Tag Archives: class action

EEOC Trolling for Plaintiffs? Say it Ain’t so…

Contributed by Julie Proscia

There are many disturbing facets to this story that will both outrage and terrify employers. As such, I will try to narrow the scope as best as possible and weed through the issues. Last month, Case New Holland Inc. filed suit against the federal Equal Employment Opportunity Commission (“EEOC”) in the U.S. District Court for the District of Columbia. The suit alleges that the EEOC unconstitutionally trolled for class members in a potential age discrimination class action by essentially spamming over 1,000 of Case New Holland’s business email domains.  The facts alleged are outrageous for two reasons.  First, the EEOC sent a “spam like” survey regarding working conditions to over 1,000 email addresses and second, it did this two years after the complaint was filed and after allegedly remaining silent and not pursuing any charges for over a year.

The latter fact, the dormancy or silence, is definitely not a new issue. Charges and complaints often languish in EEOC purgatory for months if not years. The length of time for an investigation is not capped with a statute of limitation and there is no watch dog per se to spur completion. Once a charge gets sent to the bottom of the pile, it can be forgotten about for a long time. As management, this can be a catch twenty two: it is frustrating in the desire to have closure, but also allows for a distance that eases tensions and memories. 

The more controversial part of the story is the email blast.  The mass email blast takes the investigation process to a whole new digital level of response that is disconcerting. The mass email was transmitted at 8:00 a.m. and was sent in survey form.  Not only did this early morning email disrupt the enterprise, but it also elicited statements from upper level management that represent the corporation. This email went out not only to non-managerial employees, but also to members of management and executive level staff, including members of the counsel’s office. Some of the managers and executives were at a level where their responses could bind the company and be classified as admissions, unlike in the discovery process of a case where depositions are attended by counsel, this email went out blind.  Case New Holland Inc. was never showed nor told of the survey before its transmission. 

That brings us to back to the complaint. In its complaint, Case New Holland Inc. is seeking a permanent injunction prohibiting the EEOC from soliciting its employees with mass emails; a court order requiring that the EEOC turn over any and all information obtained through the email survey; and an order enjoining the EEOC from utilizing the information obtained and from disseminating the information to any third parties.  All of which are aggressive requests to combat an aggressive move on the part of the EEOC.

This is a case that we will monitor closely and update you on. Technology may make our lives easier, but it also adds an increased dimension of liability. If agencies can send out a mass spam request for information without a company’s knowledge, the class of plaintiffs may have just increased exponentially.

String of Recent Decisions Confirm Employer’s Right to Enforce Class Action Waivers in Arbitration Agreements

Contributed by Suzanne Newcomb

In June, the Supreme Court upheld a contractual ban on class arbitration despite that the cost of individual arbitration so exceeded the potential recovery it made pursuing the claims impractical.  American Express v. Italian Colors.  AmEx was not an employment case but it begged the question:  might a bar to class or collective arbitration of FLSA claims also stand?  The Second Circuit answered with an unequivocal “yes” on Friday in Sutherland v. Ernst & Young and again Monday in Raniere v. Citigroup.

Sutherland earned a set salary for “low level clerical work.”  She sued for unpaid overtime “on behalf of herself and all others similarly situated.”  In addition to standard arbitration language, the agreement mandated that disputes “pertaining to different employees will be heard in separate proceedings.”  Sutherland sought $1,867 and claimed arbitration could cost $200,000.  She argued that the cost of individual arbitration so dwarfed the amount in controversy, it removed any incentive to enforce the statute.  The district court invalidated the arbitration agreement, finding the cost of individual arbitration prevented plaintiffs from “effectively vindicating” their rights.  Quoting AmEx, the Second Circuit reversed the holding, “the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy.”   

So what are the practical implications?  We can confidently include class action waivers in arbitration agreements.  You can do it, does that mean you should?  The answer to that question, like the larger question of whether any arbitration agreement is right for your organization, is not as clear-cut.  Plaintiffs tend to file in court and fight for their right to litigate, thus adding a costly battle to the war.  Traditional arguments against enforcement remain, i.e. fraud, duress, unconscionability, etc.  Moreover, AmEx left the door open (though only slightly) for plaintiffs to argue an arbitration agreement is unenforceable when arbitration is unaffordable and thus prevents the plaintiff from pursuing her claims. 

Even when enforced, arbitration agreements are no panacea.  Arbitration is more private than traditional litigation and it can move more quickly, which can translate to lower attorney fees.  Arbitration removes the jury from the equation and with it the possibility of a “run away jury.”  However, the parties must pay the arbitrator.  Arbitrators tend to limit discovery, may not apply the rules of evidence as strictly and some shun summary judgment (a powerful tool for employers).  Furthermore, arbitrators are notorious for split decisions and there is very little room for appeal if you do not like the decision.  An effective class action waiver may mean fewer claims, but it could force an employer to fight a multitude of small claims.  Deciding whether an arbitration agreement is right for your organization and if so, whether that agreement should include a class action waiver, requires an individualized assessment and should not be taken lightly.

