EN BANC PANEL OF 9TH CIRCUIT COURT RULES IN DUKES V. WAL-MART

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On April 26, 2010, a panel of eleven 9th Circuit Court judges ruled 6-5 that a class approximated at 500,000 female Wal-Mart employees could proceed with a class action suit in accordance with Rule 23 of the Federal Rules of Civil Procedure. These rules are available here, and the text of the case is available here.

The case involves an original claim by six named plaintiffs filed on June 8, 2001 that females employed at Wal-Mart are (1) paid less then men in comparable positions even when women have higher performance rating and more seniority and (2) are less likely to be promoted and wait longer for their promotions than men. The plaintiffs charged that:

"Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.”

The plaintiffs sought to certify a class of women working at any Wal-Mart store on or after December 26, 1998. Considering that Wal-Mart had 3,400 stores in 41 regions, the estimated size of the class in the original claim was approximately 1.5 to 1.6 million women.

In 2004, the District Court for the Northern District of California certified a proposed class of females on issues relating to alleged discrimination, including liability for punitive damages, injunctive relief, and declaratory relief, but rejected a proposed class for back pay determination. In 2007, a three-judge panel of the 9th Circuit ruled 2 to 1 to affirm the district court ruling. Wal-Mart then appealed for the en banc review.

In a nutshell, the majority of six in the en banc panel made three rulings: (1) that Rule 23 was satisfied for injunctive relief, declaratory relief, and back pay, for females employed at Wal-Mart on or after June 8, 2001 (approximately 500,000 females), but remanded to the district court on (2) a separate class of current female employees seeking punitive damages relating to the promotion claims and (3) a separate class of female employees no longer working at Wal-Mart at the time the suit was filed. The dissenting judges argued that the majority rulings were “made with virtually no analysis” and is “wrong both as a matter of law and fact”, and that it establishes a split among circuit courts.

This is a complex ruling. We will update with a more detailed analysis in the coming weeks. In all likelihood, we are a looking at a landmark Supreme Court ruling somewhere down the line.

SUMMARY OF DISCRIMINATION COMPLAINTS MADE TO OFCCP IN FISCAL YEARS 2004-2010

by David Cohen, President, DCI Consulting Group

As described in an earlier DCI client update, the Department of Labor released a database summarizing recent OFCCP enforcement activity. One interesting section of that database lists individual complaints of discrimination made to OFCCP from Fiscal Years 2004-2010. DCI staff summarized data from multiple spreadsheets to produce these tables. These include complaints of discrimination made under the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), Section 503 of the Rehabilitation Act of 1973, and Executive Order 11246.

Unfortunately, it is difficult to identify meaningful trends across OFCCP complaint data. However, this in and of itself is an interesting finding, primarily because very few complaints are made to OFCCP in any given year regardless of mandate. In fact, the number of complaints made within mandate was oftentimes less than 1% of the number of audits OFCCP conducts in a given year. This finding isn’t particularly surprising for complaints made under EO 11246 and Section 503, because the EEOC enforces similar statutes that offer more lucrative settlements (compensatory and punitive damages) for victims of discrimination.

In the case of complaints made under VEVRAA, OFCCP data suggest that this was the most common mandate that complaints were made under (n=352), yet only about 3% (n = 11) of those claims led to a finding of discrimination. One interesting finding is that, in many cases, the mandate that a complaint was made under eventually led to a finding of discrimination against a group that was not protected under that mandate (e.g., pregnancy and religion discrimination findings stemming from VEVRAA complaints), accommodation findings stemming from EO 11246 complaints, etc.). In summary, based on data released by DOL, complaints of discrimination appear to be made very infrequently to OFCCP, and result in very few actual findings of discrimination.

