Why it matters

Siding with the Equal Employment Opportunity Commission (EEOC), a panel of the Fifth Circuit Court of Appeals determined that the agency could bring a pattern or practice suit against an employer based on representative liability under Section 706 of Title VII. The Commission issued a charge that Bass Pro Outdoor World discriminated against African-American and Hispanic applicants at its stores across the country. The employer moved for summary judgment, countering that the EEOC can only bring pattern or practice claims under Section 707 of Title VII. A federal district court denied the motion and the federal appellate panel affirmed. While Section 707 specifically authorizes pattern or practice actions, the court said nothing prevented the EEOC from proceeding under Section 706. Further, the agency was not required to identify any aggrieved individuals by name to satisfy the requirement of conciliation prior to bringing suit. The EEOC informed the sporting goods retail chain about the class it allegedly discriminated against, the panel said, and the parties had meetings about the charges, so Bass Pro was clearly on notice as to the claims against it.

Detailed discussion

In February 2007, the Equal Employment Opportunity Commission (EEOC) issued a Commissioner’s Charge stating that the agency had “reason to think” Bass Pro Outdoor World had discriminated against African-American applicants and employees on the basis of their race at retail stores and facilities nationwide dating back to November 2005. An amended charge expanded the allegations to include Hispanic and Asian applicants and employees.

Following an investigation, the EEOC issued a Letter of Determination in April 2010 that it had “good cause” to believe the allegations were true, launching the conciliation process. The agency told Bass Pro it had identified about 100 individuals who were victims of discriminatory hiring, but it did not provide specific names. Although the parties exchanged several letters and met in person, the EEOC declared conciliation unsuccessful in April 2011.

The agency then filed suit in Texas federal court in September 2011 alleging Bass Pro had a pattern or practice of discriminatory hiring against minority applicants in violation of Title VII. The EEOC did not identify aggrieved individuals and stated its intent to proceed under the framework established in the U.S. Supreme Court decision inInternational Brotherhood of Teamsters v. U.S.

Under that two-part framework, the agency would first establish that unlawful discrimination was a regular procedure followed by the employer with a subsequent remedial phase to determine the scope of individual relief.

Bass Pro moved to dismiss, arguing that the EEOC was not allowed to bring a pattern or practice claim under Section 706. The district court agreed and tossed the case. The EEOC then filed an amended complaint featuring the names of more than 200 aggrieved minority individuals the agency characterized as “exemplars” of the employer’s pattern or practice of discrimination. Bass Pro moved for summary judgment.

The district court denied the motion and reversed its previous decision, ruling that the EEOC could proceed within theTeamsters framework to prove a pattern or practice claim under Section 706. Bass Pro appealed to the Fifth Circuit Court of Appeals.

Although the federal appellate panel recognized that Section 706 of Title VII does not explicitly authorize pattern or practice suits—as Section 707 does—the Fifth Circuit relied upon a 1980 U.S. Supreme Court case emphasizing that Congress granted the EEOC “broad enforcement powers” “to advance the public interest in preventing and remedying employment discrimination.” To further that goal, the Justices stated themselves reluctant to disable the agency from advancing the public interest and allowed the agency to pursue the case with an order bifurcating the issue of class liability from individual damages.

“We heed the Court’s reluctance,” the Fifth Circuit wrote. “We conclude that Congress did not prohibit the EEOC from bringing pattern or practice suits under Section 706 and, in turn, from carrying them to trial with sequential determinations of liability and damages in a bifurcated framework. Bifurcation of liability and damage is a common tool deployed by federal district courts in a wide range of civil cases—well within its powers under Rules 16 and 26. We decline to imply limits upon the trial court’s management power that not only cannot be located in the language of the statute but also confound the plain language of the Federal Rules.”

Bass Pro’s other arguments also failed to persuade the court. Allowing pattern or practice suits under Section 706 would not render Section 707 functionally superfluous, the panel said, as the two provisions have multiple differences, such as the right of private individuals to intervene in Section 706 actions not found in Section 707 and the agency’s access to trial by a three-judge panel when proceeding under Section 707, but not Section 706.

The employer challenged the use of the Teamsters model, arguing that it would offend both its due process and Seventh Amendment rights. If it were to be found liable in the first stage of the process, Bass Pro argued, it could then be exposed to damages for the thousands of individuals the EEOC claimed were discriminated against without the opportunity to present distinct defenses to damages against each aggrieved person.

“But pattern or practice suits characteristically involve allegations of discrimination on a large scale—and the pressure to settle that attends such extensive litigation—whether they are brought under Section 706 or Section 707,” the court said. “The pressure remains a concern in the cost/benefit analysis inherent in settlement decisions, but necessary risks do not offend due process as long as the risk enhancements flow from structures that do not themselves offend due process.”

This argument also slighted the management tools at the hand of the district court, the panel wrote, unimpressed by the purported complexities of the case. While the EEOC’s pursuit of compensatory damages may prove difficult to administer, the agency “may conclude that its obligation to enforce Title VII is best discharged by not pursuing in this hiring case the relatively nuanced and elusive compensatory damages,” the court suggested. “The administration of this litigation is a challenge, but one best left for the able district court.”

Finally, the Fifth Circuit addressed Bass Pro’s concern that the EEOC failed to fulfill its mandatory administrative prerequisites to filing suit under Section 706 by neglecting to name specific aggrieved individuals and investigate and conciliate their individual claims. Citing a Ninth Circuit decision interpreting the U.S. Supreme Court’s recent holding inMach Mining v. EEOC, the panel held that the EEOC can meet its conciliation and investigation requirements without naming individual class members.

“Efforts began in April 2010, when the EEOC informed Bass Pro that it had reasonable cause to believe that Bass Pro had engaged in discriminatory practices,” the court said. “Even if the EEOC did not initially provide the names of specific victims, it informed Bass Pro about the class it had allegedly discriminated against—African-American, Hispanic, and Asian applicants. The parties negotiated for eleven months, via letters and face-to-face meetings about the charges. These efforts clearly put Bass Pro on notice as to the claims against it.”

The EEOC’s reliance on statistical and anecdotal evidence—rather than evidence about specific aggrieved individuals—did not demonstrate the agency neglected its investigation duties, the panel wrote, with its review limited only to whether an investigation occurred and not its sufficiency.

An investigation clearly occurred, the court said, with the exchange of numerous letters and meetings and production by Bass Pro of over 230,000 pages of documents. “This investigation meets the EEOC’s statutory burden,” the panel said. “Since the EEOC is authorized to bring a pattern or practice suit under Section 706, the fact that it focused on pattern or practice evidence instead of individual claims during the investigation and conciliation process is of no consequence. Our review is only to determine whether the EEOC engaged in these steps, which it did.”

To read the opinion in EEOC v. Bass Pro Outdoor World, click here.