Beware of the EEOC’s Continued Efforts to Bring Class Actions Against Employers

Contributed by Sara Zorich

January 11, 2013 was a victory day for the Equal Employment Opportunity Commission (EEOC) in the matter of EEOC v. UPS, 2013 U.S. Dist. LEXIS 4462 (N.D. Ill. Jan. 11, 2013) and a day on which employers should take note that courts have made it less burdensome in the Northern District for the EEOC to bring class action lawsuits against employers.

In 2009, the EEOC filed a complaint on behalf of Trudi Momsen (Momsen) and other unidentified class members alleging that United Postal Service (UPS) violated the Americans with Disabilities Act (ADA) by permitting Momsen and the other class members only twelve-month leaves of absence and failing to provide them with reasonable accommodations for their disabilities.  The court dismissed the complaint on the basis that the EEOC had failed to plead that Momsen and others were qualified individuals under the ADA.  The EEOC then filed an amended complaint pleading additional facts about Momsen, added an additional individual and plead more specific facts stating that the unidentified class members were qualified individuals able to perform the essential functions of their job and that UPS failed to reasonably accommodate these unidentified individuals.  The EEOC did not plead any specific facts with regard to any of the unidentified individuals.  The court once again dismissed the EEOC’s complaint on the basis that it failed to plead any specific facts regarding the unidentified individuals.  The EEOC then sought leave to file a second amended complaint that added the claim that the unidentified individuals were part of a common scheme to terminate individuals with disabilities through an alleged inflexible process and lack of individual analysis, which the Court denied.

In response to the court’s denial, the EEOC then filed a motion requesting the district court to certify the matter for appeal to address whether the EEOC must plead individual facts regarding class members.  In its response to the EEOC’s motion, the court reviewed its prior rulings, reviewed the case law and reversed its prior dismissals of the EEOC complaints.  In a change of stance, the court held that the EEOC’s first amended complaint met the sufficient pleading standard since it identified “the statutes that UPS allegedly violated; the time frame in which the alleged violations occurred; the names of two presently identified victims; a general description of the class of aggrieved persons; the specific claims alleged and their elements as to the charging party and the class of aggrieved persons; the types of conduct to which the named claimants and the unidentified class were subjected; and the remedies being sought.”  Thus, the court changed its previous view and now found that the EEOC did not have to plead any specific facts about unidentified class members in order to survive a motion to dismiss.

Take away: Employers should be cognizant that the EEOC is aggressively pursuing class actions against employers.  Furthermore, based on the ruling in this matter, the EEOC may file a class action without having to plead any specific evidence regarding unidentified class members.  This does not mean that the EEOC will be victorious on the merits of the case, but rather that this minimal pleading will allow them to survive a motion to dismiss.

The U.S. Supreme Court Is Back In Session – What Does This Mean For Employers?

Contributed by Heather Bailey

As with every Fall, the United States Supreme Court is back in session with less than the normal amount of employment cases, but important ones nonetheless.  This session includes the following employment (and employment-related) cases up for decision by our highest court:

  • To be a true “supervisor” for purposes of Title VII (i.e., race harassment), does the individual have to have authority to hire, fire, and discipline the alleged victim in order for the employer to be vicariously liable?  The problem is that some federal appeals courts and the Equal Employment Opportunity Commission find that just overseeing and managing the employees’ day-to-day duties is sufficient.
  • There are two pending class action disputes – i) does the employer’s offer of judgment (aka settlement offer) that satisfies the solo plaintiff’s claims moot the Fair Labor Standards Act’s collective action, vitiating the other member’s ability to be part of the class action; and ii) can a court certify a class of individuals under Rule 23 without the plaintiff(s) first having to show with admissible evidence that all of the class members are entitled to some damages?
  • One ERISA case will be decided as to whether an employer’s health benefit plan can seek full reimbursement from plan participants where the participants sought additional recovery from third parties during personal injury settlements. What is a fiduciary’s “appropriate equitable relief” will be challenged because there are times the participant’s third party recovery is less than the medical expenses accrued.
  • An affirmative action case against the University of Texas — although not employment-related — could have a significant impact on future employment litigation.  Here, the woman is alleging that the use of affirmative action racial quotas for admission is a violation of her Constitutional rights.  The Equal Employment Advisory Council filed a brief for neither party, but asked the Court to take into consideration its decision will have on future employment affirmative action cases for private employers.

Stay tuned as SmithAmundsen will report back immediately once decisions are rendered in these cases.