Employers Eschew Settlement in Class Actions

justice-scale-761665_1Employers are settling fewer class action employment discrimination cases than at any time in recent history.

This is a finding  of the employer defense  law firm,  Seyfarth and Shaw, LLP, in its Annual Workplace Class Action Litigation Report: 2014 Edition.

The tone of the report is almost gleeful as it chronicles pro-employer rulings by the  U.S. Supreme Court in the past five years that make it  much more difficult for employees to prevail in  class action lawsuits against employers.

According to the  report, the total amount  for the top ten largest employment discrimination class action settlements in 2012 was $48.6 million, compared to $282.1 million in 2007 and  $91 million in 2006. The number was higher in 2013 ($234.1 million) because of a single $160 million settlement. However, when that settlement is deducted, the 2013 represents the second smallest settlement figure in the past decade.

The firm  attributes the reduction in class action settlements to two decisions by the  U.S. Supreme Court, Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) and Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), which  “influenced settlement strategies in workplace class actions in a profound way.”

The report states Comcast and Walmart decisions have “impaired the ability of the plaintiffs’ bar to convert their case filings into blockbuster settlements”  and improved the “ability of defendants to dismantle large class cases, or to devalue them for settlement purposes.”

“ Simply stated, Wal-Mart and Comcast Corp. aided employers to defeat, fracture, and/or devalue employment discrimination class actions, and resulted in fewer settlements at lower amounts.”

The   Comcast decision, decided by a slim 5 to 4 majority, added a new weapon to employers’ arsenals in challenging class certification. The  majority held that individual issues of damages may preclude class certification under Rule 23(b)(3) of the Federal Rules of Civil Procedure.  This means the plaintiffs may have to conduct hundreds or perhaps thousands of mini-hearings on the issue of damages, raising the cost of the litigation to prohibitive levels.

The Comcast decision  has “sharply curtailed” the ability of plaintiffs to obtain certification on the damages and “provides companies with a significant and rational defense to class certification in class actions,” according to the report

 The  2011  Walmart decision  held that a small group of female employees of the world’s largest retail chain  did not have enough in common with other Walmart female employees to constitute a class in a sex discrimination lawsuit.  The Court unanimously ruled in Walmart’s favor, although Justice Ruth Bader Ginsburg concurred in part and dissented in part, joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.

The consistent conservative majority on the Court includes Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, Anthony  Kennedy and Samuel Alito.

Roberts Tells Congress to Set Aside Politics?

Roberts

Chief Justice John G. Roberts Jr. has called on Congress to set aside politics when it comes to funding the federal courts.

Oh, the irony.

In his year end report, he wrote, “The United States courts owe their preeminence in no small measure to statesmen who have supported a strong, independent, and impartial judiciary as an essential element of just government and the rule of law.”

This from a Supreme Court justice who is considered to be the most pro-business, anti-worker justice since World War II.

One cannot help but wonder how the Court hopes to rally public support when it has consistently refused to allow its proceedings to be televised and has provided virtually no leadership to encourage the use social media and internet technology to  better serve the public.  The Roberts’  court has done little, if anything,  to help the public understand the importance of the judiciary is a democratic society.

The U.S. Supreme Court who?

A suggestion for Congress  – this might be a good time to encourage the Court to open its doors to television cameras.

Moreover, the Roberts’ court appears to be terribly, woefully and sadly out of touch with the masses, tuning out the little folk who pay federal judges’ hefty salaries while providing a megaphone to the U.S. Chamber of Commerce.

Roberts is seeking $7 billion appropriation in 2014, which compares to $6.97 billion allocated last year (reduced by about  $300 million  by sequestration, after Congress gave the courts an additional $51 million in October). The Court has passed along budget cuts to federal public defender offices, clerks,  parole and probation officers.

The business of federal courts appears to be down overall.  Filings in  civil and criminal cases grew by 1 percent in 2013 but  filings in appeals courts dropped by 2 percent; filings in the Supreme Court dropped by 2.6 percent; and, filings in bankruptcy courts dropped by 12 percent.

One reason for the decline may be that  victims  of employment discrimination are foregoing the use of federal courts because of the hostility of federal judges to job discrimination claims.

A 2013 article in The Minnesota Law Review reviews some 2,000 U.S. Supreme Court decisions and ranked the 36 justices who served on the court from 1946 to 2011 by the proportion of their pro-business votes.

