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EEOC Seeks to Clear Path for Classwide Punitive Damages and Backpay Awards

January 1, 0001

 

On March 19, 2009, the EEOC filed an amicus brief on behalf of the plaintiffs in Dukes v. Wal-Mart Stores, Inc., just five days before an en banc panel of the Ninth Circuit Court of Appeals is scheduled to hold oral argument to review the lower court’s decision to certify a class of approximately 1.5 million female employees of Wal-Mart. Although the class was certified approximately five years ago and the case has been actively litigated on appeal in the Ninth Circuit during that time, this is the first time the EEOC has weighed in with its own views on the class certification decision.

The EEOC’s brief is important to employers for several reasons. As an initial matter, it strongly suggests that in the new Administration, the EEOC will focus as never before on systemic discrimination cases. This is not surprising, given that the newly appointed Acting Chairman, Stuart J. Ishimaru, has focused much of his career on large, systemic discrimination cases. In its statement of interest, the EEOC highlighted its interest in such cases: “Although the Commission’s ability to bring an enforcement action alleging a pattern or practice of discrimination does not require class certification under Federal Rule 23, the Court’s resolution of issues related to punitive damages and backpay in class cases may directly affect the Commission’s enforcement of Title VII, particularly its systemic litigation.”

Additionally, the brief signals the approach the EEOC is likely to take in these cases, which is to seek large monetary awards against employers. Indeed, the EEOC takes the position that punitive damages can be appropriate against an employer even in the absence of any award of backpay or compensatory damages to individual plaintiffs.

More specifically, the EEOC takes two positions in its brief. First, the EEOC argues that punitive damages may be determined on a classwide basis in the first stage of a “pattern or practice” discrimination case, before any individual plaintiff has established liability or an actual injury. Under Teamsters v. United States, 431 U.S. 324 (1977), a pattern or practice case is divided into two stages. In Stage I, the plaintiffs or EEOC must prove that unlawful discrimination has been a regular procedure or policy followed by an employer. The proof at Stage I typically consists of (1) statistical evidence of, for example, the promotion rates for women compared to the promotion rates for men, and (2) anecdotal evidence, often in the form of testimony from the named plaintiffs about their individual experiences. But Stage I does not establish liability as to any individual plaintiff. That is left to Stage II, in which individuals must carry the additional burden of showing that each was an actual victim of discrimination.

According to the EEOC, “if plaintiffs persuade a Stage I jury that the employer engaged in a pattern or practice of discrimination, ‘in the face of a perceived risk that its actions will violate federal law,’ they have done all that needs to be done to justify an award of punitive damages.” This would mean that punitive damages could be awarded before any individuals had established themselves as victims of discrimination. Indeed, the EEOC argues that “there is no requirement that punitive damages be proportional to compensatory damages or backpay. On the contrary, punitive damages may be available to Title VII claimants even in the absence of any backpay or compensatory damages award.”

Second, the EEOC argues that backpay may be determined on a classwide basis without individualized hearings. As the EEOC concedes, under Teamsters, the district court usually has to conduct additional proceedings to determine the amount of backpay any individual is entitled to receive. In a case where it would be challenging to “reconstruct” the individual employment histories, however, the EEOC argues that “an approximate measure of damages” should suffice. Accordingly, the EEOC endorses the use of “computerized calculations comparing each class member’s pay to that of comparable men” using the company’s personnel databases.

Based on its positions in Wal-Mart, it appears that the EEOC is seeking to clear the path for large punitive damages and backpay awards against employers.

O’Melveny & Myers LLP represents the U.S. Chamber of Commerce as amicus in Dukes v. Wal-Mart Stores, Inc.