EEOC Ordered to Pay Big Fees for Pursuing Criminal-History Suit

The EEOC suffered another defeat this week, being ordered again to pay the fees and costs incurred by an employer after the EEOC’s claims turned out to be without merit.  IN EEOC v. Peoplemark, Inc., A split 6th Circuit affirmed an award of approximately $750,000 in fees and costs incurred by a temp agency in defending against one of the EEOC’s criminal-history cases.  The EEOC contended that the temp agency’s company-wide policy barring employment to individuals with felony records had a disparate impact on Black candidates.Fees letterpress_3

The temp agency, PeopleMark, had offices in five states.  In 2005, a Black candidate, Sherri Scott filed a Charge of Discrimination, alleging that she had been denied employment because she had a felony conviction.  In fact, Scott had two felony convictions and had been released from prison less than a month before she applied for a job with PeopleMark.

And it gets worse.

The EEOC “investigated” the Charge, issuing multiple subpoenas and obtaining more than 15,000 pages of documents.  Although the evidence did not seem to support the allegations in the Charge, EEOC disagreed and filed suit.  The suit, asserted on a class of individuals, alleged that the company’s policy prohibited the hiring “of any person with a criminal record,” which disparately impacted Black applicants.

The trouble, though, was that PeopleMark did not have such a policy. Then the EEOC identified approximately 250 individuals it contended to be within the class of aggrieved persons.  Well, as it turned out, PeopleMark had hired 57 of the individuals and some others did not have a criminal background in the first place.

The EEOC eventually agreed to dismiss the case but, as you may imagine, PeopleMark was not exactly satisfied and it sought sanctions in the form of fees and costs incurred in the litigation in the amount of approximately $1.3 million.

In March 2011, the U.S. District Court for the Western District of Michigan granted the motion and awarded approximately $750,000 in fees to PeopleMark.  On appeal, the 6th Cir. affirmed, finding that the employer was entitled to recover fees from the time that the EEOC learned or should have learned that PeopleMark did not have the policy as the EEOC had alleged.

EEOC v. Peoplemark, Inc., No. 11-2582 (6th Cir. Oct. 7, 2013).

See also

EEOC Faces Petition for $5.5m in Fees

W.D. Pa. Finds EEOC Failed to Conciliate

What Does “Good Faith” Mean to the EEOC?

When the EEOC Goes Too Far-Part 2

When the EEOC Goes Too Far

EEOC v. Ruby Tuesday

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EEOC Faces Petition for $5.5m in Fees

Employers are wary of litigating against the EEOC. And for good reason. Many employers who have faced the EEOC in the courtroom have complained that the agency uses guerilla litigation tactics. One commonly heard complaint occurs in the context of class actions, when the EEOC refuses to disclose the identity of the claimants on behalf of whom the EEOC seeks relief.

Recently, though, some courts have heard these complaints and agreed with the employer. Different courts have reacted, differently, though. Only a few have gone so far as dismissing the EEOC’s case.

One of the first courts to take this course was the U.S. District Court in Iowa. In EEOC v. CRST Van Expedited, Inc., the EEOC filed suit on behalf of 270 female truck drivers, claiming that they were subject to a hostile work environment. The district court dismissed the claims of all but two employees. The company settled the remaining claim for $50,000.

The EEOC appealed but the 8th Circuit held that the EEOC’s failure to conduct a complete investigation and conciliation prevented it from representing certain claimants and affirmed the dismissal of the EEOC’s suit as to those employees.

With that significant victory under its belt, the employer has decided to see if it can keep its winning streak alive. On March 18, 2013, CRST filed a petition seeking $5.5 million in fees and expenses incurred in defending the EEOC’s suit. In support of its petition, the employer points to some troubling facts:

· 150 depositions were taken during the litigation;

· 115 of the 270 claimants were dismissed for failing to appear for deposition;

· 7 summary-judgment motions were filed;

· 88 claims were dismissed as meritless; and

· 67 claims were dismissed for the EEOC’s failure to conciliate.

These facts should be enough to scare any employer, although it remains to be seen whether they will be sufficient to warrant an award of fees. We’ll be sure to keep you posted.

See also

W.D. Pa. Finds EEOC Failed to Conciliate

What Does “Good Faith” Mean to the EEOC?

