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Mediating Class Action Litigation involving the EEOC

Published by the Journal of the American Arbitration Association
Insights for Employment Mediators and Attorneys

The United States Equal Employment Opportunity Commission continues to direct significant resources toward systemic and class action litigation. As these cases are complex and contentious, it is commonly difficult for litigants to resolve the litigation without a mediator. This article describes the unique nature of EEOC class litigation and various elements leading to a successfully mediated outcome.

The Equal Employment Opportunity Commission (EEOC or Agency) is the federal administrative agency designated to enforce multiple employment discrimination laws. Two of the major statutes enforced by the EEOC include the Civil Rights Act of 1964, as amended, and the Age Discrimination in Employment Act of 1967, as amended. Examples of prohibited conduct include discrimination motivated by race, gender (including pregnancy), national origin, ethnicity, religion, age, disability, genetic information, and retaliation. 1

The EEOC organizational structure involves a national office and field operations. The national office includes the Commission, consisting of political appointees, whose role is to develop strategic direction and operational policy. The other national office is the Office of the General Counsel, who prosecutes cases. Field operations consist of District Offices, headed by a District Director and Regional Attorney, who independently report to the national office. Area offices in smaller cities report into the District Office. Within a District Office, there are four units: investigative, mediation, litigation, and outreach. Cases entering the system are docketed and assigned to an Investigator. Each case is then assessed for processing, reflecting significance of the allegation and linkage to the Agency or District enforcement priorities. 2

History of EEOC pattern and practice authority
A class action is a lawsuit brought by one or more individuals (the named plaintiffs) on behalf of a larger group (the class) where the size of the group is so large that simply joining all of its members in the lawsuit would be procedurally impracticable. The named plaintiffs represent the interest of the known and the unknown (absent) class. In pleadings, the EEOC contends a pattern or practice of employment discrimination exists where an employer repeatedly and regularly engages in acts prohibited by statute. The EEOC must prove that the alleged discrimination was the company’s standard operating procedure, not isolated acts. The Agency asserts class discrimination is the result of a pattern of conduct that does not become apparent until the employer has implemented the practice with sufficient frequency to permit assessment of the impact of the policy on various demographic groups. 3

The EEOC authority to bring pattern and or practice litigation is not subject to Rule 23 of the federal Rules of Civil Procedure (FRCP).  Under Section 706 of the Civil Rights of Act of 1964, as amended, the EEOC need look no further to sue in its own name. Although the principles and legal theories of discrimination are the same, there are clear differences in the mediation of EEOC litigation versus Rule 23b litigation. Rule 23b creates significant barriers to class certification: numerosity of claims, commonality of claims, typicality of claims, and adequacy of representation. The practical difference involves the complex skirmishing around Rule 23b certification, including certification for settlement only or the possible denial of class certification. 4

Systemic investigations can arise from three basis: a) an individual charge is filed as a pattern or practice claim, b) on its own authority, the EEOC initiates a “directed investigation,” or c) the EEOC Commissioners commence an investigation (a Commissioners Charge). In 1996, the Commission adopted a National Enforcement Plan (NEP) and required District Offices to develop Local Enforcement Plans (LEP), and delegated authority to the General Counsel to initiate litigation without the express vote of the Commission, except in limited circumstances. In 2000, the Commission developed an internal Comprehensive Enforcement Program that built on the National Enforcement Plan and created best practices for the internal workings of the agency. In 2006, the EEOC launched its Systemic Discrimination Initiative, which targets cases involving claims of systemic discrimination. The objective of the Systemic Initiative was to identity, investigate, and litigate systemic cases as a pattern or practice where the alleged discrimination has a broad impact on an industry, profession, company, or geographic area. At the end of FY 2011, the agency maintained 580 active systemic investigations. 5
Recently, the Agency approved a Strategic Plan for Fiscal Years 2012-2016.  The Strategic Enforcement Plan (SEP) includes three objectives: a) strategic law enforcement, b) education and outreach, and c) consistent service through a skilled and diverse workforce and effective systems. 6

Motivations to settle
An employer sued by the EEOC has significant motivation to settle. These reasons include minimizing negative publicity, preventing the EEOC from uncovering greater liability, reducing legal defense fees, and eliminating the distraction of litigation on the business. Other reasons to settle include avoiding a “runaway jury verdict” of monetary relief, and avoiding inflexible injunctive relief imposed by a court. Of course, employers settle for the opportunity to “fix” their allegedly unlawful employment practices and prevent such litigation in the future. 7

Although their interests may differ, Plaintiffs and the EEOC have several motivations to settle the class litigation. For plaintiffs, the primary motivation is avoiding the risk of no relief, receiving monetary relief in a timely manner, and avoiding appeals even if they prevail at trial. A secondary reason is to avoid the stress and time of going to trial. For the EEOC, motivation to settle includes avoiding the risk of losing a Motion for Summary Judgment (historically not likely), or outright losing the case at trial. To a lesser degree, the EEOC is concerned about the judicious use of its staff resources, which could be allocated to other lawsuits of greater systemic impact. Trial often requires the EEOC to shift staff between regions and hire temporary staff. EEOC attorneys only represent the US government, serve the “public interest,” and acknowledge that the Commission and plaintiff’s interest may diverge during the litigation. 8

Timing/ripeness to mediate
A threshold question during mediation of class litigation is when the case is “ripe to mediate.” The general answer is sooner than later, presuming the parties have sufficient information upon which to assess the case both in its monetary value and the risk of trial. Each defense law firm has a different view of sufficient discovery to proceed to mediation; some require significant depositions and information exchange. In the absence of the traditional Rule 23 skirmishing over class certification, EEOC mediations are often encouraged by the federal judge early in the history of the case. However, employers often complain (to this mediator) that the absence of a Rule 23 certification allows the EEOC class cases to be far less common in facts and more of a “collection of claims” involving the same employer. The EEOC vigorously denies this perspective.

