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

Seyfarth Synopsis: In an EEOC-initiated systemic lawsuit alleging that a senior living and nursing facility operator violated the Americans With Disabilities Act (“ADA”) by failing to offer employees light duty as a reasonable accommodation and ignoring its obligation to engage in an interactive process, a federal district court in California recently granted in part the employer’s motion to dismiss the claims of eight specifically identified claimants, holding that the EEOC failed to sufficiently allege that these individuals had a disability or could perform essential job functions.

For businesses facing EEOC-initiated litigation relative to disability discrimination, this ruling provides a blueprint for attacking such claims at the pleading stage.

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Case Background

In EEOC v. Prestige Care, Inc., Case No. 1:17-CV-1299, 2018 LEXIS 119305 (E.D. Cal. July 17, 2018), the EEOC brought a systemic lawsuit on behalf of thirteen identified claimants for violations of the ADA. Prestige manages nursing care facilities and senior assisted living facilities in California, Oregon, Washington, Alaska, Idaho, Montana, Nevada, and Arizona. Id. at *3. The EEOC alleged that Prestige implemented and followed policies that violated the ADA, including: (1) a “100% healed/100% fit for duty” return to work policy; (2) not offering light duty as a reasonable accommodation; and (3) ignoring its obligation to engage in an interactive process. Id. The EEOC argued that these policies did not permit reasonable accommodations for qualified individuals.

In its motion to dismiss, Prestige argued that the EEOC’s complaint was deficient as to ten of the thirteen claimants identified by the EEOC since it failed to allege they had impairments that affected a major life activity, or failed to identify essential job functions. Id. Without such allegations, Prestige argued there were no plausible ADA claims with respect to the ten claimants. In response, the EEOC argued that dismissal was inappropriate because the allegations stated plausible claims, including on behalf of unnamed individuals. Further, the EEOC argued that it would be premature to dismiss without the benefit of discovery as to the specific individuals.

The Court’s Decision

The Court granted Prestige’s motion to dismiss the EEOC’s claims as to the eight claimants while denying Prestige’s motion as to two claimants. The Court first addressed the EEOC’s arguments (1) that no challenge with respect to claimants was appropriate because it was not a proxy for any individual claimant or charging party; (2) Rule 23 does not apply to the Commission’s lawsuits or when a § 706 claim is pursued; and (3) the EEOC is not required to identify each member of the class to recover. Id. at *5. Noting that “none of these positions adequately address the issue at hand,” the Court explained that Prestige did not argue that Rule 23 applied in this case, nor did it attempt to impose any of Rule 23’s requirements on the EEOC. Further, Prestige did not argue that the EEOC must identify each person for whom recovery is sought. Rather, Prestige was simply raising the question of how to review the allegations concerning the persons that the EEOC chose to identify. As such, the Court held that when the EEOC pursues a systemic claim under § 706 and chooses to identify additional persons who have suffered some form of disability discrimination, the allegations must plausibly show that those “additional individuals” are protected by the ADA. Id. at *6.

The Court then addressed the sufficiency of the allegations as to each of the ten identified claimants that were the subjects of the motion to dismiss. In moving to dismiss the claims of eight of the ten claimants, Prestige primarily challenged the allegations by arguing (1) the EEOC did not identify or allege that a major life activity was affected; (2) the essential functions of the job were not identified; and (3) there were no indications that the aggrieved individual could have performed the essential functions of the job with or without accommodation. Id. at *8-11. For several claimants, the Court held that while the EEOC would identify a physical impairment in its complaint, for instance, plantar fasciitis, it failed to adequately identify a major life activity that was substantially affected by the condition (such as walking or standing, for the claimant with plantar fasciitis). Id. at *17. Regarding the EEOC’s failure to plead the essential job functions, by way of example, the Court noted that for a laundry worker claimant with PTSD and anxiety, the EEOC failed to identify any essential functions of the job, and therefore could not show she was qualified. Id. at *22. Accordingly, the Court granted the motion to dismiss eight of ten identified claimants.

In denying the motion to dismiss as to two of the ten claimants, the Court explained that the allegations were sufficient to plausibly show that the claimants were “qualified individual[s] with a disability.” Id. at *18-19. For instance, the Court held that for a claimant who disclosed a nerve condition that was adversely affected by standing for longer than 15 minutes and lifting heavy objects, the EEOC alleged that Prestige still hired him as a cook, and therefore believed that he could perform the essential functions of that position. As such, the Court held that dismissal of this claimant as a class member would be inappropriate. Id. at *19. Accordingly, the Court denied the motion to dismiss two of the ten claimants.

Implications For Employers

This ruling provides an excellent framework for employers in regards to attacking disability discrimination claims where the EEOC identifies multiple claimants. Employers can rely on the Court’s analyses relative to (1) how the EEOC often failed to identify a major life activity that was substantially affected by the physical impairment it identified; and (2) how the EEOC frequently failed to provide any information whatsoever about essential job functions in its pleading.

