EEOC v. Abercrombie & Fitch: In Title VII Disparate Treatment Action, Job Applicant Need Not Show that Employer Actually Knew of Need for Accommodation or that Applicant Requested Accommodation

Title VII of the Civil Rights Act of 1964 prohibits a prospective employer from refusing to hire an applicant in order to avoid accommodating a religious practice that it could accommodate without undue hardship. The question presented is whether this prohibition applies only where an applicant has informed the employer of his need for an accommodation. 

EEOC v. Abercrombie & Fitch Stores, Inc. (6/1/15) ___ U.S. ___.

Samantha Elauf, a practicing Muslim who wears a headscarf for religious purposes, applied for a job at Abercrombie & Fitch (A&F). A&F staff assumed that Elauf wore the headscarf for religious purposes, but they did not know for sure and they did not ask. A&F rejected Elauf, believing her wearing a headscarf at work would violate its "Look Policy." 

The EEOC sued on Elauf's behalf, alleging that A&F violated Title VII. The trial court granted summary judgment for Elauf on liability, a jury awarded her damages, and the court entered judgment. The Tenth Circuit reversed, holding that A&F could not be liable because it did not know if Elauf actually needed a religious accommodation. 

The US Supreme Court granted certiorari and reversed the Tenth Circuit, holding that a plaintiff may prevail in a Title VII disparate treatment action without showing that the defendant had actual knowledge of his or her need for a religious accommodation. Instead, an employer may be liable "even if he has no more than an unsubstantiated suspicion that accommodation would be needed" and even if the applicant does not request religious accommodation.

The Court rejected the argument that a claim based on an applicant's religious practice must be raised as a disparate impact claim. "[R]eligious practice is one of the protected characteristics that cannot be accorded disparate treatment and must be accommodated."

An employer may be liable even if its policies treat religious practices no less favorably than similar secular practices. 

Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices. Rather, it gives them favored treatment, affirmatively obligating employers not “to fail or refuse to hire or discharge any individual . . . because of such individual’s” “religious observance and practice.” An employer is surely entitled to have, for example, a no-headwear policy as an ordinary matter. But when an applicant requires an accommodation as an “aspec[t] of religious . . . practice,” it is no response that the subsequent “fail[ure] . . . to hire” was due to an otherwise neutral policy. Title VII requires otherwise-neutral policies to give way to the need for an accommodation.

Justice Scalia wrote the opinion, with Chief Justice Roberts and Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan joining. Justice Alito wrote a concurring opinion, and Justice Thomas dissented. The opinion is available here. 

Sonic-Calabasas A, Inc. v. Moreno: SCOTUS Vacates and Remands to California Supreme Court

On October 31, the Supreme Court of the United States granted certiorari and vacated the California Supreme Court's decision in Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, which held: (1) an employee's "statutory right to seek a Berman hearing [a wage hearing before the DLSE or Labor Commissioner], with all the possible protections that follow from it, is itself an unwaivable right that an employee cannot be compelled to relinquish as a condition of employment;" (2) waiver of an employee's right to seek a Berman hearing is a substantively unconscionable contract term; and (3) the Federal Arbitration Act does not preempt the Court's holdings on points one and two.

SCOTUS remanded the case to the California Supreme Court for further consideration in light of AT&T Mobility LLC v Concepcion.

The California Supreme Court lists the issues presented as follows:

1. Can a mandatory employment arbitration agreement be enforced prior to the conclusion of an administrative proceeding conducted by the Labor Commissioner concerning an employee's statutory wage claim?

2. Was the Labor Commissioner's jurisdiction over employee's statutory wage claim divested by the Federal Arbitration Act under Preston v. Ferrer (2008) __ U.S. __, 128 S.Ct. 978, 169 L.Ed.2d 917?

The Court's web page for the case is here.

Review of LACBA Dinner on Dukes and Concepcion

I organized and had the honor of introducing the speakers at last night's Los Angeles County Bar Association program on class action practice after Wal-Mart v. Dukes and AT&T Mobility v. Concepcion: Nancy Abell of Paul Hastings, Brad Seligman of The Impact Fund, and our moderator, Aaron Cole of Irell & Manella. 158 people attended, making it the most successful dinner that the Labor and Employment Law Section has presented.