TWO RELIGIOUS GARB RULINGS FAVORING PLAINTIFFS

by Art Gutman Ph.D., Professor, Florida Institute of Technology

The first ruling is Haqq v. Pennsylvania Department of Public Welfare, decided on March 23, 2010 in U.S. District Court for the Eastern District of Pennsylvania. Haqq, a Muslim woman whose religious beliefs requires her to veil her body with the exception of hands and face was terminated for failure to pass a probationary period as a state welfare case worker. Haqq’s charges of religious discrimination in termination and retaliation survived summary judgment and a claim of religious harassment did not. Among other things, Haqq claimed that two of her trainers intentionally downgraded her performance, and that one of them made crude remarks about her garb. The retaliation claim is based on her allegation that she complained to her union representative, and that subsequently, she received poor ratings and was advised to resign. The ruling may be accessed here.

The second ruling is EEOC v. White Lodging Services Corp, decided on March 31, 2010 in the Western District of Kentucky. White Lodging Services manages the Marriot Downtown Hotel in Louisville, KY. The hotel has a policy of prohibiting employees from wearing hats unless it is part of the uniform. Four Somali Muslim women applied for housekeeping jobs and were waiting for an interview. A manager saw through a glass partition that the women were wearing headscarves and instructed his assistant manager to request the women to remove the headscarves. The women refused for religious reasons and were not interviewed. The EEOC issued a Title VII religious discrimination suit and the defendant moved for summary judgment, claiming that the company was not an “employer” at the point of the interview and the manager was unaware that the head garb was worn for religious reasons. The district court judge rejected these arguments and ruled that the lawsuit may go forward. The ruling may be accessed here.

RULE 26: MAJOR PROPOSED CHANGES FOR ATTORNEYS AND EXPERTS

by Art Gutman Ph.D., Professor, Florida Institute of Technology

My thanks to Dr. Lance Seberhagen (CEO & Director of Seberhagen & Associates) for forwarding the following information.

As reported in the BullsEye Newsletter in February 2010, there are major proposed changes relating to Rule 26 of the Federal Rules of Civil Procedure.

Rule 26 has permitted broad disclosure of any communication between experts and attorneys since 1993, including draft reports. The proposed changes include protection of communications short of the final expert report and supporting data under work-product doctrine. According to the BullsEye report, the proposed changes were approved by the US Judicial Conference in September 2009, and the Supreme Court is expected to approve these changes by May 1, 2010 for submission to Congress. If Congress approves, the changes will take effect on December 1, 2010.

Other relevant links include:

• BullsEye Expert Newsletter


• ABA Litigation News


• HGExperts.com

JUSTICE HILLARY RODHAM CLINTON?

by Art Gutman Ph.D., Professor, Florida Institute of Technology

The Associated Press has reported that Hillary Clinton’s name has surfaced as a possible replacement for Justice Stevens, who recently announced his retirement from the Supreme Court.

The report is based on an appearance by Senators Hatch and Leahy on NBC’s Today show. Hatch said "I heard Sen. Hillary Rodham Clinton's name today and that would be an interesting person in the mix." He said he likes Clinton and that she has done a good job for the Democratic party. However he did not indicate whether he would support her. Senator Leahy, an obvious supporter, said "I think she's done a good job for the country, not just for Democrats."

MINNESOTA DEPARTMENT OF CORRECTIONS (DOC) EARLY RETIREMENT POLICY VIOLATES THE ADEA

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In an April 8, 2010 ruling by Judge Paul A. Magnusen of the US District Court for the District of Minnesota (EEOC v. Minnesota DOC [No. 08-5252 (PAM/FLN]), Judge Magnusen agreed with the EEOC that a policy providing better retirement benefits based on age constitutes illegal facial discrimination under the ADEA. As of April 16, this case is not yet available on Lexis. However, the case is described for subscribers to the BNA Daily Labor Report and on the EEOC website (viewable to all).

The EEOC filed suit in this case in September 2008, challenging a collective bargaining agreement relating to an early retirement incentive plan (ERIP) permitted employer contributions for health and dental insurance up to age 65 for employees retiring at age 55 or earlier, but not for employees retiring after age 55. Although clearly facially discriminatory, the DOC issued two interesting defenses.