But despite dismissing eight of the ten claimants, it is noteworthy that the dismissals were without prejudice. Id. at *22-23. The Court held that the EEOC may file an amended complaint that addresses and corrects the deficiencies with respect to these eight alleged claimants. As such, even though the employer emerged largely victorious in this battle, the Court nonetheless afforded the EEOC a second bite of the apple to remedy its largely deficient pleading.

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

 

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

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

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

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

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

Case Background

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

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

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

The Ruling

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

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

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

Implications For Employers

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

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

By Gerald L. Maatman, Jr.

On September 22, 2014, in EEOC v. Vicksburg Healthcare LLC, et al., Case No. 3:13-CV-895 (S.D. Miss. Sept. 22, 2014), Judge Keith Starrett the U.S. District Court for the Southern District of Mississippi granted defendant’s motion to dismiss an EEOC lawsuit for lack of personal jurisdiction and insufficient service of process. The EEOC had filed a disability discrimination claim on behalf of a nurse who worked at hospital owned by a subsidiary of defendant. The Court held that the EEOC, which sued a subsidiary hospital in Mississippi and its Tennessee-based parent corporation, did not put forth prima facie evidence of the necessary factors to satisfy personal jurisdiction requirements for the parent corporation in Mississippi. While this ruling is favorable for non-Mississippi parent corporations who operate subsidiaries in Mississippi, it has larger significance for employers. It shows that nationwide jurisdiction is not a given when the EEOC sues. Additionally, the ruling provides the framework for how to prevent liability by avoiding personal jurisdiction.

Case Background

The EEOC filed an action on behalf of Beatrice Chambers alleging disability discrimination under Title I of the Americans With Disabilities Act of 1990. Id. at 1. The complaint named Community Health Systems, Inc. (“CHSI”) and Vicksburg Healthcare, LLC (“VHL”) as Defendants, alleging that both CHSI and VHL have been continuously doing business as River Region Medical Center (“River Region”) in Vicksburg, Mississippi. Id. The EEOC alleged that the Defendants terminated Chambers, who worked as a nurse at River Region for approximately 36 years, because of her unspecified disability, and additionally failed to provide her with reasonable accommodations in violation of the ADA. Id. at 1-2. VHL was a subsidiary of CHSI, which was incorporated in Delaware and had its principal place of business in Tennessee. Id. at 2. While VHL admitted doing business as River Region and admitted employing Chambers, CHSI denied doing business as River Region and denied employing Chambers. Id. Further, in its motion to dismiss, CHSI asserted the affirmative defenses of lack of personal jurisdiction, insufficient process, and insufficient service of process. Id           

The Court’s Decision

In granting CHSI’s motion to dismiss, the Court held that the issue of personal jurisdiction was controlling. Id. The EEOC has the burden of establishing a prima facie case for personal jurisdiction. Id. at 5. The Court noted that a non-resident defendant is amenable to being sued in Mississippi if: (1) Mississippi’s long-arm statute confers jurisdiction over the defendant; and (2) the exercise of personal jurisdiction comports with the requirements of federal due process. Id. at 3. The Mississippi long arm statute consists of three prongs, including: (i) the contract prong; (ii) the tort prong; and (iii) the doing-business prong. It was undisputed that the “doing-business” prong was case dispositive. Id.

CHSI submitted an affidavit from its Senior Vice President and Chief Litigation Counsel to the effect that it did not conduct business in Mississippi and that it lacked sufficient minimum contacts to be hauled into court in Mississippi. Id. at 6. The affidavit confirmed that CHSI is a holding company with no employees; CHSI indirectly owned subsidiaries including VHL; CHSI neither operated nor controlled the day-to-day operations of River Region; CHSI and River Region maintained separate banking records and did not co-mingle funds; CHSI did not employ nor have control over any River Region staff; CHSI never made any employment decisions regarding Chambers; CHSI and River Region observed corporate formalities (including no overlap between the Board of Trustees of River Region and the Board of Directors of CHSI; the respective Boards of River Region and CHSI each convened separate meetings; and the Boards maintained separate minutes and records); and CHSI is not qualified to do business in Mississippi, owns no property there, has no offices there, does not market there, and does not pay taxes there. Id. at 6-7. Following well-established precedent, the Court found this aggregation of factors to be dispositive. It held that the EEOC lacked personal jurisdiction to sue CHSI in Mississippi. Id. at 7.

