In a widely publicized case, the EEOC obtained a $1.45 million settlement on behalf of female mortgage consultants in Columbus, Ohio who it alleges were subjected to a hostile work environment and denied lucrative sales leads and training opportunities. Employers can learn two lessons from the case: (1) the method of distributing sales leads, customers, and territories should be defensible and (2) litigation holds should be promptly and effectively implemented as soon as litigation is anticipated.

Aimee Doneyhue worked at JPMorgan Chase in Columbus, Ohio as a mortgage consultant, a commission-based sales position. Doneyhue alleged that she was subject to abusive and harassing behavior based on her sex by her manager and other managers. After complaining about the behavior, she alleged that Chase retaliated against her by tampering with her commissions and loan assignments and subjecting her to heightened job scrutiny and continued ridicule. She was terminated in May of 2008.

Doneyhue filed a charge with the EEOC alleging discrimination and retaliation. The EEOC found probable cause in Doneyhue’s charge and filed a class action lawsuit against Chase in September 2009. The EEOC alleged that Chase assigned sales calls in an unfair way to women, which directly affected their ability to earn bonuses and commissions, and permitted a hostile work environment to exist.

The EEOC successfully obtained sanctions against Chase for failing to preserve telephone skill login data records relating to the assignment of loans to mortgage consultants.  Chase argued that the data was purged as a result of its routine destruction of electronically stored information. The Court was unsympathetic, holding that Chase had notice of the scope of the EEOC’s claims and that its failure to implement a litigation hold was “inexcusable” and the result of at least negligence, which bordered on intentional conduct. As a result of that sanction award, the Court would have made an instruction to the jury at trial (if the case had gone to trial) that the jury could view the absence of the records in a way negative to Chase’s case, meaning that the jury was free to infer that the records would have indicated discriminatory loan assignments occurred. The Court also precluded Chase from filing for summary judgment.

Chase and the EEOC ultimately resolved the matter before trial, resulting in a $1.45 million settlement, $470,000 of which represents punitive damages. In addition, Chase is required to institute an automatic call distribution system and maintain records regarding that system and the assignment of mortgage consultants to different skill levels of calls. Chase must also make reports to the EEOC for two years on any allegations of sex harassment; conduct discrimination, harassment, and retaliation training for managers and supervisors annually for at least two years; and post notice of its anti-harassment, anti-discrimination, and anti-retaliation obligations to employees.

Lessons Learned

Lesson #1:

It is difficult to ensure equity in the assignment of sales leads, customers, and territories because these opportunities are not amenable to exact division and because many variables determine who is the right sales person for each opportunity. However, these assignments directly affect the ability for sales personnel to earn commissions and bonuses. The assignment of sales leads, customers, and territories should be equitable based on legitimate, nondiscriminatory criteria (prior experience with the territory or customers, skill level, product knowledge, and experience or tenure, among others). More importantly, the method of assigning sales leads, customers, and territories should be defensible and explainable if challenged, and any necessary training or advancement opportunities should be equally available to all.

Lesson #2: 

Companies should ensure that litigation holds preserving relevant paper documents as well as electronic documents (including ceasing any regular destruction of electronic documents) are implemented as soon as litigation is anticipated. This should be at the first notice of probable litigation, i.e., at the time a litigation threat letter is received, at the time of receipt of notice that a charge of discrimination has been filed, etc. These litigation holds should be expanded as soon as the litigation’s scope or potential litigation’s scope is expanded. A failure to implement a litigation hold can: (1) turn a potentially strong case into a weak one due to lost evidence supporting your case; (2) lead to adverse inferences about lost evidence and whether the evidence would have been helpful to the opposing side; or, (3) both.