissenting opinion (a must-read) highlighted the difficulty of identifying actionable conduct at predominately male-populated worksites, like construction sites and oil/gas fields. In the interim, we expect that the EEOC will continue to push the boundaries of Title VII to encompass cutting edge harassment theories.

5.    EEOC v. Hill Country Farms, Inc. d/b/a Henry’s Turkey’s Servs., No. 11-CV-41 (S.D. Iowa). 

In a record breaking and widely publicized jury trial award, the EEOC recovered $240 million in an ADA case on behalf of a class of mentally disabled men who suffered mistreatment and discrimination on the basis of their disability. To put the $240 million award in context – between 1997 and 2012, the EEOC secured a total of $89 million in damages for all ADA claims. The EEOC’s complaint alleged that the 32 claimants were verbally and physically abused in a variety of ways over three decades.  Before the case proceeded the trial, the EEOC won summary judgment on a claim that the claimants were paid lower wages than their non-disabled counterparts.  On May 1, 2013, after a six-day trial on the remaining claims, the jury awarded $7.5 million in compensatory and punitive damages for each of the 32 claimants, totaling $240 million. The court later reduced the award per claimant to $50,000 ($1.6 million total for all claimants) pursuant to the ADA’s statutory cap on damages. On August 12, 2013, Hill Country Farms filed an  appeal raising two issues: one, that another entity, West Liberty Foods, Inc., should have been joined in the action as a necessary party, and two, that the court erred in admitting evidence regarding activities in the Bunkhouse. The outcome of the appeal is still pending. 

The egregious facts of this case drove the record-breaking verdict.  Nevertheless, the EEOC’s recent and growing focus on ADA claims should be taken as fair warning to employers that the EEOC will pursue any and all perceived violations.  

We hope you find this retrospective on 2013 and EEOC-Initiated Litigation helpful to corporate counsel. It was quite a year, and we expect 2014 will be no different.

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