When the EEOC Goes Too Far-Part 2

When the EEOC Goes Too Far

EEOC v. Ruby Tuesday

EEOC Sanctioned for Failure to Produce Social-Media Evidence

EEOC v. Original Honeybaked Ham Co. of Georgia, Inc., is the subject of today’s post. I first wrote about this case in November, when the Colorado District Court granted a motion to compel the EEOC to turn over social-media content of claimant-employees. The court acknowledged that discovery of social-media content presents “thorny and novel issues.” But, finding that the postings were relevant to the issues in the case, the court ordered that it be turned over.eeoc_3

In an unusual twist, the court required the EEOC to turn over the log-in information and passwords of the claimants to a special master, who would make an initial determination of discoverability. I concluded that the decision was a well-reasoned attempt to balance the individual claimants’ privacy interests with the defendant-employer’s right to broad discovery of potentially relevant information. Faced with these two competing interests, the court crafted a fairly complex, multi-tiered, and dynamic process for the collection, review, and production of the information from the employees’ social-media accounts.

Fast-forward three months.

The employer files a motion for sanctions, alleging that the EEOC had failed to comply with the court’s order to produce the social-media data. The court granted the motion, finding that the EEOC had, in several material respects, made the discovery of claimants’ social media “more time consuming, laborious, and adversarial than it should have been.” In short, the court found that the EEOC had agreed to various discovery procedures only to later renege when the “higher-ups” at the EEOC learned about the parties’ agreement and didn’t, well, . . . agree.

In awarding the employer its reasonable attorney’s fees, the court had to use some judicial imagination, finding first that most of the sanctions rules did not apply because the EEOC had not litigated in bad faith. Instead, the discovery problems were more a result of bureaucracy, rather than intentional bad-faith tactics. Still, the court did find a rule that enabled it to award fees and, with any luck, send a strong message to the EEOC about the consequences of failing to cooperate (and keep its promises) during discovery.

No. 11-02560-MSK-MEH (D. Colo. Feb. 27, 2013).

Employees Must Turn Over Facebook Info For Harassment Claim

Discovery of EEOC Claimants’ Social-Media Posts

W.D. Pa. Finds EEOC Failed to Conciliate

What Does “Good Faith” Mean to the EEOC?

When the EEOC Goes Too Far-Part 2

When the EEOC Goes Too Far

EEOC v. Ruby Tuesday

Call Me, Maybe. Discovery of Employee Identities

W.D. Pa. Finds EEOC Failed to Conciliate

In February 2012, the EEOC approved its Strategic Plan for fiscal years 2012-2016.  The Plan establishes a framework for achieving the EEOC’s mission to stop and remedy unlawful employment discrimination by focusing on strategic law enforcement, education and outreach, and efficiently serving the public.  The second performance measure of the plan requires the EEOC to approve a Quality Control Plan. The QCP will revise criteria to measure the quality of agency investigations and conciliations throughout the nation.

The EEOC has requested input from interested parties regarding recommendations for quality indicia of investigations or conciliations or general recommendations for improving the quality of our intake process, investigations and conciliations.  The EEOC’s current interest in improving its conciliation track record likely is related to a recent string of cases challenging the sufficiency of the agency’s conciliation efforts.  One such case was issued last month by a federal court in Pennsylvania.

Background

The case began when a single employee filed a charge of unlawful discrimination based on sex and retaliation, which was later amended to allege age discrimination. The EEOC investigated the Charge, requested and received a significant amount of information from the defendant. Approximately 8 months later, the EEOC issued a Cause Finding in which it determined that the defendant had unlawfully discriminated against the Charging Party based on sex and that the defendant had engaged in a pattern and practice of discrimination based on age in 6 of its restaurants.

The EEOC advised the defendant that it would promptly seek to conciliate the dispute and sent a proposed conciliation agreement. By the time the defendant received the Determination and proposed conciliation agreement, it had only 7 days to respond.

The defendant asked for an additional 30 days to respond but the EEOC denied the request. Instead, the EEOC told the defendant that it had to provide its “best offer” within the next week. The EEOC also made its first monetary demand-approximately $6.5 million for an unspecified number of potential claimants.

The defendant made a counter-offer as to the Charging Party’s claims and an expressed willingness to engage in further negotiations. Six days later, the EEOC issued a Notice of Failure of Conciliation and, a week after that, filed suit. The parties engaged in discovery for the next three years.