Roberts  and Associate Justice Samuel A. Alito, Jr., both appointed by GOP President George W. Bush, are the most likely to vote in favor of business interests of any of the 36 justices who has served since 1946.  And three other current conservative justices are in the top ten of most pro-business justices since 1946.  They are Justices Clarence M. Thomas, Antonin Scalia and Anthony M. Kennedy.

Also on the Court are Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia M. Sotomayor and Elena Kagan, all appointed by Democratic presidents.

The study was prepared by Lee Epstein, a law professor at the University of Southern California; William M. Landes, an economist at the University of Chicago; and Judge Richard A. Posner, of the federal appeals court in Chicago, who teaches law at the University of Chicago.

 

Appeals Ct Sides with EEOC in Conciliation Dispute

motherjonesmural

A federal appeals court in Chicago has departed from several other federal circuits by ruling that judicial review is not appropriate over efforts by the U.S. Equal Employment Opportunity Commission  to settle employment discrimination complaints.

Title VII of the Civil Rights Act directs the EEOC  to try to negotiate an end to an employer’s unlawful employment practices before it seeks a judicial remedy but it does not require the EEOC to actually reach a settlement.

Nevertheless, several federal appeals courts have allowed employers to raise an affirmative defense in employment discrimination cases that the EEOC failed to engage in good faith settlement negotiations  prior to filing a lawsuit. This is referred to as a “failure-to-conciliate” defense.

A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit in Chicago ruled last week that an implied failure-to-conciliate defense would add an “unwarranted mechanism” in Title VII by which employers could avoid liability for unlawful discrimination. “They can do so through protracted and ultimately pointless litigation over whether the EEOC tried hard enough to settle,” said the panel.

In addition, the panel said, the implied failure-to-conciliate defense runs “flatly contrary to the broad statutory prohibition on using what was said and done during the conciliation process  ‘as evidence in a subsequent proceeding.’”

Six other federal circuits – the Second, Fourth, Fifth, Sixth, Tenth and Eleventh Circuits –  allow some form of judicial review over the sufficiency or good faith of the EEOC’s conciliation efforts.

The 7th Circuit ruling came in a 2008 sex discrimination case filed against Mach Mining, which  allegedly refused to hire female applicants  for coal mining jobs. After investigating, the EEOC found there was reasonable cause to believe Mach had discriminated against a class of female job applicants at its Johnston City site. The EEOC engaged in informal conciliation with Mach but in 2011 the EEOC concluded the parties could not agree and filed a lawsuit.

Mach argued the suit should be dismissed because the EEOC failed to conciliate in good faith.  The EEOC did not contend that its efforts were either sincere or reasonable, only that they were not reviewable as a defense to unlawful discrimination.

The 7th Circuit panel said the U.S. Congress gave the EEOC broad discretion to negotiate as it sees fit, including the power to accept or reject any offer or proposed settlement for any reason.  “Nor can Mach Mining explain just how many offers, counteroffers, conferences, or phone calls should be necessary to satisfy judicial review, despite repeated invitations to provide the court with a workable standard,” it added.

The U.S. Chamber of Commerce filed a brief in the case arguing that it was necessary to keep the EEOC on a tight leash to avoid “agency shenanigans” but the 7th Circuit panel noted the EEOC  filed only 122 merit lawsuits in 2012.  “That so few unsuccessful efforts at conciliation end up in court shows how constrained the agency is by practical limits of budget and personnel,” said the appeals court.

The panel remanded the case, EEOC v. Mach Mining, No. 13-2456,  to the lower court for further proceedings.

In brutally harsh decision last fall in  EEOC v. CRST Van Expedited, Inc.,  Chief Judge Linda R. Reade of the U.S. District Court of Iowa ruled  that the  EEOC  must pay CRST, one of the nation’s leading transport companies,  a judgment of $4,694,422.14  stemming from a lawsuit filed by the EEOC alleging sex discrimination.  Judge Reade dismissed at least 67 class members from that case because the EEOC’s allegedly failed to conciliate with CRST with respect to each individual class member.

Courts Scrutinize Employer “Look” Policies

Abercrombie

Dreadlocks and Hijabs

An employer’s vision of a company’s “culture” can be risky business when it involves the appearance of workers.

Abercrombie & Fitch recently settled two lawsuits involving a provision of its dress code or “Look Policy” that prohibited Muslim employees from wearing a hijab (religious scarf) on the job.

Meanwhile, the U.S. Equal Employment Opportunity Commission (EEOC) has filed a lawsuit against Catastrophe  Management Solutions, a Mobile, Alabama catastrophic  insurance claims company, for alleged discrimination against a  black applicant for employment because she wore dreadlocks.