The Intervener law firm
Occasionally, the class litigation involves not only the EEOC but a plaintiff law firm (called the Intervener) who has been retained by some of the plaintiffs. In theory, the EEOC and the law firm work as a team. Usually, this relationship works well, but the interests of the law firm and the interests of the government may diverge. For example, the law firm may have a different evaluation of the risk of trial, and often has a more pressing desire to settle for their clients. The EEOC trial guide (Class Action Settlements) admits “EEOC’s obligation is to the public; class counsel’s obligation is to the class.” The “nuclear option” of an Intervener law firm is to break away from the main litigation and independently settle their claims with the employer. The divergent interests between the law firm and the EEOC can become an impediment to settlement for the mediator.

Class litigation process
The more common theory of employment discrimination is disparate treatment, which focuses on intent of the decision-maker. Such discrimination occurs when the employer intentionally treats an employee differently because of an unlawful criterion (as in age or pregnancy). To prevail, the EEOC must show that other similarly situated employees outside of the protected class were treated more favorably. To rebut a claim of disparate treatment, the employer may establish the claimant was not treated differently than non-protected employees, or if the claimant was treated differently, the reason for different treatment was legitimate and nondiscriminatory (such as misconduct or job performance).

Class discovery is extensive and takes several forms: offensive written discovery, defensive written discovery, third-party discovery, plaintiff depositions, depositions of company fact witnesses, and experts. Some discovery focuses on liability, other on damages. Mediators have mixed opinions of discovery prior to the mediation. On one hand, the parties require sufficient knowledge of the scope and facts to place a value on the case. One the other hand, defense counsel may seek full discovery (requiring years) before being able to value the case.  This mediator encourages both parties to avoid the “scorched earth” discovery strategy. Commonly, class discovery increases contentiousness and leads the litigation to “become personal” between litigators. 9 While EEOC attorneys do not have the traditional client-attorney relationship, courts have tried to sort out the elements of the attorney-client privilege. Conflict may arise during the EEOC’s communication to the class, including current employees.

Class litigation invariably includes motion practice, which can become an impediment to settlement. The most common motion is “to compel” one side to produce certain information. Other examples are motions in limine to exclude certain evidence, and motions to exclude the testimony of so-called expert witnesses. Most cases include the threat of the employer filing a motion for partial or full summary judgment. Disputes involving the potentially massive volumes of electrically stored information (ESI) are increasingly common. There can be motions for sanctions against opposing counsel during litigation or even during the mediation. Sometimes, the Agency moves the court to bifurcate the trial into two stages: liability (including punitive damages) and damages. Motion practice can delay setting the date of mediation and typically increases tension between counsel. Where there is a ruling by the Judge, the result of may embolden one party in negotiations, creating further impediment to settlement.

Most recently, defendants are filing motions under the “CRST Van Expedited” court decision” to dismiss the claims of individual victims whose claims were not individually “investigated and conciliated” during the investigation phase. In the particular case alleging harassment and assault of long-haul female truck drivers, the court awarded $4,000,000 in attorney fees to the defense. The EEOC is vigorously attacking this judicial interpretation, but its appeal to the Eighth Circuit to reverse the trial court was not successful. They now seek en banc review. 10

Evolution of the class members
Over the life of a class case, there are various groupings of plaintiffs, which can become an obstacle to settlement. First, there are the “named plaintiffs” who allege they are the original victims, named in the complaint. Second, there are “disclosed plaintiffs.” During discovery, the EEOC temporarily assigns paralegals and other Agency attorneys to identify additional class members and often determine their alleged damages. Third, there are “non-located plaintiffs” known by name from employment records based on last known address, but not located or contacted. Finally, there are “not identified plaintiffs” who are not known by name (e.g.-applicants), despite invitations to join the class in local newspapers. During litigation, the EEOC attempts to enlarge the class and the exact number of class members will vary. Through discovery, some plaintiffs may be excluded or withdrawn from the class. The Agency may withdraw a member who, given further examination, has not suffered damages. The employer will attempt to discredit the class. For example, the employer may seek to exclude a plaintiff who has failed to mitigate his or her damages, or has declined a bonafide job offer, or has voluntarily moved away from the location of employment.

Roles of the mediator
A mediator of class litigation may serve multiple roles. More commonly, the mediator has a single purpose: to bring the parties to mediation and facilitate a final settlement of all contested matters. However, mediations scheduled early in the history of the case may focus not on settlement but on an exchange of relevant information. The mediator may serve as a “discovery facilitator” where the parties are bickering over the scope of discovery they feel is required prior to mediation. Sometimes the parties will ask the mediator to suggest a schedule or timetable of depositions. This mediator’s experience is that the decision to retain a mediator is often suggested by the assigned Judge, rather than raised by the parties. The simple act of agreeing hire a mediator does not necessarily infer that the case is actually ripe to mediate.

