Jackson Lewis Class Action Trends Report 2022: Discrimination Developments
It was a relatively quiet year on the class action front with respect to employment discrimination claims. However, the following developments in 2021 warrant mention.
Employers seek Bostock exemption
In a rare class action involving a class of employers, a federal court in Texas granted in part the plaintiffs’ motion to certify classes in a suit against the Equal Employment Opportunity Commission (EEOC) seeking a religious exemption from Title VII antidiscrimination protections to the extent they prohibit discrimination based on LGBTQ status. The plaintiffs, citing the First Amendment and Religious Freedom Restoration Act (RFRA), seek a declaratory judgment that they have the right to hire and fire in accordance with their asserted sincerely held religious beliefs, including the right to set employment policies and to make adverse employment decisions based on sexual orientation and gender identity — notwithstanding the U.S. Supreme Court’s landmark 2020 decision in Bostock v. Clayton County, Georgia, which held Title VII protects employees from discrimination based on LGBTQ status.
The employers contend there are questions of law common to the class members, including whether the RFRA compels the grant of exemptions to Bostock’s interpretation of Title VII, among others. The district court certified two classes of employers as to several of the asserted claims: (1) a “Religious Business-Type Employers” class including a private company that claims to operate its health and wellness center, vitamin shop, and pharmacy as Christian businesses (and does not employ individuals who engage in homosexual behavior or gender-nonconforming conduct, does not recognize same-sex marriage or extend benefits to an employee’s same-sex partner, and enforces a sex-specific dress-and-grooming code); and (2) an “All Opposing Employers” class comprised of employers that oppose homosexual or transgender behavior for religious or nonreligious reasons.
The court declined to certify a “Church-Type Employers” class and awarded summary judgment in defendant’s favor as to these plaintiffs, reasoning the employers qualify as “religious organizations” under the text of the statutory exemption in Title VII and, therefore, are not burdened by the statute’s protections for LGBTQ individuals. In addition, the court awarded partial summary judgment to the EEOC
as to other alleged claims and awarded partial summary judgment in favor of two of the employer classes as to certain employment policies the court found do not violate Title VII as a matter of law.
“Ambient” harassment won’t get class treatment
In a March decision, a Seventh Circuit panel ruled that a district court erred in certifying a class of female jail employees in a suit alleging their county employer failed to prevent sexual harassment by male inmates. The appellate panel found the court below abused its discretion in adopting an overbroad “ambient” or indirect harassment theory, and that the hostile work environment class could not stand because it was comprised of class members with materially different work settings whose claims required separate, individualized analyses.
In its initial order certifying a class comprised of about 2,000 nonsupervisory female employees who worked with male inmates at the jail or adjoining courthouse, the district court found a common question: “whether the ambient harassment experienced by female employees at the jail and the courthouse is sufficiently severe and pervasive to support a Title VII hostile work environment claim.” The court defined ambient harassment as “the experience of working in an environment highly permeated with sexually offensive and degrading behavior, that is, a highly sexualized atmosphere in which crude and offensive sexual behavior is common and employees see that it is normative, whether specifically directed at them or not.” The Seventh Circuit reversed, finding the ambient harassment theory was a problematic basis for commonality because it overlooks meaningful distinctions among the class members’ individual experiences, which can vary dramatically depending on where they work.
The district court had treated ambient harassment at the jail complex as if it were a homogenous phenomenon affecting every class member in the same way. However, the jail complex in question was massive (spanning 36 buildings across eight city blocks) and, while sexual harassment
allegedly occurred throughout the jail, the evidence showed it was heavily concentrated within a few residential divisions where a fraction of class members worked. Thus, whether the employees endured objectively severe or pervasive harassment depends on individualized questions of fact and law and must be resolved individually.
However, the appeals court observed that a smaller class comprised of a subset of class members with comparable work experiences might conceivably form a coherent class. Remanding, the Seventh Circuit left that issue to the district court’s discretion. In August, the named plaintiffs notified the district court that they would pursue their claims in their individual capacities instead, and the court instructed the parties to propose potential bellwether plaintiffs for trial.
