With an increased budget and additional investigative resources, the Equal Employment Opportunity Commission (EEOC) has announced its renewed focus on combating systemic discrimination and its intent to pursue a greater number of large-scale enforcement actions through FY 2012 where it seeks relief for numerous applicants or employees. Known as a “pattern and practice” case, this type of litigation poses the greatest exposure and risk to employers through challenges to policies and practices in the workplace that allegedly have a discriminatory impact on a protected class and relies heavily on statistical evidence. In this past year, there has been a spate of EEOC enforcement actions seeking relief on a class basis. Now more than ever, it is imperative for employers to be cognizant of these large-scale cases, to understand the nuances involved in the EEOC’s handling and prosecution of such cases, and to be prepared to timely challenge any attempts by the EEOC to overreach.

What Are These “Class Action Monsters”?

In typical employment discrimination class actions, the named plaintiff is required to comply with the certification requirements of Rule 23 of the Federal Rules of Civil Procedure, including numerosity, commonality, typicality, and adequacy of representation. Many class actions are weeded out or otherwise prevented from being litigated on a class basis if certification is denied under Rule 23. However, the EEOC is not required to comply with Rule 23 and, as a result, can easily advance class claims in federal court. Because Rule 23 does not apply in EEOC litigation, these cases can degenerate into the proverbial “class action monster.”

Further, “pattern and practice” cases are generally evaluated by the courts using a bifurcated, two-phased burden-shifting paradigm adopted by the U.S. Supreme Court in Int’l Brotherhood of Teamsters v. United States instead of the more traditional McDonnell Douglas Corp. v. Green or mixed-motive burden-shifting frameworks generally applied in discrimination cases. In Phase I of the Teamsters framework, the plaintiff bears the burden to prove that the discrimination was “a regular procedure or policy” followed by the employer. The plaintiff must prove more than the mere occurrence of isolated or sporadic discriminatory acts, but must establish that discrimination was the company’s “standard operating procedure,” which is typically accomplished via a combination of statistical and anecdotal evidence. Once the plaintiff meets its burden, the burden then shifts to the employer to defeat the plaintiff’s prima facie showing by demonstrating that the plaintiff’s proof is either inaccurate or insignificant. In essence, the employer must show that the EEOC’s statistical analysis was flawed or provide a nondiscriminatory explanation.

If the plaintiff successfully meets its burden in Phase I, it creates a rebuttable presumption that all individual employment decisions made during the period of the pattern or practice were discriminatory. This presumption then carries into Phase II, which addresses the award of individual damages to individual claimants. Because of the inference from Phase I that any particular employment decision was made in pursuit of a discriminatory policy, the burden rests on the employer in Phase II to demonstrate that the employment decision for each individual employee was not the product of discrimination, but was taken for lawful reasons. Phase II is essentially a series of individual mini-trials, which often can take several weeks or months and several juries depending on the number of class members.

Two Types of EEOC “Class” Cases

Generally, there are two types of EEOC “class” cases: 1) Section 706 of Title VII, 42 U.S.C. § 2000e-5, and 2) Section 707 of Title VII, 42 U.S.C. § 2000e-6, commonly known as a “Commissioner’s Charge.” The word “class” is in quotation marks because although the EEOC often utilizes that term when it seeks to represent a group of aggrieved persons under sections 706 or 707, these cases are markedly different from a traditional Rule 23 class action: see table.

Strategies for Dealing with the EEOC

There is little doubt that EEOC pattern and practice cases are increasing in number and complexity. And, although the EEOC has broad investigatory and prosecutorial powers to eradicate discrimination in the workplace by utilizing sections 706 and 707 to bring large-scale enforcement actions, employers are not without the ability to challenge attempts by the EEOC to overreach or pursue overly aggressive litigation strategies.

Employers should be vigilant in determining whether the EEOC has followed its own administrative requirements before it files suit. For example, some courts have analyzed whether the EEOC, during the administrative phase of the case, gave fair notice to the employer of class claims; whether the EEOC conducted an investigation under a class basis; and whether the EEOC violated its own statutory duty to negotiate in good faith during the mandatory conciliation phase of the case. In cases where the EEOC has flagrantly disregarded its own administrative requirements, courts have dismissed the EEOC’s case and have even required the EEOC to pay the attorneys’ fees of the defendant employer.

The EEOC has recently suffered some significant setbacks regarding its aggressive prosecution of pattern and practice cases:

On October 26, 2010, in EEOC v. Bloomberg L.P., the District Court for the Southern District of New York dismissed retaliation claims in a gender (pregnancy) discrimination lawsuit filed by the EEOC on behalf of a nationwide class of women. The Bloomberg court held that dismissal of these claims was appropriate in light of the EEOC’s failure to reasonably and flexibly participate in conciliation efforts – calling the EEOC’s approach to conciliation as a “weapon to force settlement.” The court went on to state that “[t]he EEOC consistently stonewalled in the face of ‘plainly reasonable’ requests from Bloomberg to obtain more information about the [retaliation] claims to formulate a proposal,” particularly as it faced the EEOC’s demands for over $41 million in settlement funds.

  • On September 20, 2010, in EEOC v. Cintas Corp., the District Court for the Eastern District of Michigan dismissed a gender discrimination action filed by the EEOC on behalf of 13 women. The Cintas court held that the EEOC’s litigation strategy of “sue first, ask questions later” proved fatal to its claims since it failed to engage in the integrated, multistep enforcement procedure required as set forth above to exhaust administrative remedies in section 706 actions.
  • On February 9, 2010, in EEOC v. CRST Van Expedited, Inc., the District Court for the Northern District of Iowa dismissed a sexual harassment/hostile work environment case filed by the EEOC on behalf of 67 women and awarded CRST over $4 million in attorneys’ fees, finding the EEOC’s prosecution of the case to be frivolous, unreasonable and without foundation. Again referring to the EEOC’s litigation strategy of “sue first, ask questions later,” the court found that the EEOC did not investigate or attempt to conciliate the individual claims in the case as required by section 706.
  • On January 15, 2009, in EEOC v. Agro Distribution, LLC, the Fifth Circuit Court of Appeals affirmed the entry of summary judgment in favor of Agro awarding $225,000 in attorneys’ fees to Agro and against the EEOC for its pursuit of a frivolous disability discrimination claim and failing to engage in good faith conciliation.

The statutory obligations of the EEOC to investigate, determine reasonable cause and conciliate serve the purposes of ensuring an employer is fully notified of the violations being alleged against it and resolving any violations through conciliation and voluntary compliance. However, the EEOC often pursues aggressive litigation strategies at odds with its statutory obligations; thus, leaving jurisdictional challenges available to employers, as in Cintas and CRST.

With the EEOC’s renewed focus and efforts toward prosecuting pattern and practice cases, employers are wise to engage experienced counsel in this area to help:

  • Watch for early indicators of class exposure, such as numerous EEOC charges with the same or similar allegations;
  • Closely scrutinize individual charges of discrimination, and resolve them early when feasible;
  • Ensure careful and thoughtful responses to requests for information issued by the EEOC so as to avoid expanding the scope of the investigation when possible; and
  • Document any failures by the EEOC to follow its own statutory requirements and duties to preserve all defenses should a large scale enforcement action be filed.