Procedurally, the first role of the mediator is to reach out to the EEOC and defense counsel. The mediator seeks to determine how much discovery has been conducted, and whether opposing counsel is prepared to refocus from discovery to settlement.  Assuming the case is considered ripe to mediate, the mediator explores numerous administrative details. First, how many days will be required for the mediation?  Most cases require one or two long days of negotiations. Second, in what city will the case be mediated? Commonly, the location is near the employer’s offices or the prosecuting EEOC office. Third, what time do we start? Some counsel prefers to start in the afternoon (of the first day) to allow reflection during the evening break. Fourth, who will attend? Class representatives (the named plaintiffs) do not always attend. The EEOC may send several attorneys. Fifth, where will the case be mediated: typically at a law firm or at a hotel. Next, who will represent the employer: the HR VP, in-house Counsel, or a true operating executive? Finally, is there EPLI insurance covering the employer’s liability, and will a Carrier Representative attend the mediation. Normally the discovery process or motion practice is suspended for a period prior to mediation. 11

Traditionally, the pre-mediation statements by the Agency and the employer are confidential to the mediator. Often, the statements focus more on strident case evaluation than on exploring options to settlement. This mediator encourages parties to exchange the general pre-mediation statements, with a confidential section on risk and settlement for the mediator.

In preparation for mediation, the Regional Attorney submits a case evaluation to headquarters seeking approval concerning terms of settlement. These terms are eventually approved and serve as the negotiating parameters for the Agency.  Before the mediation, the EEOC will submit a proposed Consent Decree to the employer for their consideration. In this respect, the Agency is required to propose detailed language of their initial offer. There is often reluctance by the EEOC to proceed to mediation until the defense has responded to the proposed Consent Decree, particularly concerning injunctive relief. Despite preparations for mediation, this mediator favors drafting of a detailed discovery plan (with obvious financial costs) in the event mediation is not successful.

On-site mediation process
The three traditional steps during mediation to resolve an employment class case are injunctive relief, monetary relief, and attorney fees, typically in that order. Prior to the mediation, the mediator discusses each of these subjects with opposing counsel. Although the process assumes one long day of mediation is sufficient, mediations may require multiple sessions. Respect and trust between opposing Counsel is essential to constructive settlement discussions. 12

The parties seek a strong evaluative mediator, both on liability and damages. Evaluative mediation reflects a wide variety of practice, ranging from merely pointing out weaknesses in evidence to predicting outcomes of motions or even risks of trial. One simple evaluation is whether the EEOC will withstand the employer’s motion for summary judgment (MSJ). Other examples of evaluative practice include observations concerning apparent animus by managers, inferences drawn from statistics, evaluating stray remarks as evidence, and the propensity of jurors (in the federal district) towards employers.

By the time of mediation, the employer has a greater feel for several significant issues. If litigation continues, what is the risk of the EEOC uncovering more liability or expanding the scope of the case to other sites? How much is this matter going to be a significant distraction to management? How are the pending motions expected to fall? What is the estimated cost of trial preparation and trial? Finally, will settling this case make the employer a more likely target for additional litigation? Ultimately, the question to settle is balancing finality against the short term monetary payment and the longer term equitable requirements. 13

There are numerous creative methods to create doubt (risk of trial) and encourage settlement. In one case, the parties exchanged expert witness reports, followed by presentation by the experts. In another case, the business clients met with the mediator to discuss business issues involving the litigation. Even if the parties cannot resolve all of their differences in mediation, the process may be able to resolve some of the issues-and that makes the effort reasonable. 14

Mediating injunctive relief
Injunctive relief intends to prohibit further unlawful discrimination and monitor compliance with the Consent Decree. In some class cases, injunctive relief may be the predominant form of relief. Negotiating injunctive relief can be brief and easy, or can be extended and contentious, reflecting the employer’s view of how intrusive the relief will be for the organization. Typically, the relief is negotiated based on interests. Initial positions of both parties often overreach in scope. The scope of injunctive relief depends on the nature of the case. The Agency assumes the alleged bias may continue, so needs monitoring of compliance.

The first step is to eliminate whatever discrimination is allegedly occurring. As examples, the EEOC may seek to change an employment policy, or define job related criteria for promotions, or to enable broader and objective decision-making by on-line job posting systems. The employer may be asked to disseminate the anti-discrimination policy in paychecks.
“Rightful-place” injunctive relief awards the victim the position they would have held but for the discrimination.