First, the DOC argued that the rules for discrimination in retirement plans were altered by the Supreme Court’s ruling in Kentucky Retirement Systems v. EEOC (2008) [128 S. Ct. 2361]. That case featured a pension disability plan in which “hazardous position” workers (e.g., policemen) were eligible for normal retirement benefits after 20 years service or after working 5 years upon reaching age 55. Additionally, years were added for disabled workers to total 20, or number of years needed to reach age 55. Thus, a 15-year employee would receive five additional years if disabled at age 40, but only one additional year if disabled at age 54. This was a controversial 5-4 ruling in which five justices viewed the plan as consistent with Supreme Court’s ruling in Hazen v. Biggens (1993) [507 US 604] in which a unanimous court agreed age discrimination is not implied by “factors correlated with age” (such as years of service). The four dissenters argued that the Kentucky plan constituted facial discrimination under the Older Workers Benefit Protection Act (OWBPA) of 1990, which overturned a controversial facially discriminatory policy in Public Employees Retirement System of Ohio v. Betts (1989) [492 US 158],.

As an aside, the Kentucky ruling featured an unusual grouping of justices, with Breyer joined by Roberts, Stevens, Souter and Thomas in the majority and Kennedy joined by Alito, Ginsburg and Scalia in the dissent. Interestingly, the only two justices left from the Betts ruling (Kennedy and Scalia) were in the majority in the Betts case and in the minority in Kentucky case. Indeed, Justice Kennedy wrote the Betts ruling. It wouldn’t shock me if Congress overturns the Kentucky ruling much as it did the Betts ruling.

Getting back to basics, Judge Magnusen rejected the Kentucky Retirement defense ruling “the law on intent is clear: when a plan is discriminatory on its face, intent to discriminate can be presumed.” The second defense was that ERIP was a valid Bona Fide Benefit Plan (BFBP), which is a statutory defense to discrimination based on age, but only if it costs more to provide benefits for older than younger workers, in which case, employers may require higher contributions from the older workers. However, under no circumstances does it cover a facially discriminatory plan in which benefits are provided based on age, even if it is part of a collectively bargained agreement.

Stay tuned. I will provide the link to the ruling when it becomes available.

TERMINATED HIV+ EMPLOYEE ALLOWED TO PURSUE CLAIMS UNDER THE ADA AMENDMENTS ACT (ADAAA)

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In an April 12, 2010 ruling in the US District Court for the Northern District of Illinois (Horgan v. Simmons [2010 U.S. Dist. LEXIS 36915], Judge Ruben Castillo denied summary judgment for the employer, permitting Kenneth Horgan to proceed with claims that (1) he was illegally terminated because of his disability and (2) the company owner (Timothy Simmons) made an illegal inquiry regarding his disability. A third charge was disallowed (invasion of privacy under Illinois state law). What makes this case particularly interesting is that it’s one of the first cases decided under the ADAAA. Also of interest, Judge Castillo credits the EEOC “Regulations To Implement the Equal Employment Provisions of the Americans With Disabilities Act, as Amended” published on September 23, 2009.

The facts of the case were that Horgan was diagnosed as being HIV+ ten years previously, but only his close friends knew. The following allegations were made by Horgan. There were no issues with Horgan’s ability to perform his job. He began working for the company in 2001 as a sales manager and was promoted to general manager in 2008. In July 2009, Simmons asked Horgan for a “social visit.” Simmons was not concerned with Horgan’s performance, but rather, whether something was wrong with him medically. Horgan felt compelled to disclose his condition, including that his TCELL count was 300 and that a TCELL count of 200 would constitute AIDS. Simmons then queried him with respect to how he could continue to work with a “terminal illness.” According to Horgan, Simmons told him immediately leave the premises and take a vacation. The next day, Horgan learned of his termination in an email disseminated to all general managers.

It should be noted that there are three ways (or prongs) for proving disability within in the meaning of the ADA. Prong 1 is having a current impairment that substantially limits a major life activity. Prong 2 is having a history of an impairment that substantially limits a major life activity, and Prong 3 is being regarded as having an impairment that substantially limits a major life activity.