In both cases, the employers allegedly interpreted their culture in such a way as to exclude workers who demonstrated physical or cultural characteristics  of race or religious identity.  Other employers run afoul of  Title VII of the Civil Rights Act of 1964 law when they interpret their culture in ageist or sexist ways.

Eliminating barriers in recruitment and hiring, especially class-based recruitment and  hiring practices that discriminate against racial, ethnic and religious groups,  older workers, women, and people with disabilities, is one of six national  priorities identified by the EEOC’s Strategic Enforcement Plan.

Dreadlocks

Chastity Jones was among a group of  applicants who were selected for a group interview by Catastrophe Management Solutions on May 12, 2010.  Jones, who is black, had blond hair that was dreaded in neat curls, or “curllocks.”  Jones was offered a position as a customer service  representative.

According to the EEOC, Jones’s offer of employment was rescinded later that day when  human resources staff met with Jones to discuss her training schedule and realized that Jones’s curled hair was in  dreadlocks.  The manager in charge told  Jones  the company did not allow dreadlocks and that she would have to cut  them off to obtain employment.  Jones  refused to cut her hair.

The EEOC argues that Catastrophe’s ban on dreadlocks discriminates against African-Americans is based  on physical and/or cultural characteristics in violation of Title VII. The EEOC filed suit in U.S.  District Court for the Southern District of Alabama (Equal Employment Opportunity Commission v. Catastrophe Management  Solutions, Inc., Civil Action No. ­­­­­­­­­­­1:13-cv-00476-CB-M).

“This litigation is not about policies  that require employees to maintain their hair in a professional, neat,  clean or conservative manner,” said C. Emanuel Smith, regional attorney for the EEOC’s Birmingham District Office.  “It focuses  on the racial bias that may occur when specific hair constructs and styles are  singled out for different treatment because they do not conform to normative standards  for other races.”

Third time’s the Charm?

The EEOC reports that three federal judges have issued rulings in different cases in recent years rejecting Abercrombie’s claim that it would create an undue hardship and/or violate Abercrombie’s free speech rights to require the company to permit employees to wear hijabs. Title VII requires employers to accommodate the sincere religious beliefs or practices of employees unless doing so would impose an undue hardship on the business.

Abercrombie & Fitch last month settled two EEOC lawsuits involving its “Look Policy” –  an internal dress code that included a prohibition against head coverings.

The settlement follows a ruling by U.S. District Judge Yvonne Gonzalez Rogers ruled that Abercrombie was liable for religious discrimination in the firing of Muslim employee Umme-Hani Khan for wearing her hijab.

Khan, 19, started working in  2009 at the firm’s Hollister store (an Abercrombie & Fitch brand targeting teenagers aged 14 through 18) at the Hillsdale Shopping Center in San Mateo, Calif.  As an “impact associate,” she worked primarily in the stockroom.  At first she was allowed to wear headscarves in Hollister colors. Several months later, she was informed that her hijab violated Abercrombie’s “Look Policy” and that she would be taken off schedule unless she removed the hijab while at work.  Khan refused and was fired on Feb. 23, 2010.

Judge Rogers rejected Abercrombie’s argument that its Look Policy goes to the “very heart of [its] business model” and any deviation from the policy threatened the company’s success. She said Abercrombie offered only “unsubstantiated opinion testimony of its own employees to support its claim of undue hardship.”  That testimony, she added, demonstrated “their personal beliefs, but are not linked to any credible evidence.”

Abercrombie settled Hahn’s case along with a lawsuit by Halla Banafa, who was not hired as an “impact associate” in Abercrombie’s Great Mall outlet in Milpitas, Calif., because of her headscarf. In April, U.S. Judge Edward J. Davila dismissed Abercrombie’s undue-hardship claims on summary judgment, citing the “dearth of proof” linking store performance or the Abercrombie brand image to “Look Policy” compliance.

The settlement requires Abercrombie to create an appeals process for denials of religious accommodation requests, inform applicants during interviews that accommodations to the “Look Policy” may be available, and incorporate headscarf scenarios into all manager training.  The company must make regular reviews of religious accommodation decisions to ensure consistency and provide biannual reports to the EEOC and Khan.  Khan and Banafa will also receive $71,000 under the terms of the settlement.

In a third lawsuit not part of this settlement, a district court in Tulsa, Okla., ruled on July 2011  that it was religious discrimination for Abercrombie not to hire a Muslim applicant for a sales position due to her hijab. The case is pending on appeal.