The second step is commonly to provide training, which prompts numerous disputes. First, who will receive the training: supervisors, managers, executives, or hourly workers? Second, who will conduct the instruction: in-house trainers, external law firms, or consultants? One problem with the use of internal employer trainers (e.g-the HR VP) is that they are viewed by the Agency as “prior bad actors” that failed to perform their job in the first place, so should not be allowed to train managers in a remediation phase. Third, the EEOC will need to review the curriculum, including whether the curriculum includes multiple issues of discrimination or only the issues in the litigation. Fourth, the parties must agree on the duration of the training (how many hours), how will it be delivered (video, face to face, or on-line), and the sign-in arrangements. 15

The third step is for the employer to implement an EEO complaint procedure or even create an internal Ombudsperson. Occasionally, the parties will decide to retain the services of a Settlement Monitor, a Special Master, or a Diversity Monitor. Occasionally, the parties will ask the mediator to become the Consent Monitor. 16

The final step is to define the duration and scope of monitoring. The Agency may seek a long (for example, a five year) duration of the decree, while the employer may seek a brief (for example, a six month) duration of the decree. The Agency may seek to require monitoring of the entire company (even when the company is a conglomerate), or all of the company’s manufacturing plants. The employer will seek to avoid monitoring of the entire company, and to narrow any ongoing obligations to the offending division or sites. As the terms of injunctive relief are resolved, the focus turns to the contentious issues of the notice to employees of the Consent Decree (including the wording), the terms of required reporting to EEOC (what information is supplied), and how often the information is supplied (once or twice a year).  In summary, the goal of the mediator is to achieve a win/win outcome, and create a base of good-will between the parties. 17

Mediating monetary relief
Monetary relief can include backpay, frontpay, compensatory damages, and pre-judgment interest. The EEOC typically seeks a fixed amount. Revertor funds provide that any unused money revert to the defendant. The EEOC only negotiates nonrevertor funds, or sometimes the defendant is required to donate remaining funds to a charity which benefits the adversely impacted group. There are numerous means to negotiate damages, and they may overlap during discovery. A common goal is to assist the parties to move beyond the inclination of mediating each separate case. Much of any monetary relief is characterized as compensatory damages. Damages can include emotional distress, personal stress, financial worries, and depression. There is no obligation on the employee to establish doctor visits or medical expenses to establish compensatory relief. Commonly, the named plaintiffs receive a larger premium (payment), often 10% above other plaintiffs.  18

Employment class actions may include a reconciliation of damages. Where the class size is not huge, the EEOC may calculate and submit the terms of individual relief for each victim. Where depositions have been conducted of some class members, the employer may challenge (or seek to reconcile) the accuracy of the EEOC claimed damages. Specifically, an employee’s deposition testimony may suggest damages lower than the relief claimed by the EEOC. The result is often greater clarity around damages. Through discovery, an employer will pose numerous objections to limit their damages. One objection is to contest the termination date of damages: such as when the employee voluntarily resigned, or when the employer went out of business, or when the victim refused an unconditional offer to return to work.  A second objection is contesting whether an employee has mitigated his or her damages.  A third objection is when the victim has already filed individual bankruptcy but failed to mention the pending settlement to the court, thus precluding monetary relief from the employer.

Negotiating damages
One method of negotiating damages involves simply negotiating “the number,” which can be a dollar value placed on the case. It is not necessary for both parties to reach “the number” with the same rationale. A second method involves a formula which creates three tiers (or buckets) of damages. Bucket one refers to the weakest cases, bucket two refers to stronger cases, and bucket three refers to the strongest cases.  The first step is for each Counsel to place victims into each tier. The second step is for opposing Counsel to negotiate placement of the victims into the tiers, and then negotiate a dollar value for each tier. A third method of negotiating damages involves extrapolation modeling, most commonly for plaintiffs with highly similar factual circumstances. In its most simple form, if each victim has been jointly evaluated as suffering $15,000 in damages, and there are 40 victims, then the common value of relief is $600,000. A fourth method of negotiating damages involves a point system, which evaluates the circumstances of each victim and assigns a point total according to the severity of damages. For example, in a sexual harassment case, a victim who has more tenure in the toxic work environment, reported directly to the most offending supervisor, and has suffered tangible medical expenses, may receive higher points. In this model, a victim with 10 points may be eligible for $10,000 in monetary relief, while a victim with 100 points may be eligible for $100,000 in monetary relief.
Tax consequences of settlements are always a consideration. Proceeds are generally taxable events. The employer must pay additional FICA on any backpay, in addition to the gross amount in the settlement. Occasionally, the employer will argue cash flow problems to pay the settlement, and will seek payments in multiple tax years. If a claim goes to trial and an award, prejudgment interest is an element of complete compensation in back pay awards, as it helps make victims whole and compensates them for the true cost of the money damages incurred. This may be discussed during mediation, but is included in the settlement.

Occasionally, the parties agree that the determination of individual damages for each class member cannot be negotiated, and instead should be referred to a tiered ADR process. In this case, the parties hire a claims processing consultant to administer a process typically providing an offer of settlement, then mediation, and later arbitration in an adjudicatory hearing. This tiered ADR process (often referred to as a stream of cases) have proven to be highly effective, but can significantly add to the cost of the overall settlement, so is often disfavored by employers. 19

Payment of damages to class members is contingent upon each class member signing a release, so that they cannot sue on the identical claim in the future. Employers seek global releases which broadly release them from any current claims from class members. The EEOC will not allow such a global release, but rather allows only releases of the specified claims in litigation. However, class members directly represented by an intervener law firm may be required to sign a global release prior to payment. The EEOC does not allow a release to contain a confidentiality of terms.

