EEOC Whacked Again on Background Checks

Ct Rejects Race Discrimination Initiative

Another court has rejected the U.S. Equal Employment Opportunity Commission’s initiative to combat race discrimination by limiting the use of criminal background checks in hiring.

The U.S. Court of Appeals for the Sixth Circuit in Michigan this week upheld a lower court ruling requiring the EEOC to pay $751,942.48 in fees and costs to Peoplemark, a temporary-employment agency with offices in Michigan, Tennessee, Kentucky and Florida.

The award includes $526,172 in fees to Peoplemark’s in-house expert, an amount the EEOC  called astounding, inappropriate and poorly documented.

 EEOC Director Jacqueline Berrien recently maintained that the EEOC does not challenge an employers’ decision to conduct criminal background checks but instead challenges screening processes that are not job related and consistent with business necessity and which have a disproportionate impact on African-Americans.

The EEOC filed a complaint in 2008 alleging that Peoplemark had a blanket policy of denying employment opportunities to persons with felony records and that this policy had a disparate impact on African Americans.

Obvious?

Initially, it appeared obvious that Peoplemark had a policy of denying employment to applicants with felony records. Peoplemark used  an application form that asked applicants if they have a felony record and conducted independent investigations into the criminal records of all applicants. Most importantly, Peoplemark’s Associate General Counsel Judd F. Olsten actually admitted to the EEOC that Peoplemark had a company-wide policy of rejecting felon applicants

Peoplemark did not did not deny the existence of a company-wide policy against hiring felons until July 2009 – almost two years after the EEOC began investigating and a year after the  EEOC’ filed its complaint.

The appeals court notes that Peoplemark had  turned over 178,888 discovery documents to the EEOC by Oct. 1, 2010 which showed that Peoplemark had referred felons to job opportunities.  The fee award  dates October 2010.

According to the appeals court: “When discovery clearly indicated (Peoplemark’s Chief Counsel’s) statements belied the facts, the Commission should have reassessed its claim.”

The appeals court also noted the EEOC identified a class of 286 individuals that included applicants that did not have felony convictions and applicants who obtained employment through Peoplemark despite their criminal records.

The EEOC and Peoplemark agreed by joint motion to dismiss the case in March, 2010, with Peoplemark held to he prevailing party for fee purposes.  The EEOC argued it could have filed an amended complaint stating a valid claim against e at that time, an argument the court found to be irrelevant.

The award includes  $219,350.70 in attorney’s fees, $526,172 in expert witness fees (for 123.55 hours of work) and $6,419 in other expenses.

The case involved a complaint by Sherri Scott, an African-American with a felony conviction, submitted an application and was not referred for employment.  She filed a discrimination complaint under Title VII of the Civil Rights Act and the EEOC began an investigation.

In August, Judge Roger Titus of the U.S. District Court for the District of Maryland dismissed a lawsuit brought by the EEOC in 2009 against Freeman, Inc., a service provider for corporate events, which alleged Freeman unlawfully relied upon credit and criminal background checks that caused a disparate impact against African-American, Hispanic, and male job applicants.

The Attorney Generals  of West Virginia, Colorado, Alabama, Georgia, Kansas, Nebraska, Montana, South Carolina and Utah have complained about the EEOC background check policy.

The EEOC last summer filed lawsuits against BMW and Dollar General Store for refusing to hire individuals with felony records. In the Dollar Store case, the individual was incorrectly reported as having a felony record when she did not.

The Bureau of Justice Statistics has estimated that approximately 9 percent of all men will serve time in state or federal prisons, including 28 percent of black males, 16 percent of Hispanic males, and 4 percent of white males.

Judge Whacks EEOC With $4.7 in Fees

Case of Female Truck Drivers Crashes and Burns

It’s easy to forget that EEOC v. CRST Van Expedited, Inc. started with a 2005 sex discrimination complaint by a female truck driver trainee, Monika Starke, who said she was sexually harassed  by her two “Lead Trainers.”

 Chief Judge Linda R. Reade of the U.S. District Court of Iowa ruled recently that the U.S. Equal Employment Opportunity Commission must pay CRST, one of the nation’s leading transport companies,  $4,694,422.14 in attorney fees and costs stemming from the case.

Judge Reade’s decision  is brutally unsympathetic to the EEOC and the  255 female trainees and drivers who alleged sex discrimination and harassment against CRST.  She appears to be much more concerned about the supposedly unfair burden the litigation placed on CRST. 