The Employer’s Motions

The defendant filed a motion to dismiss and for summary judgment. In support of its motion to dismiss, the defendant argued that the EEOC’s complaint failed to allege sufficient facts as the basis for its claim. The court agreed and ordered the EEOC to file an amended complaint within 30 days.

In support of its motion for summary judgment, the employer argued that the EEOC had failed to satisfy its duty to conciliate in good faith. The court acknowledged that the EEOC had great discretion to determine the extent of efforts needed to meet this duty. Even so, the court concluded that the so-called conciliation was insufficient.

The Court’s Decision

Particularly because of the break-neck speed of the process, the court found it difficult to “discern how the EEOC’s actions here would indicate a meaningful desire to actually engage in a process of ‘persuasion,’ ‘conference’ or ‘conciliation.'” As the court explained:

By any measure, a demand for the payment of more than $6 million dollars, coupled with nine days to either say “yes” or to make a “best and final” response in these circumstances (which includes, as noted above, a demand for more than a dozen significant affirmative remedial measures) is so devoid of reasonableness as to lead this Court to the conclusion that it was not a meaningful, good faith conciliation effort.

The court went on to explain that an “exchange of pointed letters does not evidence a sincere effort to reach a meeting of minds, especially in the context of an extraordinarily short set of response deadlines which were not driven by any externally imposed deadlines.” “Conciliation by letter,” the court concluded, will “rarely constitute ‘conciliation'” but, instead, were more akin to “surface bargaining.

Although the EEOC’s efforts were so fundamentally flawed, they were not sufficient to warrant dismissal of its case. Instead, the court concluded that, to dismiss the suit, after years of discovery, would be “wholly improvident.” Instead, the better course was to require that the parties now engage in the conciliation process-a process that should have occurred sooner.

Thus, the court stayed discovery to allow the parties 45 days to engage in conciliation under the court’s supervision.

(PDF) 2:09-cv-01330 (W.D. Pa. Jan. 22, 2013).

See also:

What Does “Good Faith” Mean to the EEOC?

When the EEOC Goes Too Far-Part 2

When the EEOC Goes Too Far

Give Me Some Credit! EEOC Credit-Check Case Dismissed

“Give Me Some Credit!” Maybe that’s how the EEOC feels these days, after its high-profile suit against Kaplan Higher Education Corp. was dismissed on January 28, 2013. As readers may remember, the EEOC sued Kaplan in 2010, alleging that its pre-employment credit check policies had a disparate impact upon Black job applicants.

In a 23-page opinion, the U.S. District Court for the Northern District of Ohio dismissed the suit on Kaplan’s Motion for Summary Judgment. The Court first excluded the expert witness testimony offered by the EEOC, holding that it was scientifically unsound. Expert witness testimony is key in disparate impact cases, because they rise and fall on the percentage of job applicants from a given classification as compared to the percentage of hires in the same classification. Among the key problems for the EEOC was that Kaplan, like many employers, does not collect demographic information on the race of job applicants. As a result, EEOC struggled to identify the races of those applicants that were rejected due to credit problems. In an effort to remedy the problem, the EEOC subpoenaed records from state DMVs, and used a team of “race raters” to review the DMV photos and assign races to the job applicants. The Court, not surprisingly, rejected this approach and the resulting expert witness analysis.

Next the Court addressed Kaplan’s Motion for Summary Judgment. In the absence of any statistical evidence demonstrating an adverse impact caused by the use of credit checks, the Court held that the EEOC’s case had to be dismissed.

There are several interesting considerations arising out of this litigation. First, as the Court’s decision noted, the EEOC itself uses credit checks to vet job applicants! This should not come as a great surprise, as many employers use credit checks as one of a litany of tools at their disposal to identify the best-qualified candidates. Nonetheless, for an agency that has widely publicized the pitfalls of background checks in the hiring process, its adoption of the practice calls its hardline stance into question.

Second, the EEOC’s past enforcement practices gave rise to many of its difficulties in this case. Many employment law attorneys discourage their clients from collecting race, gender, and other protected-characteristic data during the application process. In the past, the EEOC has used such information to support disparate hiring claims. Kaplan, in complying with EEOC best practices, deprived the EEOC of information that it needed to prove its case, thereby leading to the rejected “race rater” approach.