Allocation to the class
Once the gross amount of damages is negotiated (“the number”), the employer may not wish to be involved in the allocation of payment between victims or the physical distribution of monies. Those tasks are left to the EEOC. In this process, the EEOC determines how damages will be allocated to class members between back pay, compensatory damages, and interest. This mediator has seen damages allocated as 30% backpay, 60% compensatory, and 10% interest. Often, the majority of payment is characterized as compensatory damages. For smaller cases, the EEOC will coordinate with the employer to distribute the funds. In massive cases, the administrative distribution of payment to class members may be handed over to a private claims processing firm, which is a cost assumed by the defense.

Mediating attorney fees with an Intervener firm
The negotiation of attorney fees in class litigation is highly contentious. Since the EEOC, as a federal agency, cannot seek attorney fees, this not an issue if the EEOC sues alone. Fees are only an issue if there is an Intervener law firm. The disputed fee amount may involve the lodestar multiplier for private plaintiff counsel, or may involve a court’s discretion to increase the fee request through the “catalyst theory,” which requires a change in the employers’ HR policy. Requested fees include not only work performed to litigate the case, but work to be performed in monitoring the Consent Decree, if appropriate. A liquidated amount may be negotiated with the Intervener firm to cover future costs.

The standard EEOC position is that attorney fees may not diminish the settlement. Formally, the EEOC does not want to negotiate a single lump sum, which is to be divided up to include attorney fees. The Agency does not want to negotiate away class monetary relief at the same time as negotiating fees. In contrast, defense counsel view this bargaining position as unrealistic, and a middle ground is often found. Most times, attorney fees for Intervener firms are successfully negotiated during the mediation. However, most intervener firms will offer for their fee request to go to arbitration or to the federal magistrate for a binding decision. Intervener firms may be asked to take a reduction or “haircut” over their fees to settle the matter. Rarely, the parties will settle and bear their own costs.

Mistakes made by advocates
Class-action mediators offer numerous observations concerning common errors by lawyers during mediation. Class mediator Michael Dickstein (of San Francisco) observes that common errors in class litigation concern communication: insisting on keeping everything confidential from the other side, avoiding opening statements, and not sharing mediation statements with the other side. He observes another error involves insulting the other side: either purposely, inadvertently, or because one lawyer simply believes opposing counsel needs to be told the truth about themselves. Mediator Dickstein offers that there are only two issues in mediation: what will be the terms of the deal, and what is likely to happen to each party if they do not make the deal? He feels that lawyers who jump to negotiating “the number” are often wrong and are disappointed with the resulting lack of progress in negotiations. 20

This mediator’s experience of party error during mediation includes rushing to caucus, rather than taking advantage of joint sessions. Another error concerns the opening offer: anchoring the monetary step too high or too low. Another error is not inviting alleged victims to participate and offer their own perspective as to liability or damages.

Role of insurance carriers
Employment Practice Liability Insurance (EPLI) protects employers from the expenses of defending employment litigation, as well as costs of settlement. Employers obtain coverage either through a stand alone EPLI policy, a management liability policy, or endorsement to an existing policy. Coverage does not include willful or intentional acts of discrimination. EPLI is now considered a cost of doing business. 21 Once an insurance carrier enters the process, numerous issues concerning the policy and the role of the carrier must be confronted and explored prior to any actual mediation. The first question is what policy applies when the incident occurred. As an example, a triggering act of discrimination from 2005 may be covered by an EPLI policy with deductibles and policy limits that are different than the EPLI policy in existence today. The second question is whether the carrier denies liability. Denial might occur if the claim was not reported within a specified time period, or if the alleged victim is an independent contractor not contemplated in policy. EEOC charges are often considered a claim to be routinely reported to the carrier. If the employer has changed EPLI carriers, there may be a dispute as to which firm has liability. Assuming acceptance of liability by the carrier, the next question involves the deductible to be paid by employer, prior to start of liability by the insurer. Many deductibles are one million dollars. From there, the next question involves the carrier’s “duty to defend” the client, which creates significant control by the carrier over litigation strategy. This issue includes who will be the defense attorney: is the existing law firm acceptable to the carrier, or will the carrier impose its own counsel? Finally, who has final authority to settle, and will the carrier attend the mediation? The mediator can cajole the employer to provide insurance information, but normally cannot require such disclosure. 22

In the past, EPLI representatives would attend mediations and play a proactive role as fellow problem solvers. Most EPLI representatives would accept the opinion of defense counsel as to the value of the matter. In the past year, this mediator’s personal experience is that the role of the carrier representative has changed to become less deferential to defense counsel, less innovative, and occasionally to be an obstacle to settlement. 23

The Consent Decree
The EEOC Consent decree is generally a forward-looking document focusing on injunctive relief and damages to the class. It is offered as a court order subject to supervision by a federal judge for a set duration. The decree should be precise to avoid confusion and should avoid boilerplate language drafted in prior litigation. There will be a non-admission clause denying any liability by the employer. After expiration of the decree, the force and continuing jurisdiction of the court ceases to exist and the employer’s duty of compliance reverts to statutory obligations. Employers cannot negotiate the EEOC press release, and may become frustrated when allegations are repeated as facts in the press release.  24

