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.