In the spirit of “it ain’t over ‘till it’s over,” this week’s decision in EEOC v. Bass Pro Outdoor World, LLC, et al.,Case No. 11-CV-3425 (S.D. Tex. July 30, 2014), by Judge Keith Ellison of the U.S. District Court for Southern District of Texas is a stark about-face from the Court’s own ruling from earlier this year (which we blogged about previously here.) In the process, the Court makes several sweeping rulings concerning EEOC-initiated litigation procedure and addresses the very fabric of Title VII itself.  The sheer scope of the Court’s ruling makes it an important read for employers and practitioners alike. Of course, the case is not without controversy, especially given the Court’s tacit invitation to Bass Pro to appeal its ruling.

Background

Historically, the EEOC has used two avenues for suing employers for alleged discrimination under Title VII — Section 706 and Section 707 actions. Section 706 cases have traditionally been viewed as a “representative” actions, where the EEOC steps into the shoes of individual claimants and sues on their behalf (some of these actions are one-off, single-claimant actions, while others involve a group of similar claimants). Section 706 claimants can be awarded typical economic damages, as well as compensatory and punitive damages. Section 707, on the other hand, authorizes the EEOC to bring a systemic case alleging a universally applied “pattern or practice” of discrimination. Because a § 707 case is brought directly by the EEOC on its own behalf, it may only obtain equitable relief and damages, such as back pay. Pattern or practice cases follow a burden-shifting framework first articulated in Franks v. Bowman Transportation Company, Inc., 424 U.S. 747 (1976), and later refined in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). The Teamsters framework typically requires a showing by the EEOC that discrimination is the employer’s “standard operating procedure.” If the government meets that difficult burden of proof, it arguably creates a presumption that all individuals in the EEOC’s “class” were victims of discrimination, leaving it to the employer to rebut individual claims, often years after employment decisions were made. Obviously, a class-wide presumption of discrimination is deeply troubling for employers.

This all sets the stage for the case against Bass Pro. There, the EEOC has attempted to bring a  “hybrid” claim, where it seeks to use the Teamsters pattern or practice framework typically used under § 707, in a § 706 action (with the full boat of damages allowable under that section). Bass Pro, of course, vigorously opposed the EEOC’s play, insisting that to cut-and-paste the Teamsters model into § 706 would essentially make a § 707 case redundant and obsolete.

And the Court agreed with Bass Pro.  At least at first.

On May 31, 2012, the Court sided with Bass Pro, holding that “the EEOC cannot bring a hybrid pattern or practice claim that melds the respective frameworks of § 706 and § 707.” Id. at 29. The Court noted that § 707, unlike § 706, expressly authorized the use of a pattern-and-practice framework for determining claims and that the differences in remedies available under each section counseled in favor of applying two different frameworks. Id.

The Court’s About-Face

But the EEOC repeatedly asked the Court to revisit its decision, and eventually the Court relented and took another look.  Judge Ellison took his original ruling, and turned it on its head. Specifically, the Court held that the Teamsters analysis canapply to both § 706 and § 707 claims. Id. at 2. In doing so, the Court rejected the Defendants four primary arguments, though not without noting the strength of the Defendants’ positions:

  •  First, even though Section 707 expressly authorizes pattern-or-practice litigation (and Section 706 does not), the Court held that because Congress knew about the Teamsters framework, it must have implicitly included it in drafting Section 706, even though it expressly included it in Section 707.  Id.at 23-26.
  • Second, even though Congress authorized different damages under Sections 706 and 707, the Court concluded that this distinction did not limit the way in which the EEOC could prove facts to support any sort of relief, albeit equitable relief or monetary damages.  Id. at 26-28.
  • Third, the Court rejected Defendants’ position that applying a Teamstersframework in a jury trial on Section 706 claims — in contrast to § 707 proceedings where evidence is presented to a court — would create Seventh Amendment problems because a second jury may be required to re-examine facts already decided by a first jury.  The Court deferred the constitutional concerns for another day, noting that it “will carefully consider the Seventh Amendment implications . . . when the Court revisits a case management plan.”  Id. at 30.
  • Fourth, the Court declined to adopt the reasoning of analogous cases cited by Defendants, instead relying heavily on the Sixth Circuit’s decision in Serrano v. Cintas Corp.  The Court noted, however, that “lower courts have been riven by disagreement” and that “this is an area of law ripe for further illumination from the appellate courts.”  Id. at 2.

Finally, in the same order, the Court again addressed the EEOC’s conciliation obligations — an issue that has been a bone of contention in this case for years, as discussed here and here. Defendants moved for summary judgment, asserting that the EEOC had not sufficiently fulfilled its obligations to conciliate the Section 706 claim on behalf of individuals who had not been identified before filing suit. The Court rejected this argument, noting that the EEOC could conduct an adequate investigation, even where it does not know the specific identities of all those allegedly aggrieved. The decision appears to leave untouched the Court’s earlier ruling that the EEOC cannot sue on behalf of claimants that had not even applied at the time the parties conciliated the underlying claims.

Where does this leave Bass Pro? In a fairly stunning move, Judge Ellison acknowledged that he was “fully sensitive to the strength of the antithesis” of his decision. Id. at 2. Indeed, the Court went so far as to express that it “would look favorably upon a motion for certification” of an appeal of his decision.  Id. at 46. The Court has essentially invited Bass Pro to appeal his ruling to the U.S. Court of Appeals for the Fifth Circuit. Readers of this blog should stay tuned, as we suspect that is precisely what Bass Pro will do.

Implications For Employers

The Court’s decision in Bass Pro has sent reverberations throughout the employer community, and may further muddy the waters on some fundamental structural issues of EEOC-initiated litigation. Of course, this is just one court’s take on the Section 706/707 issue, and even the judge acknowledged that there was “ample support” for Bass Pro’s positions. Thus, this case has limited presidential value, but we expect the EEOC will attempt to expand the impact of the Bass Pro decision to other jurisdictions or even different legal theories. The EEOC v. Bass Pro decision essentially leaves employers with less clarity on the rules of the road in government-initiated litigation than ever before.