ALM Properties, Inc.
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Crash and Burn
The allegations are appalling: graphic charges of assault and degradation by long-haul truck drivers who were supposed to be training more than 200 newly hired female drivers.
Some women say they were raped on the shoulders of dark roads. Others claim they were coerced into providing sex in exchange for passing grades. Male trainers allegedly masturbated in front of trainees, groped them while they were driving, and refused to let them go to the restroom.
If ever there was a compelling case of sexual harassment for the Equal Employment Opportunity Commission, the suit against trucking giant CRST Van Expedited Inc. would seem to be it. And yet the agency lost resoundingly in district court, where it was ordered to pay $4.5 million in attorney fees and costs, and fared only marginally better on appeal. The result is a potentially devastating precedent for the EEOC that threatens its key goal of bringing more "systemic" cases involving widespread discrimination.
The EEOC has asked for an en banc review of the 2-to-1 decision by the U.S. Court of Appeals for the Eighth Circuit. As the court considers the request, the question remains: Was the outcome the result of a few idiosyncratic judges? Or did EEOC attorneys make fundamental errors in strategy and presentation that left only two of 270 plaintiffs with a chance to have their day in court?
"I have been in the business a long time," said the trial court judge, Chief Judge Linda Reade of U.S. District Court for the Northern District of Iowa, according to a court transcript. "I also have never had a case brought by a government agency that was such a mess . . . not thought through, not ready for trial after an extensive amount of time, not pled the way you wanted to try it. I just have never seen that from a government agency."
EEOC general counsel P. David Lopez defended his agency's performance in an interview, noting that the commission has successfully brought dozens of other systemic discrimination cases using the same approach. He calls the court decisions "unprecedented and a new rule" that would seemingly require the EEOC to individually investigate and attempt to settle the allegations of every class member before suing an employer. "We continue to think that we are right," he says.
The employment bar is riveted. The ink was barely dry on the Eighth Circuit's February opinion before defense lawyers began citing it. "If the decision is followed by other circuits, it's going to dramatically impact the EEOC's ability to bring cases on a classwide basis," says Dana Kravetz, who chairs the labor and employment practice at Michelman & Robinson in Los Angeles.
The case began in 2005, when Monika Starke was hired as a new driver by CRST, a family-owned business headquartered in Cedar Rapids, Iowa, which employs more than 2,500 long-haul drivers. New drivers are sent on the road for 28 days straight with an experienced "lead driver," who at the end of the trip gives the trainee a pass/fail evaluation. The drivers sleep in bunks in the back of a small cab and are together around the clock. It's an environment with ample opportunity for sexual harassment, but the EEOC in prior cases had asserted that it's discriminatory for a trucking company to pair women drivers only with other women.
Starke spent a week driving with a male trainer who allegedly made repeated sexual comments and twice tried to pull down her pants while his were down. She complained to the company and was assigned a new trainer, who allegedly forced her to have sex in order to get a passing grade. (The trainer said the relationship was consensual.)
In December 2005 Starke filed a charge of discrimination with the EEOC. When the agency asked CRST for information "you deem relevant to the charge," the company provided the names of two other female drivers who had complained of harassment. In court papers the EEOC faulted the company for not being more forthcoming.
In September 2007 the commission filed suit on behalf of Starke and "a class of similarly situated female employees." The problem was that it still didn't know who they were. Reade, who was appointed to the bench by George W. Bush in 2002, called it a "sue first, ask questions later" litigation strategy. The agency sent out more than 2,700 letters to former CRST female employees soliciting their participation, and a year later it had 79 class members.
Judge Reade wrote: "As discovery progressed, it became clear to the court that the EEOC did not know how many allegedly aggrieved persons for whom it was seeking relief, and was using discovery to find them." She told the EEOC to name all class members by October 15, 2008. In the final week the commission added almost 200 additional women. (The original number was higher, but the list contained 14 duplicate names and one man.) CRST asserted that the EEOC simply added names from the company's human resources files without ever speaking to the plaintiffs. CRST's lead lawyer, Jenner & Block's John Mathias Jr., declined to comment.
The EEOC had just three months to depose all 270 women before discovery ended. Those who were not deposed would be dismissed, Reade ruled. CRST agreed to make five lawyers available to travel to any city the EEOC proposed, for depositions during four days in December, but the agency was overwhelmed, and many appointments went unused. In the end, the EEOC produced 150 women for depositions. The other 120 would-be plaintiffs were dismissed and barred from any recovery.
There were other problems. Judge Reade complained that the commission's materials were "replete with typographic and other technical errors." She ordered it to correct and refile more than a dozen documents. But the problems persisted in the Eighth Circuit. Lopez declined to discuss the matter. McDermott Will & Emery partner Linda Doyle, who was not involved, says that so many mistakes "are highly unusual for the EEOC."
With almost half of the class members eliminated, the EEOC was hit with another unfavorable order. It had sued CRST under section 706 of Title VII. But Reade wrote that the EEOC also appeared to be "pursuing matters in this case that it did not plead or allege"namely, that CRST engaged in a "pattern or practice" of sexual harassment, in violation of section 707. The statutes are similar, but 707 doesn't allow for compensatory or punitive damages. It does, however, offer an advantage when it comes to the statute of limitationsthe EEOC has successfully argued that it can seek relief for victims of pattern or practice claims "as far back as the evidence warrants" because the violations are ongoing. Claims under section 706 are limited to discrimination that occurred no more than 300 days before the charge was filed.
"It would appear the EEOC is attempting to have its cake and eat it, too," Reade wrote. "To show a pattern or practice of unlawful employment practices, the EEOC must do more than quibble with alleged deficiencies in CRST's antisexual harassment policies and practices. It must cite legal authority." She found that it had not, and dismissed 12 plaintiffs' claims that were more than 300 days old.
That was just the beginning. She tossed the claims of three women for failing to disclose the pending suit in bankruptcy filings, 15 for failing to report their harassment to CRST, 11 because their harassment was not sufficiently severe or pervasive, and 42 on multiple groundsleaving just 67.
Then came the bombshell. In August 2009 Reade dismissed the claims of all remaining plaintiffs because the EEOC did not investigate or attempt to conciliate their individual claims before filing suit. The EEOC "wholly abdicated its role in the administrative process," Reade wrote. "Although dozens of potentially meritorious sexual harassment claims may now never see the inside of a courtroom, to rule to the contrary would work a greater evil insofar as it would permit the EEOC to perfect an end-run" around Title VII's presuit requirements.
It is this finding that's at the heart of the Eighth Circuit appeal. The EEOC argued that "conciliation requires only that EEOC notify a respondent of the nature of the violation and how it could be remedied." No other courts, the EEOC added, have required the agency to investigate and conciliate every individual claim before filing a class suit.
The Eighth Circuit didn't buy it. The court noted that the EEOC didn't interview any witnesses or subpoena any documents to determine if the allegations of the 67 women were true. "The present record confirms that the EEOC wholly failed to satisfy its presuit obligations," wrote Judge Lavenski Smith, with a concurrence by Judge William Duane Benton. The majority also upheld the lower court's determination that the trainers were not supervisors because they lacked the power to hire or fire traineeswhich meant that CRST was not vicariously liable.
Lopez hopes that an en banc review will turn things around. But many observers are skeptical. Says Donald Livingston, who was once himself general counsel of the EEOC: "The logic of [the decision] is compelling."