Wal-Mart v. Dukes: Aaron did a nice job of explaining the decision. Not surprisingly, Nancy and Brad disagreed strongly on its impact going forward. Brad emphasized that the theory of the case -- that a company policy giving discretion to local decision-makers can have a disparate impact on employees -- is very narrow and rarely used, so that the ultimate impact of Dukes may be more narrow than we all may assume. Nancy emphasized more broadly applicable rules found in the decision, such as the limitation on the use of aggregated statistics and the use of Daubert motions on class certification. Brad countered that Daubert challenges have been used for several years and will continue to be used, but whether they will succeed in keeping social scientists out of the certification debate in the future remains to be seen.

Nancy argued that the Hilao v. Estate of Marcos method of trying class actions -- what Justice Scalia referred to as "trial by formula" -- is dead, at least in Title VII cases, and cited Marlo v. UPS II (9th Cir.) and the more recent Cruz v. Dollar Tree (N.D. Cal.). Brad countered that this part of the decision rests on the language of Title VII (limiting its impact in other class cases) and in any case, the plaintiffs never relied on Hilao, which was inserted sua sponte by the Ninth Circuit in its en banc decision. He said that in Dukes, the plaintiffs have full data on the disparate impact of Wal-Mart's policies and can try the case based on that data, rather than on sampling. The Supreme Court, however, did not address this issue.

Brad conceded that the most significant impact of Dukes outside of the Title VII context is that if a plaintiff seeks a monetary recovery, Rule 23(b)(2) is out, and the case will be analyzed under Rule 23(b)(3). Nancy added that plaintiffs likely will seek to work with the EEOC, which may intervene in Title VII cases and which is not bound by Rule 23. Brad said that we likely will see larger cases broken down regionally. "Stay tuned."

AT&T Mobility v. Concepcion: Again, Aaron did a nice job summarizing the case. Nancy argued that along with Discover Bank, Gentry v. Superior Court is dead, and last week's Brown v. Ralph's Grocery is wrongly decided. Brad argued that California courts are going to follow their own line -- as in Brown -- until the Supreme Court says no, and that AT&T's arbitration agreement was unusually generous and that more standard arbitration agreements may not receive such a warm welcome in the courts.

Justice Moreno then asked what impact AT&T might have on the California Supreme Court's decision in Sonic-Calabasas A, Inc. v. Moreno, which he authored. Nancy stated, no offense to Justice Moreno, that it is dead. Brad countered that enforcement actions before the DLSE or under PAGA may not be subject to arbitration under the Supreme Court's EEOC v. Waffle House decision.

Asked whether a class action ban might violate the National Labor Relations Act by interfering with concerted activity, Brad responded that at least one such case is under consideration by the NLRB.

All in all, a very interesting night for us class action wonks. Thank you to Nancy, Brad, Aaron, and everyone else involved for making it such a success.

Thompson v. North American Stainless: SCOTUS Upholds Associational Retaliation in Title VII Case

In Thompson v. North American Stainless, LP, --- S.Ct. ----, 2011 WL 197638 (January 24, 2011), the Supreme Court of the United States held that an employee who alleged he was fired in retaliation for his fiancée’s filing of a Equal Employment Opportunity Commission complaint against their mutual employer could state a claim under Title VII of the Civil Rights Act since a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.

Justice Scalia wrote for the Court:

Thompson was an employee of NAS, and the purpose of Title VII is to protect employees from their employers' unlawful actions. Moreover, accepting the facts as alleged, Thompson is not an accidental victim of the retaliation-collateral damage, so to speak, of the employer's unlawful act. To the contrary, injuring him was the employer's intended means of harming Regalado. Hurting him was the unlawful act by which the employer punished her. In those circumstances, we think Thompson well within the zone of interests sought to be protected by Title VII. He is a person aggrieved with standing to sue.

Slip op. at 6.

Justice Ginsberg wrote a very brief concurring opinion, in which Justice Breyer joined. Justice Kagan did not take part.

The opinion is available here.