Upon conclusion of a successful mediation, the mediator’s role is to ensure the Consent Decree is signed and the deal does not collapse for unforeseen reasons. The settlement is contingent upon approval by the EEOC headquarters. Upon signatures, the lead EEOC attorney will focus on conveying the settlement to individual class members and obtaining signed releases, which are submitted to the employer as a condition for payment of compensation. No authority requires the EEOC to seek a fairness hearing for approval by the Judiciary. There are no “objectors.” However, there is increasing controversy concerning the public policy impact of class settlements, and suggestions for reform of the terms of settlement. 25

Final observations: unique aspects of mediating class versus single victim litigation
In EEOC class litigation (without an Intervener firm), the only recognized plaintiff is the Agency, and Agency interests may at times be materially different from the actual victims. In addition, the ultimate decision-maker for the Agency is not at the table, but is rather in Headquarters. In theory, the settlement is contingent and can be rejected. Often, none of the plaintiffs are invited to the mediation. Finally, at least in theory, the EEOC has unlimited resources and unlimited time to prosecute or settle a settlement.

Defense firms often tend toward a scorched earth philosophy of discovery prior to mediation, generating animosity between counsels. Sometimes they do not bring line executives to the table, rather relying on human resources, which introduces an absent decision-maker in the process. There is often more indignation by the company against the Agency than in single victim cases. Defense legal fees can easily approach one million dollars. Finally, EPLI carriers are no longer consistently helpful to the settlement.

The mediation process is remarkably different than single victim discrimination cases. First, there is a significant learning curve for the mediator to appreciate the state of the case, including discovery disputes, motion practice, judicial monitoring, and relationships between counsel. Next, the number of class members keeps shifting, and there is continuing jousting about the extent of damages. While single victim cases rarely focus on injunctive relief, class cases all start out with such negotiations. Finally, the terms and complexity of settlement (the Consent Decree) is significantly different than private settlements.

Increasingly, the EEOC is asserting class litigation to challenge a broad spectrum of alleged injustice, including glass ceiling issues (gender promotion claims), reinstatement of retirement benefits (age claims), and the effect of blocker policies (age claims) involving executive succession planning. Mediating class action litigation is complex practice requiring significant patience and subject-matter expertise. The role of the mediator and the process depends on the stage of litigation; either early in the process with limited discovery, or just prior to trial with extensive discovery. The ability to persuade the parties is crucial. Not only must the mediator carry messages, but must interpret them, convey the substance, and objectively convey the cost and risk of non-settlement. Copyright 2012, All Rights Reserved

Illustration (gender discrimination in restaurant industry)
The EEOC has filed a class complaint against a restaurant chain alleging systemic discrimination against current and former female employees with respect to the terms and conditions of employment and denial of advancement. The EEOC pleadings contend that female employees (in twenty-eight restaurants in three states) were intentionally denied favorable job assignments within their restaurant, and those jobs were required for them to be considered for upper level management positions. The chain did not have a progressive human resource function or a structured means of promotion.

The Complaint seeks monetary relief, injunctive relief, creation of a formal on-line application system for promotion, training programs for current supervisors, and a posting of settlement. The Complaint  also seeks a four year Decree, quarterly reporting, a posted notice, and hiring of a Special Master to monitor compliance. The Complaint named five current employees. During the investigation, an additional 145 former and current employees were identified and consented to join the class. Based on employment records, the EEOC is searching for an additional 80 former employees.

1. The Story of the EEOC, Ensuring the Promise of Opportunity for 35 Years, 1965 to 2000, celebrating the 35th Anniversary of the Commission, US Government Publishing Office.
The EEOC enforces the following laws (listed in the order the EEOC obtained authority):Title VII of the Civil Rights Act of 1964 (Title VII), as amended, which prohibits employment discrimination on the basis of race, color, religion, sex, or national origin; The Age Discrimination in Employment Act of 1967 (ADEA),as amended, which prohibits employment discrimination against individuals 40 years of age and older; The Equal Pay Act of 1963 (EPA), as amended, which prohibits discrimination on the basis of sex in compensation for substantially equal work performed under similar conditions; Section 501 of the Rehabilitation Act of 1973, as amended, which prohibits employment discrimination against federal employees and applicants with disabilities; Title I and Title V of the Americans with Disabilities Act of 1990 (ADA), as amended, which prohibits employment discrimination on the basis of disability in the private sector and in state and local government; and The Genetic Information Non-Discrimination Act of 2008 (GINA), which prohibits employment discrimination based on genetic information.
The reader should not be confused with the mediation of actual class litigation (as described in this article), versus the EEOC Charge Mediation Program. The EEOC charges are not lawsuits and are mediated by either internal EEOC employees or contract mediators.

2. See website of EEOC.gov. Also see An Agency on the Move, Corporate Counsel Magazine, January 2012, p. 65. According to the Agency’s Annual Report, the EEOC received 99,947 cases in fiscal 2011, including 580 systemic investigations. EEOC Chair Berrien stated EEOC staffing fell 30% during the Bush Administration to a low of 2176 staff in 2008, but has since recovered to higher levels.