Investor suit over harassment, discrimination fallout
A gaming company is defending a class action investor lawsuit related to the company’s alleged “frat boy” workplace culture and ongoing pattern of discrimination against women and minority employees. The investor suit, filed last August, was brought on the heels of a July complaint by the California Department of Fair Employment and Housing (DFEH) that revealed allegations of egregious and pervasive sexual harassment, as well as disparate treatment and discriminatory promotion practices. After the DFEH lawsuit was filed, some 2,000 employees staged a walkout condemning the company’s response. The protest led to further comments from the company’s CEO and a drop in share prices of more than 6 percent.
According to the investors’ complaint, the company made multiple materially false and misleading statements that concealed from investors a pervasive culture of harassment and discrimination, which drew regulatory and legal scrutiny and enforcement. The suit alleges that, while the company’s annual and quarterly filings disclose it is party to “routine claims and lawsuits,” they failed to disclose the two-year DFEH investigation. Also, the company’s 10-Ks incorporated by reference its code of conduct, which directed the company and employees to comply with applicable laws and regulations and stated no-tolerance policies for harassment and discrimination — statements that were materially false and resulted in shareholder losses when the falsehoods came to light, the class action complaint alleges. A motion to dismiss the investors’ suit is pending. Separately, the employer entered into a proposed three-year consent decree with the EEOC to settle Title VII claims arising from the alleged misconduct, creating an $18 million fund to compensate and make amends to eligible claimants and agreeing to significant injunctive and equitable relief.
Website accessibility litigation
Class action suits continued to proliferate in 2021 contending that businesses’ websites are not accessible to vision-impaired users, in violation of Title III of the Americans with Disabilities Act (ADA), the provision related to discrimination in public accommodations, and state-law counterparts.
Under Title III, individuals with disabilities, advocacy groups, and the U.S. Department of Justice can sue for violations. Spurred by the availability of attorney’s fees under Title III, plaintiffs’ firms have aggressively pursued these claims. (New York continues to be the epicenter of such litigation, but 2021 brought a notable increase in suits brought in California.) Defendants have ranged from small “mom and pop” restaurants to Fortune 50 corporations.
In a significant decision in 2021, the Eleventh Circuit (which includes Alabama, Florida and Georgia) held a grocery chain’s website is not a “place of public accommodation” under the ADA, joining several circuits in so holding. However, the Eleventh Circuit went even further: the divided panel expressly held that, under the facts of the case, a website that lacks an auxiliary aid that would enable the website to be read aloud by screen-reader technology is not necessarily equal to the denial of goods or services.
Fast-food chain faces class bias claims
Individual and classwide sexual harassment claims against a national fast-food franchisor and its franchisee survived a motion to dismiss. The class action under Title VII and the Florida Civil Rights Act was brought on behalf of all female employees who worked in a position below that of general manager at restaurants in Florida. The district court held the employees sufficiently alleged at the pleading stage that the complained-of harassment and hostile work environment were the result of company-wide policies, including inadequate training and a corporate-level policy of incentivizing managers to ignore sexual harassment, and there was enough evidence of a pattern or practice sufficient to satisfy Rule 23’s commonality and typicality requirements. The court, in its July decision, did foresee problems meeting the adequacy requirement because the proposed class may include individuals (such as lower-level supervisors) who contributed to the hostile work environment. However, the court explained, that issue would be considered when the employees move to certify the class.
In a separate action, a federal court in Michigan certified a class action in another sexual harassment suit against the fast-food chain, finding a 99-member class was sufficiently large to proceed and the allegations of harassment by the same manager could be resolved on a classwide basis (even if some of the class members had been involved in sexual or romantic relationships with the manager). In its December ruling, the court held the question of whether the manager’s conduct was unwelcome could be litigated on an individual basis. The court dismissed claims against the national corporate defendants, however, as the court rejected the plaintiffs’ contention that the franchisor entities were their joint employers