Dukes v. Wal-Mart: SCOTUS to Announce Certiorari Decision Next Monday

The Supreme Court of the United States will decide in a private session tomorrow whether to grant the petition for certiorari filed by Wal-Mart in Dukes v. Wal-Mart. SCOTUS will announce its decision next Monday, November 29, at 10:00 am. The Court's docket is here.

Plaintiffs File Opposition to Wal-Mart Petition for Certiorari

On October 21, 2010, plaintiffs filed their opposition to the petition for certiorari filed by Wal-Mart in Wal-Mart Stores, Inc. v. Dukes. We have followed this case very closely and will provide a full analysis of the opposition as soon as possible.

The opposition brief is available here. The Supreme Court's docket is here.

Supreme Court Holds That Rule 23 Preempts State Anti-Class Action Laws

I presented this case in a seminar in the Spring, but never posted it to the blog. Mea culpa.

In Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 130 S.Ct. 1431 (U.S., March 31, 2010), a medical provider brought a putative class action against an automobile insurer, alleging breach of contract, bad faith breach of contract, and violation of New York law in failing to pay statutory interest and penalties on overdue payments of insurance benefits owed under no-fault automobile insurance policies. The district court granted the insurer's motion to dismiss and the plaintiffs appealed. The Court of Appeals for the Second Circuit affirmed, and the Supreme Court granted certiorari.

A plurality of the Court, per Justice Scalia, held:

1. New York law prohibiting class actions in suits seeking penalties or statutory minimum damages conflicted with Federal Rule of Civil Procedure governing class actions, and
2. Federal Rule of Civil Procedure 23 is valid under the Federal Rules Enabling Act. 28 U.S.C.A. § 2072(b).

The full text of the opinion is here.

US Supreme Court Issues Arbitration Decision

On January 15, 2010, the Supreme Court granted certiorari in Rent-A-Center, West, Inc. v. Jackson (U.S. June 21, 2010) --- S.Ct. ---, 2010 WL 2471058. My original post, which gives the background, is here.

The Supreme Court issued its decision on June 21, holding that a provision of an employment agreement that delegated to an arbitrator exclusive authority to resolve any dispute relating to the agreement's enforceability was a valid delegation under the Federal Arbitration Act ("FAA") and that the district court did not abuse its discretion in granting the employer's petition to compel arbitration.

The Complex Litigator has an interesting take on the case here.

US Supreme Court To Review Class Arbitration Waiver Case

The US Supreme Court has granted certiorari to review the Ninth Circuit's decision in Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. October 27, 2009). In Laster, the Ninth Circuit affirmed a District Court decision that a class arbitration waiver was unconscionable and unenforceable. The Court also held that the Federal Arbitration Act does not preempt California unconscionability law. Our post on Laster is here.

The Supreme Court case is entitled AT&T Mobility, LLC v. Concepcion (No. 09-893). The Court's docket is here. I am adding this case to our watch list.

Dukes v. Wal-Mart: Standards for Class Certification Under FRCP 23

The Ninth Circuit Court of Appeals this morning issued its decision in Dukes v. Wal-Mart, --- F.3d --- (9th Cir. (N.D. Cal) April 26, 2010). The decision affirms in part the district court's order granting certification. Here is the summary of the opinion:

Plaintiffs allege that Wal-Mart, Inc., discriminates against women in violation of Title VII of the Civil Rights Act of 1964. After detailed briefing and hearing, the district court certified a class encompassing all women employed by Wal-Mart at any time after December 26, 1998, and encompassing all Plaintiffs’ claims for injunctive relief, declaratory relief, and back pay, while creating a separate opt-out class encompassing the same employees for punitive damages. We affirm the district court’s certification of a Federal Rule of Civil Procedure 23(b)(2) class of current employees with respect to their claims for injunctive relief, declaratory relief, and back pay. With respect to the claims for punitive damages, we remand so that the district court may consider whether to certify the class under Rule 23(b)(2) or (b)(3). We also remand with respect to the claims of putative class members who no longer worked for Wal-Mart when the complaint was filed so that the district court may consider whether to certify an additional class or classes under Rule 23(b)(3).

First of all, this is a very narrow victory for the plaintiffs: Judge Michael Daly Hawkins wrote the majority opinion, joined by five others, and Judge Ikuta wrote a dissent joined by four others, so it's a six-to-five split.