3. EEOC Pattern or Practice Litigation, by Donald Livingston of Akin Gump et al, ABA National Conference on EEO Law, March 2010

At the beginning of fiscal year 2011, systemic cases accounted for fourteen percent of the EEOC’s active litigation docket or sixty three active cases. See Avoiding and Dealing with Unethical Communications with Putative Class Members in Systemic Cases, Christopher Lage, ABA Journal of Labor and Employment Law, Volume 27, Number 1, Fall 2011.

In the 2011 Annual Report, the EEOC underscored that the agency “places a high priority on issues that impact large numbers of jobseekers and employees,” and “therefore devoted resources to investigating and litigating case of systemic discrimination as a top agency priority…The agency has hired experts in the field of statistics, industrial psychology and labor market economics who will partner with district offices to work on large offices. The agency will continue to assess whether additional or different types of expertise should aid in building the systemic program.”

4. See Wal-Mart Stores vs. Dukes, 131 SC 2541, 2011, involving 1,500,000 putative class members across 3400 domestic stores, holding that the case rested on millions of presumptively valid personnel decisions, and the plaintiffs failed to produce a common answer to the core question presented-whether Wal-Mart engaged in gender discrimination (company-wide pay and promotion practices). The case did not satisfy the prerequisite of Rule 23a: commonality.

Also see Class Action after Wal-Mart Stores, Labor and Employment Law, ABA section of Labor and Employment Law, Fall 2011, Volume 40, Number 1. Professor Schnapper (of the University of Washington Law School), summarized “the case could herald the end of class actions or merely a quirky case to an unusual circumstances.” The crux of the case was commonality-the rule requiring the plaintiff to show there are questions of law and fact common to the class.

5. Litigation against the EEOC, Client Boot Camp, Greenberg Traurig, Arizona office, Daniel Pasternak, 2010 (discussing history of EEOC systemic data)

See EEOC Annual Report for 2011 for litigation statistics at EEOC.gov (Performance and Accountability and Report)

The largest monetary settlements in the Cornell University Consent Decree Repository (CRD) are Haynes, et al. v. Shoney's, Inc.  $105,000,000; Cynthia Carter McReynolds et al. v. Sodexho Marriott Services, Inc.   $80,000,000; and Roberts, et al. v. Texaco, Inc. $176,100,000 

6. See EEOC Strategic Plan for Fiscal Years 2012-2016 (EEOC.gov) According to the EEOC 2011 data, the Commission completed work on 235 systemic investigations (cases with at least 20 known expected class members) in which 96 resulted in reasonable cause determinations. The EEOC proposed strategic Plan makes clear that attacking systemic discrimination will be one of the primary objectives.
Also see the findings and recommendations of independent assessments of the agency's programs: Equal Employment Opportunity Commission: Organizing for the Future, National Academy of Public Administration (NAPA), February 2003, Evaluation of Intake and End of Fiscal Year Closure of the Equal Employment Opportunity Commission Private Sector Charge Process, Development Services Group (DSG), Inc, November 2006, Equal Employment Opportunity Commission Customer Satisfaction and Knowledge of Law Study Final Report, Federal Consulting Group (FCG), December 2008.
Also see newspaper article “Government turns heat on employers over job bias,” by Sam Hananel (Associated Press) in Arizona Republic, September 4, 2012, quoting EEOC general counsel David Lopez, “We are not a rich agency, so we are trying to have the most impact that we can with the resources we have.” The author observes “instead of filing a lawsuit on behalf of one worker at a time, the commission is increasingly trying to supersize cases, seeking patterns of discrimination against dozens or hundreds of workers.”  

7. For comparative information on employment mediation, see Mediating Disputes involving Sexual Harassment, by Richard Fincher, ACR Resolution, Fall 2009. See Mediating Disputes of the Highly Paid Executive, by Richard Fincher, Employment and Labor Relations Law, ABA, Fall 2009. See Mediating Disputes of Whistleblowers, by Richard Fincher, American Arbitration Association, Spring 2009.

8. Settling Employment Discrimination Class Actions: Lessons from the Mediations, James Finberg, NELA Journal, discussing the motivation for settlement by plaintiff and defense counsel

9. Employment Class Actions: A Tool in Transition, The National Employer, Littler Mendelson, 2003, 2006, outlining an extensive overview of class actions by private plaintiffs and the EEOC. The scope of permitted discovery in EEOC pattern or practice suits initiated by the EEOC has continued to be debated by courts.

See EEOC v. Caterpillar, Inc. 409 F.3d.831 (7th Cir. 2005), where the Court denied enforcement of a EEOC subpoena seeking nationwide data based on the EEOC expanding the scope of the investigation involving two ADA charges.

10. EEOC v CRST Van Expedited, Case 07-CV-95, N.D, Iowa, 2010.

11. Avoiding and Dealing with Unethical Communications with Putative Class Members in Systemic Cases, Christopher Lage, ABA Journal of Labor and Employment Law, Volume 27, Number 1, Fall 2011.

12. Ethical Issues in EEOC Class Action Litigation, ABA Mid-Year Winter Meeting, Evangelina Herandez, January 2003, outlining the Commissions’ authority to bring lawsuits, and ethical considerations of Counsel in class litigation.

13. Recent Developments in Employment Discrimination Class Actions, ABA Section of Labor and Employment Law/EEO Committee Meeting, Thomas Pfister, 1999, outlining steps for employer to pursue a settlement track, including standards for establishing an “adequately supported claim” leading to valuing individual or class claims.
14. Settlement of the Class Action from the Perspective of the Mediator, Hunter Hughes, Rogers and Hardin, 2008, outlining numerous characteristics of a successful mediator.