The case began with a sex discrimination lawsuit filed by the EEOC on behalf of Starke and other similarly situated employees.  

 Court records show that Monika Starke alleged that one of the CRST trainers told her “the gear stick is not the penis of my husband, I don’t have to touch the gear stick so often”  and “You got big tits for your size, etc. . . “  She said she told him she was not interested in a sexual relationship with him and called the CRST dispatcher to complain.   “[I] was told that I could not get off the truck until the next day.”  she said.

 Starke’s other “Lead Trainer”  allegedly forced Starke to have sex with him while traveling from July 18, 2005 through August 3, 2005  “in order to get a passing grade.”

 Starke is described as a German who struggles with English. She and her  husband subsequently hired a lawyer and filed for bankruptcy.  They failed  to mention  the CRST lawsuit, prompting CRST to file a motion to prevent Starke from proceeding against CRST on grounds of judicial estoppel –  a doctrine that is meant to protect the integrity of the court.  Judge Reade granted the motion.

 In fact, Judge Reade granted CRST’s pre-trial motions to dismiss all of the complaints of sexual harassment and discrimination filed by the EEOC against CRST. 

  In a dozen cases, Judge Reade said the complaints were not “severe or pervasive” enough.

  In other cases, Judge Reade said CRST did not have legal (as opposed to real)  notice of the harassment and the “Lead Drivers” – who evaluated the performance of the female trainees – did not fall within the court’s technical definition of  supervisor in that they could not fire the trainees.

 Judge Reade dismissed 67 cases because the EEOC did not attempt to conciliate or negotiate with the CRST to settle the cases –  which appears to be a brand  new requirement that could severely limit the  EEOC in the future. Judge Reade conceded that dismissal was a  “severe” sanction for these complainants.

 The EEOC appealed Judge Reade’s dismissal of the case  to the U.S. Court of Appeals for the 8th Circuit.

Appeals Court

In its decision, the  Eigth Circuit agreed that the “Lead Drivers” are not supervisory employees and that CRST was not vicariously liable for sexual harassment/discrimination committed by these employees.  

 The  appellate court generally agreed that claims by female complainants that they were propositioned for sex by male trainers and drivers were not sufficiently severe or pervasive to support a hostile work environment claim. The Court said an individual must show “more than a few isolated incidents” to support such a claim.  (It was unclear exactly how many times  a worker must be propositioned for sex to qualify as being harassed.)

 However, the appeals court disagreed with the dismissal of the claims of three female plaintiffs and ordered them reinstated. The court also reversed Judge Reade’s earlier grant of attorney fees to CRST in the amount of $4,560,285.11.

One of the three employees whose case was reinstated was Sherry O’Donnell,  who spent  seven days on the road with a male co-driver who asked her on three to five occasions to drive naked;  refused her request to stop at a truck stop so she could go to the bathroom,  ordering her instead to urinate in the parking lot; and, “in a culminating incident grabbed O’Donnell’s face while she was driving and began screaming that ‘all he wanted was a girlfriend.’ Regarding this third incident, O’Donnell testified that Sears grabbed her face so vigorously that it caused one of her teeth to lacerate her lip.”

Her lead trainer began screaming that ‘all he wanted was a girlfriend.’ He grabbed her face so vigorously that he caused one of her teeth to lacerate her lip.

 The other complainant, Tillie Jones, testified that during a two-week training trip, her Lead Driver, wore only underwear in the cab and on several occasions rubbed the back of her head, despite her repeated requests that he stop. He allegedly referred to Jones as  “his bitch” five or six times and, when Jones’s complained about his slovenly habits, ordered Jones to clean up the truck, declaring “that’s what you’re on the truck for, you’re my bitch. I ain’t your bitch. Shut up and clean it up.”  Like many of CRST’s Lead Drivers, Jones said he routinely urinated in plastic bottles and ziplock bags while in transit, leaving  his urine receptacles about the truck’s cab for her to clean up.  

 The appeals court ruled the EEOC established material issues of fact regarding the harassment that O’Donnell and Jones allegedly suffered. “We hold that the district court erred in concluding, as a matter of law, that the harassment they suffered was insufficiently severe or pervasive,” the court said.

 Finally, the Court rejected Judge Reade’s finding that the EEOC itself was barred by the doctrine of judicial estoppel from proceeding on Monika Starke’s behalf, noting the EEOC had not misrepresented any facts to the court.  That brought Ms. Starke case back into the litigation.