The majority begins by clarifying the standards for Rule 23 certification under the Supreme Court's decision in Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982):

When considering class certification under Rule 23, district courts are not only at liberty to, but must, perform a rigorous analysis to ensure that the prerequisites of Rule 23(a) have been satisfied. See id. at 160-61. It does not mean that a district court must conduct a full-blown trial on the merits prior to certification. A district court’s analysis will often, though not always, require looking behind the pleadings, even to issues overlapping with the merits of the underlying claims.

Slip op. at 12. The Court continues:

We also agree with the Second Circuit’s recent decision in Miles v. Merrill Lynch & Co. (In re Initial Pub. Offerings Securities Litigation) (“IPO”), which explained that, to the extent lower courts have evidenced confusion regarding the Rule 23 standard after Falcon, this confusion has existed because those courts have misread a Supreme Court statement made eight years before the Court handed down Falcon. See 471 F.3d 24, 33-34 (2d Cir. 2006). Specifically, courts have misunderstood Eisen v. Carlisle & Jacquelin, in which the Supreme Court stated, “We find nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.” 417 U.S. 156, 177 (1974). “This statement has led some courts to think that in determining whether any Rule 23 requirement is met, a judge may not consider any aspect of the merits . . . .” IPO, 471 F.3d at 33. It has “led other courts to think that a judge may not do so at least with respect to a prerequisite of Rule 23 that overlaps with an aspect of the merits of the case.” Id.

Slip op. at 13. Eisen typically is cited by the plaintiffs, so if you were plaintiffs' counsel and you hadn't already read the summary, you may be worried at this point. The Court continues:

IPO held that factual disputes concerning each of the Rule 23 factors must be analyzed and resolved. 471 F.3d at 41. This is a similar holding to our previous explanation—discussed in more detail below—that a district court must make “determinations” that the prerequisites of Rule 23(a) have been satisfied before it certifies a class, “which may require review of the same facts and the same law presented by review of the merits.” Falcon, 457 U.S. at 161; Blackie v. Barrack, 524 F.2d 891, 897 (9th Cir. 1975). IPO explained that “the obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue.” 471 F.3d at 41. IPO expressly rejected the Second Circuit’s approach inCaridad v. Metro-North Commuter Railroad, 191 F.3d 283, 291-93 (2d Cir. 1999), and Wal-Mart Stores, Inc. v. Visa U.S.A. Inc. (In re Visa Check/ MasterMoney Antitrust Litigation) (“Visa Check”), 280 F.3d 124, 135 (2d Cir. 2001), which had permitted class certification based on “some showing” that the Rule 23 factors were met, obviating the need to assess conflicting expert testimony pertinent to the Rule 23 inquiries. IPO, 471 F.3d at 40.

Slip op. at 15. The Court then clarifies that there are limits on the extent to which the Court can examine merits issues in ruling on certification:

[A]lthough "the court may not put the plaintiff to preliminary proof of his claim, it does require sufficient information to form a reasonable judgment...."

***

[A] court can never be assured that a plaintiff will prevail on a given legal theory prior to a dispositive ruling on the merits, and a full inquiry into the merits of a putative class’s legal claims is precisely what both the Supreme Court and we have cautioned is not appropriate for a Rule 23 certification inquiry.

Slip op. at 26-27, citing Blackie v. Barrack, 524 F.2d 891, 897 (9th Cir. 1975) and United Steel Workers v. ConocoPhillips Co., --- F.3d ---, 2010 WL 22701, at *5 (9th Cir. (C.D. Cal.) Jan. 6, 2010) (district court erred in basing its decision on whether the plaintiffs could prove merits rather than whether their claims implicated common questions of law or fact). (We posted on United Steel here.)