15. Consent Decree: EEOC and Defendant Otto Bock Healthcare, LP, United States District Court for the District of Arizona, Case-08-cv-0221-PHX-GMS, 2009, requiring the employer to conduct training on sex discrimination, of at least 90 minutes in duration, to be held within 6 months of the Decree, to discuss discipline that can be taken against supervisors, to be paid by the employer.

16. EEOC press release: Outback Steakhouse to pay $19 million for sex bias against women in glass ceiling suit by EEOC, December 29, 2009, referring to the hiring of a claims process administrator to send letters to potential victims and pay relief to known victims

Also see EEOC v. Southwest Supermarkets, PHX PGR D, Arizona, decree filed 10/26/98, in which the employer hired an EEO Administrator to locate potential claimants, investigate their claims, and determine damages to be paid from a $200,000 escrow fund, with EEOC approval. 

According to the Consent Decree Repository, forty four (44) decrees include a mediator responsibility clause. The mediator clause states the role of the mediator in the case of an alleged breach. If the alleged non-complying party has not remedied the alleged non-compliance or satisfied the complaining party that it has complied within 30 days, the complaining party may submit the matter to the mediator.

17. According to the data from the Cornell University Consent Decree Depository, the average duration of the decree is 3.4 Years. According to the data from the Cornell Consent Decree Depository, eleven (11) settlements incorporated a Special master. According to the data from the Cornell Consent Decree Depository, thirty six (36) settlements incorporated an internal Monitor or Ombudsperson.

18. Calculating Economic Damages in an Employment Case, by John Beranbaum, Employee Rights Quarterly, Spring 2002, Volume 8

19. At Settlement: Employment class actions provide a unique context for ADR, Margaret Shaw and Lynn Cohen, American Bar Association, Dispute Resolution Magazine, Summer 1999
Also see Martens v. Smith Barney, 77 FEP 532, (SDNY 1998). The ADR portion of the settlement proposed a three tier claim process, to be administered by the Duke Private Adjudication Center in North Carolina.

20. The 12 Fastest Ways to Insure a Bad Result in Class Action Mediations, The Most Common Mistakes Lawyers Make, Michael Dickstein, Dickstein Dispute Resolution, 2006.
Also see Lets Not Get to the Point: effectively mediating Class Action Settlements, Michael Dickstein, Dickstein Dispute Resolution, 2006

21. EPLI Coverage: Updates and Strategies, Erika Blomquist and Beth Kahn and Pamela Palmer, ABA Section of litigation Insurance Coverage Litigation Committee CLE Seminar, March 2010

22. EPLI Insurance: An insurance Boondoggle or Practical Protection, Necessary for all Employers, New Mexico Lawyer, August 2010, page 9, outlining a detailed explanation of the structure, coverage, and practical considerations.

23. EPLI Coverage: Updates and Strategy, ABA Section of Litigation Insurance Coverage CLE Seminar, 2010, Erika Blomquist and Beth Kahn and Pamela Palmer

24. Consent Decree Must Map Road to Settlement Success, The Employee Advocate, NELA, Winter 2006, page 18, Judith Rosenberg

For a fascinating summary of the terms of EEOC Consent Decrees (including results of motion practice and injunctive relief), see Annual Workplace Class Action Litigation Report, 2009 Edition, by Seyfarth Shaw LLP. (CD ROM), p 52.

25. The Price of discrimination, The Nature of Class Action Employment Discrimination Litigation and its Effects, Michael Selmi, Professor at George Washington University Law School, 81 Texas Law Review 1249, 2003. This insightful law review article questions the public policy value of class settlements and observes that there are three types of class settlements from the employer perspective: a public relations settlement (Texaco), a recalcitrance settlement (Home Depot Stores) and a reform-minded settlement (Denny’s restaurants).

Also see Targeting Workplace Context: title 7 as a Tool for Institutional Reform, 72 Fordham law Review 659, 2003, Tristin Green, Associate Professor, Seton Hall University School of Law, which challenges the traditional remedies in class settlements and argues the need for broader institutional reform.

Richard Fincher is a full-time attorney-mediator of workplace disputes, commercial claims,
and employment class action litigation. He has resolved over 1000 matters during his career. His latest class settlement involved pregnancy discrimination of private security guards. He regularly teaches at the Scheinman Institute of Conflict Resolution at Cornell University, and has presented over fifty CLEs on various themes of employment ADR. He can be contacted at 602-953-5322 or by email at rdf@workplaceresolutions.com.

The author acknowledges the work of Leighann George for her comments on the drafts and research in the Cornell Consent Decree Repository. She is a senior at the School of Industrial and Labor Relations at Cornell University, and served as a Research Fellow for the Consent Decree Repository Project at ILR.

The Author expresses appreciation to the Consent Decree Repository for Employment Class Action Litigation, hosted by the Labor and Employment Law Program of the Cornell University School of Industrial and Labor Relations (ILR). To-date, 195 Consent decrees are available for academic and practitioner research on the website. See ilr.cornell.edu/consentdecree


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