On Prong 1, Simmons conceded that HIV is a physical impairment, but argued that Horgan failed to cite any “limitation of a major life activity.” Judge Castillo rejected this claim based on statutory ADAAA language. Accordingly:

[T]he ADAAA clarified that the operation of "major bodily functions," including "functions of the immune system," constitute major life activities under the ADA's first definition of disability. In addition, "an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active." …... Therefore, the "question of whether an individual's impairment is a disability under the ADA should not demand extensive analysis.".

Judge Castillo also ruled that ‘Such a conclusion is consistent with the EEOC's proposed regulations to implement the ADAAA which lists HIV as an impairment that will consistently meet the definition of disability. Judge Castillo also favored Horgan on Prong 3, ruling “the complaint also establishes a disability under the third definition set forth by the ADA because he was regarded as having an impairment.”

On the issue of illegal inquiry, Simmons argued that his inquiry into Horgan’s medical condition was “job-related and consistent with business necessity.” However, Judge Castillo rejected this claim ruling:

Plaintiff's allegation that he repeatedly insisted that nothing (including his HIV status) affected his ability to perform his duties directly rebuts Defendants' assertion that the questioning was necessary to discern whether Plaintiff could "cope with the demands and responsibilities of his job."

The case now goes to trial, unless of course, the defendant decides to settle (probably a good idea).

OFCCP COMPLIANCE REVIEW DETAILS NOW AVAILABLE ON NEW DOL ENFORCEMENT DATA WEB SITE

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

The U.S. Department of Labor (DOL), living up to a promise of more transparency and open government under Secretary Hilda L. Solis, has launched an enforcement data web site to make data collected by DOL agencies accessible and searchable by the public.

The site includes data provided by OFCCP for completed compliance evaluations and complaint investigations since FY 2004. According to the site, the OFCCP data will be updated on a monthly basis.

The data provided goes well beyond any publicly available databases, such as the National Pre-Award Registry, previously published by OFCCP. Details for each compliance evaluation completed are included, such as the number of employees, closure type (notice of compliance, conciliation agreement, etc.), and specific types of violations found.

Data for reviews in all 50 states and the District of Columbia are included in the database, but no records for Puerto Rico or Guam are listed.

Some highlights from the full database include the following:

* Out of 21,603 compliance evaluations, the following numbers of violations are listed-

• 6 promotions cases


• 5 terminations cases


• 381 hiring cases


• 70 denial of records/access cases


• 29 selection or testing cases


• 40 salary cases


• 6 accommodation cases


• 171 “systemic discrimination” cases (no definition given for systemic)

* Out of 804 complaint investigations, the following numbers are listed-

• No multi-region complaints


• 338 based on disability status


• 377 based on veteran status


• 4 based on religion


• 1 wages violation (in FY 2004)


• 2 retaliation violations (in FY 2008)


• No harassment violations


• 8 pregnancy leave violations (2 in FY 2010)


• 8 accommodation violations

CONTRACTORS RECEIVE SPRING 2010 CSAL FROM OFCCP

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

Federal contractors are currently receiving the Spring 2010 edition of OFCCP's Corporate Scheduling Announcement Letter (CSAL), which was sent to contractors' chief executive officers at the beginning of April. The CSAL notifies a contractor that two or more of its establishments are on the list of establishments selected to undergo a compliance evaluation during the current scheduling cycle.

The Spring 2010 version is identical in form and content to the Fall 2009 version. It appears that in the current fiscal year, OFCCP is including distinct establishment lists in the Fall and Spring CSAL's. Last year, OFCCP included some establishments on both the Fall and Spring CSAL's sent to a contractor, if such establishments had not been scheduled for a compliance review during the first half of the fiscal year.

Beginning in the current fiscal year, there is no limit on the number of compliance evaluations that OFCCP may schedule or conduct per contractor during a fiscal year.

According to OFCCP's web site, contractors may confirm whether their company was mailed a CSAL by faxing a written request on company letterhead to the Division of Policy, Planning & Program Development at 202-693-1304 (not a toll-free number).