The Court rejected the EEOC’s three arguments in opposition of dismissal.  Id. at 7-8. First, the EEOC argued that the 10-K form submitted by CHSI to the SEC demonstrated CHSI’s intent to do business in Mississippi as it often used language such as “we” when referring to the hospital. Id. at 8. The Court rejected this argument, noting that the 10-K form also contained a provision saying the hospitals are expressly owned and operated by the subsidiaries. Id. Next, the EEOC mistakenly speculated that the River Region employee handbook contained references to CHSI. Id. at 9-10. The Court cited an affidavit from CHSI’s litigation counsel clarifying that the entity referred to in the handbook was a different indirect subsidiary, and not the parent corporation. Id. at 10. Finally, the EEOC erroneously relied on another case involving CHSI – Bass v. Community Health Systems, Inc., Case No. 2:00cv193 (N.D. Miss.). Id. at 12. The Court noted that no facts from that case illustrated that CHSI should be amenable to personal jurisdiction. Id.

Implications For Employers

 When out-of-state parent corporations conduct business in Mississippi through subsidiaries, it is imperative that they observe corporate formalities to clearly maintain the parent-subsidiary relationship. Further, in documents such as 10-K forms and employee handbooks, employers must explicitly indicate that subsidiaries, and not the parent, own and operate local entities. If parent corporations follow the teachings of EEOC v. Vicksburg Healthcare, LLC, et al., they can avoid unwittingly submitting to personal jurisdiction in Mississippi courts while their subsidiaries do business there.

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

By Gerald L. Maatman Jr. and Howard M. Wexler

There continues to be growing firestorm of litigation initiated by the EEOC over hiring checks based on criminal backgrounds. In one of the most high profile cases addressing this issue (that we previously blogged about here and here,) Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas issued an decision in State of Texas v. EEOC, Case No.5:13-CV-255 (N.D. Tex. Aug. 20, 2014), granting the EEOC’s motion to dismiss a lawsuit brought against it by the State of Texas regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.”

Texas argued that the EEOC did not have the authority to issue the Guidance and that the EEOC’s position that Title VII trumps conflicting state laws violates its state sovereignty. Judge Cummings rejected the State’s arguments in this first-of-its-kind attack on the EEOC’s authority.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories.  In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.” Id. at 2. In March of this year, Texas amended its complaint to include more specific allegations of injury. Id. For example, Texas alleged that the EEOC’s issued a right-to-sue letter to an applicant who had been rejected by the Texas Department of Public Safety after disclosing on his application that he had been convicted of a felony (unauthorized use of a motor vehicle). Texas claims that the job involved “access to sensitive personal information for all 26 million Texans.”

The EEOC offered three primary arguments as to why Texas’ lawsuit should be dismissed, including: (1) lack of jurisdiction because the EEOC’s guidance is not legally binding and does not constitute a final agency action; (2) Texas lacks standing to pursue its claims given that the guidance has no binding authority; and (3) Texas’ claims are not ripe. Id.

The Court’s Decision

Judge Cummings based his decision entirely on a lack of subject matter jurisdiction. Because “Texas does not allege that any enforcement action has been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance,” Judge Cummings held that there is not a “substantial likelihood” that Texas “will face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance.” Id. at 7. As standing to bring suit “cannot be premised on mere speculation” Judge Cummings determined that Texas lacked the necessary standing to maintain its suit against the EEOC.

While acknowledging that the EEOC did in fact issue a right-to-sue letter to an applicant who was rejected by the Texas Department of Public Safety who believed he was discriminated against based on a prior felony conviction, that was still not enough for the Court since “there are no allegations that any enforcement action has been taken by the EEOC or Department of Justice” based on Texas’ “felony conviction” rule. Id. Accordingly, since the Guidance is not a final agency action and because no enforcement proceeding is pending against Texas, Judge Cummings dismissed the case as “seeking a premature adjudication in the abstract without any actual facts and circumstances relating to the employment practices at issue.” Id. at 7-8.

Implications For Employers

While Judge Cummings’ decision is a blow to one of the most high profile challenges to the EEOC’s Guidance, the dismissal is solely based on procedural grounds and is in no way an acceptance of the Guidance and/or the litigation initiated by the EEOC over hiring checks based on criminal backgrounds.

Furthermore, while the EEOC may have won the battle in round one of this lawsuit, the war is likely far from over. To this end, employers obtained strong ammunition to use going forward based on certain arguments advanced by the EEOC in pursuing the dismissal of Texas’ case.  In furtherance of its lack of standing argument, the EEOC admitted that the Guidance is neither “legally binding” nor does it carry with it any “legal consequences.” As such, to the extent the EEOC attempts to rely upon the Guidance moving forward as the basis for prosecuting disparate impact cases focused on criminal background checks, particularly in cases where the EEOC alleges that an employer willfully violated Title VII, employers need only turn to the EEOC’s representations to the U.S. District Court for fodder in their own defense. It remains to be seen whether Texas will appeal this ruling. Stay Tuned!

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