 After the appeals court’s decision, CRST agreed to pay Ms. Starke $50,000 to settle Ms. Starke’s case, which most people would interpret as a victory for Ms. Starke. 

 The EEOC decided it could not proceed with respect to O’Donnell complaint, citing the “law of the case.” This presumably refers to Judge Reade’s ruling that the EEOC was required to directly engage in “conciliation” with CRST on each complaint.  

 Which left Ms. Jones as the sole surviving plaintiff.

Even though  the appeals court ruled in the EEOC’s favor with respect to several issues, Judge Reade ruled CRST was the ‘prevailing party” in the case and was entitled to almost $5 million in fees and costs.

 The final award to CRST is actually larger than the earlier award by Judge because Judge Reade included fees and costs expended by CRST related to the appeal.

 Judge Reade was appointed to the federal court in 2002 after being nominated by President George W. Bush.

 

HP Can Keep Worthless Coupons?

Too often, in a consumer-based class action lawsuit, class members receive a worthless “coupon” to purchase the defendant’s products. And nothing changes.

This was the ignominious conclusion of an eight-year-old class action lawsuit against Hewlett Packard Company, which allegedly cheated consumers with respect to the sale of ink cartridges from 2001 to 2010.

However, an appellate panel from the U.S. District Court of Appeals for the Ninth Circuit on Wednesday rejected the settlement in In re: HP Inkjet Printer Litigation and sent it back to the lower court for reconsideration.

In the “global” settlement approved by a federal judge  in 2011 the class members received “e-coupons” worth $2.00 to $6.00 toward HP printers and printer supplies and so-called “injunctive relief” that essentially requires HP to provide accurate notice of its products to consumers in the future. The court also awarded attorneys’ fees of $1.5 million and costs of about $600,000.

Issue Attorney Fees

The issue on appeal was not the mild slap on the wrist suffered by HP for allegedly cheating consumers for almost a decade  but the attorney fees.

The three judge appeals panel, with one member dissenting, ruled that the Class Action Fairness Act prevents a district court from awarding attorneys’ fees to class counsel that are “attributable to” an award of coupons without first considering the redemption value of the coupons.

“Attorney’s fees are never ‘attributable to’ an attorney’s work on the action. They are ‘attributable to’ the relief obtained for the class,” ruled the panel.

The dissent argued the majority was misinterpreting the law by making a class action lawsuit the equivalent of a “contingency” case, where the attorneys get a percentage of the monetary judgment.

The Problem with “E-Coupons”

The  “e-coupons” were good only at HP.com, expired six months after issuance, were non-transferable and could not be used with other discounts or coupons.  The record included evidence that prices charged at HP.com  are higher than those charged by other retailers. For instance, the same HP “Combo Pack Ink Cartridge” sells for $42.99 on HP.com while selling for $36.99 on Amazon.com.

Of potentially millions of class members, three filed formal objections to the settlement, 458 submitted informal comments, 810 opted out of the settlement, and 122,000 filed claims.

The attorneys  asserted they racked up $7.1 million in fees and costs, representing 17,000 work hours but they only asked the court for $2.9 million, recognizing the limited nature of the settlement.

The appeals court said it did not mean to rule out the use of  coupons in settlements. For example, the court said, coupons may be appropriate if the defendant is in financial distress or the customer has a history of repeat business with the defendant.

What the Case was About

The  tortured history of this case raises questions about whether consumer class action lawsuits as currently configured are an effective method for policing the consumer marketplace. International corporations like Hewlett Packard  have pockets that are the equivalent of an abyss to fight these lawsuits.

The allegations at the core of the case are serious and, if true, cost consumers millions  of dollars. The settlement includes plaintiffs from three separate lawsuits that were combined by the court:

  • The first  action was filed on June 16, 2005, and alleged that HP misled consumers into believing that replacement of an ink cartridge was necessary when the cartridge was not empty, and was capable of additional printing.
  •  The second action was filed on May 22, 2006, and alleged that HP failed to disclose that its color printers use color ink to print black and white text and images, a process known in the printing industry as “underprinting.”
  • The third action was filed on January 17, 2007, and alleged that HP concealed that certain of its ink cartridges contained an “expiration date,” after which time the cartridges would no longer work regardless of how much ink remained in the cartridge.

The lower court judge determined that the settlement provided class members “meaningful benefits on a much shorter time frame than otherwise possible.”