CLIENT ALERT: Please read this special message.

Bass Pro Denied a Second Bite in Challenging Broad Bias Lawsuit

Bloomberg BNA—Kevin McGowan

A federal appeals court won’t reconsider its earlier decision that allows the EEOC to pursue a broad nationwide lawsuit claiming Bass Pro Outdoor World LLC discriminates against black and Hispanic workers (EEOC v. Bass Pro Outdoor World LLC, 2017 BL 142011, 5th Cir., No. 15-20078, full court review denied 4/28/17).

The U.S. Court of Appeals for the Fifth Circuit April 28 deadlocked 7-7 on Bass Pro’s petition for full court review of a very technical aspect of the Equal Employment Opportunity Commission’s lawsuit that has major implications for the agency’s ability to recover damages from employers in certain types of discrimination cases.

The agency alleged that the retailer engaged in a pattern or practice of race and national origin bias, a type of claim under Title VII of the 1964 Civil Rights Act historically limited to seeking injunctive relief and back pay. The Fifth Circuit’s deadlock left intact a 2016 decision by a panel of its judges allowing the EEOC to seek compensatory and punitive damages as well.

The decision not to rehear Bass Pro’s challenge to “one of the EEOC’s largest cases” is “good news” for an agency that emphasizes high-impact lawsuits combating alleged bias in hiring, P. David Lopez told Bloomberg BNA May 1. Lopez is a former Equal Employment Opportunity Commission general counsel now with Outten & Golden.

But an employer representative expressed disappointment that the full Fifth Circuit won’t consider whether the EEOC is barred from seeking compensatory and punitive damages in “pattern or practice” litigation. Pattern-or-practice claims are brought under Section 707 of the 1964 law; intentional discrimination claims that allow for broader damages are generally brought under Section 706.

“Allowing the EEOC to file suit alleging intentional discrimination under Section 706, but litigate the case as if it were brought as a pattern-or-practice claim under Section 707—which creates an easier path to establishing liability, but provides much more limited relief for violations—directly conflicts with the plain text of the statute,” said Rae Vann, a partner with NT Lakis LLP in Washington, which represents employers.

Vann is general counsel of the Equal Employment Advisory Council, an employers’ association that filed an amicus brief supporting Bass Pro. The U.S. Supreme Court ultimately may have to resolve whether the EEOC has “pattern or practice” authority under Section 706, the part of Title VII that also allows compensatory and punitive damages.

Traditionally More Limited Relief

Congress gave the Justice Department sole authority to pursue pattern-or-practice cases under Section 707 when Title VII was enacted in 1964. The EEOC later received Section 707 authority to pursue pattern-or-practice cases under the 1972 amendments to Title VII.

The Supreme Court in Teamsters v. United States said pattern-or-practice cases may be tried under a two-step procedure. The government in the first stage must prove unlawful discrimination was an employer’s standard operating procedure.

If the government makes that showing, however, the employer must show individual employment decisions weren’t infected by the pattern of bias. But the relief available in pattern-or-practice cases was limited to court orders against future discrimination and back pay.

Congress subsequently enacted the Civil Rights Act of 1991, which authorized jury trials and compensatory and punitive damages for intentional bias under Title VII. But those new remedies presumably didn’t apply to Section 707 pattern-or-practice claims.

EEOC Skirting Law, Employers Argue

The EEOC during the Obama administration began to file pattern-or-practice claims under both Section 706 and Section 707, seeking to recover the compensatory and punitive damages allowed under Section 706.

The Fifth and Sixth circuits now have ruled the EEOC can pursue pattern-or-practice cases under Section 706, with the attendant damages, even though only Section 707 expressly mentions the pattern-or-practice option.

Bass Pro and other employers argue the EEOC is skirting Title VII’s language and intent by using the pattern-or-practice procedure while seeking damages that traditionally haven’t been part of that type of litigation.

The employers say allowing the EEOC to pursue such cases under Section 706 and make large damages demands forces companies to settle pattern-or-practice claims regardless of the merits of the bias charges. The distinction between Sections 706 and 707 is “crucially important” to employers because Title VII is “unambiguous as to when each provision may be invoked,” Vann said in a May 1 email to Bloomberg BNA. “They are not interchangeable.”

Attorneys for Bass Pro didn’t respond to requests for comment May 1. The EEOC said it is looking forward “to having the merits of this important race and national origin hiring case heard” in federal district court.

EEOC attorneys in Washington represented the commission. King & Spalding LLP represented Bass Pro.