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The Chicago district office of the Equal Employment Opportunity Commission (EEOC)�which has won pioneering victories in sexual harassment class actions�was recently dealt a setback by a federal judge. In EEOC v. Custom Cos. Inc., No. 02C3768, Judge Harry D. Leineweber of the Northern District of Illinois called into question the legal reasoning behind a 2001 decision that magnified the EEOC’s leverage against soap maker Dial Corp. in a sexual harassment class action, and that contributed to a $10 million settlement agreed to by Dial last year. The 2001 ruling was EEOC v. Dial Corp., 156 F. Supp. 2d 926. In his April 7 pretrial ruling, Leineweber said that Custom Cos. Inc., a Northlake, Ill., shipping firm, could not be held liable for charges raised by women who had left the company before March 20, 1998, despite the fact that the EEOC may draw upon the women’s testimony to establish that the company had engaged in a long-standing pattern or practice of sexual harassment. 300 days For the most part, Title VII of the Civil Rights Act of 1964 protects employers from liability for violations that are deemed “stale.” Leineweber arrived at the cutoff date of March 20, 1998, by counting back 300 days from the first complaint the EEOC received about Custom, lodged by former sales representative Catherine Copello in 1999, according to his opinion. In the Dial case, Judge Warren K. Urbom (visiting from the District of Nebraska) said that the EEOC could seek damages on behalf of employees who had left Dial prior to the 300-day period, as long as they were the victims of a continuous pattern or practice of sexual harassment that also affected other employees during the 300-day period. Urbom’s reasoning was flawed, Leineweber wrote, because: The law is ambiguous on the point. The very existence of the 300-day period suggests that lawmakers valued finality. Damages go primarily to the benefit of individual victims, while the EEOC can still serve the public interest by seeking injunctions. That last point is hotly disputed by EEOC Regional Attorney John Hendrickson, who headed both the Dial and Custom cases. By increasing potential damages, Urbom’s ruling enhanced Title VII’s power to deter wrongdoing and gave the agency greater leverage to negotiate settlements like the one in Dial, he said. Custom attorney Diane E. Gianos, a partner in the Chicago office of Foley & Lardner, countered in an e-mail message that “Congress did not want to create an environment where employers who acted lawfully would submit to the coercion of potential liability for limitless and unmeritorious claims for the sole purpose of limiting their dollar losses.” Looking to ‘Morgan’ Hendrickson said that the U.S. Supreme Court lent support to Urbom’s view in National Railroad Passenger Corp. v. Morgan, 536 U.S. 101 (2002). The Morgan court held that an individual alleging harassment could look back before the 300-day period not only to draw upon evidence of a long-term violation, but also for purposes of collecting damages. Gianos wrote, “As Judge Leineweber held, the EEOC reads far too much into the Morgan decision. Morgan involved an individual employee’s claim of sexual harassment, not a class action.” Professor Melissa Hart, a discrimination law authority at the University of Colorado School of Law, said that the EEOC’s interpretation of Morgan was “plausible.” But she added, “I don’t think Morgan can be read as giving a definitive answer to the question of what to do with plaintiffs falling outside of the 300-day period.” Hendrickson said that the agency has not yet decided whether to seek an interlocutory appeal, but that in any event the 7th U.S. Circuit Court of Appeals is generally hostile to such appeals. Young’s e-mail address is [email protected].

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