Finally, many employment law experts and EEOC-watchers are wondering if the Court’s decision will put a damper on EEOC enforcement efforts directed at background checks. As readers of this blog know, background checks have been in the EEOC’s cross-hairs for quite some time, with new guidance issued on the use of criminal background checks in April 2012. In light of the hurdles faced in this case, many are speculating that the EEOC may back off of its efforts to litigate these issues, focusing instead on conciliation efforts.

Only time will tell. In the meantime, employers can rejoice in a victory for the reasoned and supportable use of pre-employment credit checks.

Who Says I’m a Girly Man? Doth Sayeth the EEOC

The EEOC has enjoyed several victories in recent months. For example, the EEOC was granted summary judgment in a hostile-environment claim filed on behalf of a class of black construction workers. Even more recently, the EEOC was awarded summary judgment in an age-discrimination lawsuit against the City of Baltimore. But things haven’t been all peaches and cream for the EEOC.

In EEOC v. McPherson Cos., Inc., a federal district court in Alabama granted summary judgment to the defendant-employer in a sexual-harassment lawsuit brought by the EEOC on behalf of an unnamed male employee. The employee worked in a warehouse with an all-male workforce.

The EEOC alleged that, after being subject to a constant barrage of “ugly talk,” the employee complained to his supervisor about the allegedly hostile work environment. About a year later, the employee confronted his co-workers, who apologized and, thereafter, stopped directing rude comments his way. About a year after that, the employee complained to HR, which investigated the complaint, resulting in discipline for several workers and two supervisors. After this last complaint, the comments ceased.

The court held that the EEOC had failed to establish the existence of an unlawful hostile environment because it had not shown that the rude comments and “ugly talk” were of a sexual nature or that they were made “because of” the employee’s gender.

The EEOC argued that the harassment was because of his gender and, specifically, because of his effeminate behavior. This can be a valid cause of action–when a male employee is treated badly because he acts “too girly.” But, here, despite the EEOC’s argument, the testimony of the employee himself contradicted this argument. Thus, the court dismissed the gender-discrimination and sexual-harassment claims.

The court also dismissed the EEOC’s retaliation claim. The employee was terminated, along with 11 other employees, as part of a reduction-in-force 3 months after his complaint to HR. The court expressed that it was “hard to believe” that the EEOC “is seriously arguing that the entire RIF process was a subterfuge for fraud designed for the sole purpose of providing cover for retaliation.”

EEOC v. McPherson Cos., Inc., No. 10-cv-2627 (N.D. Ala. Nov. 14, 2012).

Discovery of EEOC Claimants’ Social-Media Posts

In my previous post about EEOC v. Original Honeybaked Ham Co. of Ga.,, I described a somewhat ambiguous, if not unusual, procedure for the production and review of individuals’ social-media accounts ordered by a Magistrate Judge. In short, the Judge’s well-reasoned decision attempted to balance the individual claimants’ privacy interests with the defendant-employer’s right to broad discovery of potentially relevant information. Faced with these two competing interests, the court crafted a fairly complex, multi-tiered, and dynamic process to collect, review, and produce the information from the former employees’ social-media accounts.

The EEOC has filed an Objection to that decision. (An “objection” is, to put it simply, an appeal of a magistrate judge’s decision to the trial judge). The objection gives us a bit more insight but a lot more questions.

The EEOC acknowledges in its objection that, since the issuance of the discovery ruling, the Magistrate Judge had revised the procedure–perhaps more than once. This indicates, and the EEOC makes clear, that the court has been and is continuing to be flexible in working with the parties towards a workable procedure. Nevertheless, we do not know what the alterations were.

One of the changes, though, is described in the Objection. Specifically, the EEOC states that the Court eliminated the appointment of a special master and, instead, designated an EEOC employee with computer-forensic qualifications to perform the collection. Under the initial Order, the claims were to turn over their log-in and passwords to their Facebook accounts to the special master, which caused a big stir among commentators. Now that the data will be harvested by EEOC personnel, perhaps the password issue is an issue no more.

But none of this addresses my bigger question–why make the process so complicated? Particularly, I wonder whether it wouldn’t have been easier to have the claimants download their account information by using the tool provided by Facebook precisely for that purpose. DIY e-discovery of social-media seems to me to be a better option than the process in this case–at least the version of the process outlined in the Order.