The Court then spends several pages clarifying this standard. For example, the Court distinguishes between securities fraud cases, in which plaintiffs rely heavily on anecdotal evidence, and Title VII disparate impact cases, in which plaintiffs rely on statistical evidence:

In resolving this problem and certifying the class, the district court [in Hnot v. Willis Group Holdings Ltd., 241 F.R.D. 204, 210-11 (S.D.N.Y. 2007)] noted, “[c]ontrary to defendants’ assertions, In re IPO does not stand for the proposition that the Court should, or is even authorized to, determine which of the parties’ expert reports is more persuasive. Defendants ignore the fact that In re IPO specifically rejected this interpretation of Rule 23.” Id. at 210. Instead, Judge Lynch explained, “In re IPOreiterated that ‘experts’ disagreement on the merits—whether a discriminatory impact [can] be shown—[is] not a valid basis for denying class certification.’ ” Id.(alterations in original) (quoting IPO, 471 F.3d at 35). Thus, the court could only “examine the expert reports as far as they bear on the Rule 23 determination.” Id.

Slip op. at 31. Wage and hour class actions, like Title VII disparate impact class actions, rely heavily on statistical analysis to support class certification, liability, and damage analyses. thus, in a wage and hour case, as in a disparate impact case, the district court should not attempt to "determine which of the parties’ expert reports is more persuasive." Rather, the Court should limit itself to determining "whether plaintiffs have asserted common questions of fact or law." Slip op. at 32.

The Court then reiterates the Rule 23 class certification criteria:

First, when considering class certification under Rule 23, district courts are not only at liberty to, but must, perform a rigorous analysis to ensure that the prerequisites of Rule 23 have been satisfied, and this analysis will often, though not always, require looking behind the pleadings to issues over-lapping with the merits of the underlying claims. It is important to note that the district court is not bound by these determinations as the litigation progresses. Second, district courts may not analyze any portion of the merits of a claim that do not overlap with the Rule 23 requirements. Relatedly, a district court performs this analysis for the purpose of determining that each of the Rule 23 requirements has been satisfied. Third, courts must keep in mind that different parts of Rule 23 require different inquiries. For example, what must be satisfied for the commonality inquiry under Rule 23(a)(2) is that plaintiffs establish common questions of law and fact, and answering those questions is the purpose of the merits inquiry, which can be addressed at trial and at summary judgment. Fourth, district courts retain wide discretion in class certification decisions, including the ability to cut off discovery to avoid a mini-trial on the merits at the certification stage. Fifth, different types of cases will result in diverging

frequencies with which the district court will properly invoke its discretion to abrogate discovery.

Slip op. at 34-35.

I find the Court's discussion here very interesting. The Court obviously is very interested in harmonizing its approach with both Falcon and the other circuits. This may be an effort to blunt the force of Wal-Mart's inevitable petition for review in the United States Supreme Court, where Wal-Mart undoubtedly will argue that the decision creates a conflict with Falcon and the other circuits.

US Supreme Court Issues CAFA "Principal Place of Business" Ruling

In Hertz Corp. v. Friend --- S.Ct. ----, 2010 WL 605601 (U.S. (Cal.) February 23, 2010) the plaintiffs filed a putative class action in state court against Hertz Corp. alleging violations of California's wage and hour laws. Following removal under the so-called Class Action Fairness Act (CAFA), plaintiffs moved to remand, alleging that Hertz's principal place of business was in California, destroying diversity jurisdiction. Hertz countered by submitting a declaration "stating, among other things, that it operated facilities in 44 States, that California accounted for only a portion of its business activity, that its leadership is at its corporate headquarters in New Jersey, and that its core executive and administrative functions are primarily carried out there." Slip op. at 1. "The District Court concluded that it lacked diversity jurisdiction because Hertz was a California citizen under Ninth Circuit precedent, which asks, inter alia, whether the amount of the corporation's business activity is 'significantly larger' or 'substantially predominates' in one State. Finding that California was Hertz's 'principal place of business' under that test because a plurality of the relevant business activity occurred there, the District Court remanded the case to state court. The Ninth Circuit affirmed." Ibid.

The US Supreme Court granted Hertz's petition for certiorari. After finding that it had jurisdiction to decide the matter, a unanimous Supreme Court held:

The phrase “principal place of business” in § 1332(c)(1) refers to the place where a corporation's high level officers direct, control, and coordinate the corporation's activities, i.e., its “nerve center,” which will typically be found at its corporate headquarters.

***

“[P]rincipal place of business” is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. In practice it should normally be the place where the corporation maintains its headquarters-provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings.

Slip op. at 1-2. The Court remanded the case for further proceedings.