By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Seyfarth Synopsis:  In an EEOC-initiated lawsuit – EEOC v. LogistiCare Solutions LLC, No. 20-CV-852, 2020 U.S. Dist. LEXIS 215486 (D. Ariz. Nov. 18, 2020) – involving allegations dating back to 2013, a federal district court in Arizona denied an employer’s motion to dismiss and motion for summary judgment on the ground of laches, holding there was insufficient information to determine whether the elements of laches were met, and a material dispute of fact existed over whether the employer was prejudiced by the delay.

Although the employer’s motions here were unsuccessful, employers who face similar lawsuits following major time lapses in EEOC investigations can use the Court’s analysis to better prepare laches arguments.

Case Background

In EEOC v. LogistiCare Solutions LLC, two female employees attended a two-week training program for a call center in Phoenix, Arizona.  Both were released from the training class on September 16, 2013.  One of the employees filed a charge of pregnancy discrimination with the EEOC on October 31, 2013.   After completing its investigation, on May 1, 2020, the EEOC filed a lawsuit against multiple Defendants for terminating the employees based on sex (pregnancy) in violation of 42 U.S.C. § 2000e-2(a).  In its complaint, the EEOC alleged it was bringing suit on behalf of the charging party and, “other aggrieved individuals.” Id. at *2.  Defendant LogisticCare moved to dismiss the EEOC’s complaint, or in the alternative, for summary judgment on the grounds of laches.

The Court’s Decision

The Court denied LogistiCare’s motion to dismiss and denied its motion for summary judgment.  Citing Ninth Circuit precedent, the Court explained that a claim is barred by laches where: (i) the plaintiff unreasonably delays in bringing suit; and (ii) the defendant is prejudiced by the delay.  Id. (citations omitted).  It added that determining whether delay was unreasonable and whether prejudice ensued necessarily demanded a close evaluation of all the particular facts.  Accordingly, the Court opined that claims are not easily disposed of at the motion to dismiss stage based on a defense of laches.  Id.  Applying the this Ninth Circuit precedent, the Court held that it was not possible to determine whether the elements of laches were met from the complaint.  Rejecting LogistiCare’s argument, the Court held that a lengthy span of time alone was not enough to prove unreasonable delay.  Id. at *3 (citation omitted).

Further, the Court addressed whether LogistiCare showed it was prejudiced under the laches standard.  Id. at *4.  The Court opined that even if the EEOC’s delay in filing suit was unreasonable, genuine issues of material fact existed regarding whether LogistiCare was prejudiced by any such delay.   LogistiCare identified six witnesses for whom there were issues, such as locating the witnesses’ whereabouts and memory loss.  Id. at *5-6.  The Court indicated that LogistiCare must prove that the witnesses were unavailable, and that their unavailability was a result of the EEOC’s delay.  In its motion, LogistiCare did not explain why there was “no reasonable way” to contact its former employees.  The Court also pointed out how the EEOC was able to locate and interview one of the six witnesses.  Id. at *6.  Accordingly, the Court held that it was “entirely speculative at this point whether the former employees are outside this Court’s jurisdiction.”  Id.

The Court further held that LogistiCare did not show it was prejudiced based on loss of memory because LogistiCare could not simply rely on general statements that memories have lapsed.  Id. at *6.  Specifically, the Court observed that other than the conclusory statement that memories fade over time, LogistiCare did not provide evidence that the potential witnesses had forgotten the alleged incident.  In response to a declaration submitted by LogistiCare’s corporate representative indicating that the training supervisor for the Phoenix call center at the time of the alleged incident no longer had a meaningful independent recollection of the events, the Court held that the declaration was insufficient, since it was not submitted by the training supervisor himself.  Id. at *6-7.

Finally, the Court held that although increased back pay was one factor that demonstrated prejudice, potential back pay liability was not enough to show prejudice on its own since the Court had the power to take the EEOC’s delay into account when crafting a remedy.  Id. at *7.  In support of this position, the Court cited several decisions holding that back pay can be limited, and further noted that back pay is an equitable remedy that can be subjected to mitigation.  Id. (citations omitted).   Accordingly, the Court denied LogistiCare’s motion to dismiss since the complaint did not provide sufficient information to determine whether the elements of laches were met, and denied its motion for summary judgment since there was a genuine dispute of material fact over whether LogistiCare was prejudiced by the EEOC’s delay in filing this suit.

Implications For Employers

Given the EEOC’s perpetual backlog of charges, no matter how diligently the Commission pursues its investigations, it is not uncommon that some claims may slip through the cracks and endure substantial delays in the investigative process.  Here, there was nearly a seven-year time gap between the filing of the charge and the EEOC’s filing of the lawsuit.  Although this substantial time lapse manifests challenges for both parties and the Court relative to adjudicating a lawsuit involving a stale set of facts, this ruling illustrates that time alone does not automatically entitle employers to a quick win at the pleading stage.

Employers who are subjected to EEOC-initiated litigation stemming from alleged incidents that occurred several years ago should not lose all hope, however, because of this ruling.  The Court’s opinion provided insight into potential avenues to enhance employers’ arguments, for instance, submitting declarations directly from a witness who suffered memory loss as opposed to having a corporate representative make that statement on the witness’s behalf.  Accordingly, employers should be prepared to give specific and direct examples of how the defense of laches will impact the litigation, in order to best increase their chances of beating the lawsuit at the pleading stage.

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