Glimmer Of Hope For Employers In Multi-Employee "Pattern And Practice" Harassment Litigation

Q. May the EEOC, on behalf of a large group of employees, bring a “pattern and practice” sexual harassment lawsuit and recover compensatory and punitive damages for all members of the group, regardless of whether or not individual employees were subjectively offended by the conduct?  

A. No, according to a recent federal district court decision in Illinois.  EEOC v. International Profit Association, Inc. (“IPA”).  

Local newspapers had reported on the IPA decision because of the court’s disagreement with a series of earlier decisions by other federal courts which had held in favor of the EEOC.  In 1998, in the Chrysler Mitsubishi decision, the EEOC successfully used a “pattern and practice” sexual harassment claim and the parties settled for $34 million dollars.  In 2003, in the Dial Corporation decision, the EEOC pushed the envelope again and a court allowed the EEOC to seek punitive damages in a pattern and practice case and the case settled for $10 million dollars.  Therefore, the EEOC must have expected another victory in the IPA case.  But that was not in the cards for the EEOC.

The defendant, IPA, provided business analysis and consulting services and employed over 400 telemarketers.  The office environment was fast-paced and high-pressured.  Allegedly, some of the female telemarketers were propositioned, offered job benefits contingent upon performance of sex, slapped, pinched, touched, grabbed, and sexually assaulted.  Attempts at outright rape also were alleged.  

The EEOC brought a lawsuit on behalf of two individually named plaintiffs, and an alleged “group” of over 110 other female plaintiffs employed at IPA.  The lawsuit was not brought as a class action, despite the number of plaintiffs.  However, the EEOC  alleged that IPA engaged in a “pattern and practice” of sexual harassment affecting all of the female employees.  Injunctive relief, as well as compensatory and punitive damages were sought.   

IPA denied the allegations and argued that, during  their depositions, certain plaintiffs could not remember any specific improper activity.  Thus, IPA claimed that the EEOC could not prove a pattern and practice of harassment.  The EEOC responded that, as part of a “pattern and practice” claim, it did not have to prove that each of the individual employees experienced specific incidents of harassment.  IPA disagreed and countered that the EEOC could not obtain compensatory and punitive damages in favor of individual employees without proving that those individual employees suffered specific violations.  The court agreed with IPA.

The court rejected the EEOC’s position that in a pattern and practice sexual harassment case, a particular employee may recover damages even if the employee was only subjected to superficial harassment.  To conclude otherwise, the court observed, would be unfair because “a woman who experienced only an untoward glance or an isolated remark could nonetheless recover compensatory and punitive damages, so long as she was subjectively offended.”  

The court stated that actionable harassment in the workplace, “does not mean that the terms and conditions of employment have been altered for each employee who experienced the harassment.”  It is entirely possible for an employee to work at a business with a policy of tolerating actionable sexual harassment, yet be exposed to harassment in only the most superficial ways.  Thus, the court held that it must “focus on the conduct to which each individual claimant was exposed.”  That “would prevent eggshell plaintiffs - those who are offended by comments or actions that would not offend a reasonable person… .”

The EEOC also had sought separate juries for each individual claimant’s damage claims.  In 2003, the court in the Dial case had granted the EEOC’s request for individual juries and had divided the plaintiffs into three groups, each group having a separate jury.  Of course, the potential for having multiple juries puts a great deal of pressure on an employer to settle individual claims.  However, the court in the IPA case did not agree to conduct the trial with separate juries, finding that multiple juries was neither economical nor practical.

The court’s decision in IPA creates a conflict among the district courts in the Northern District of Illinois.  The Seventh Circuit Court of Appeals has not had the opportunity to address this issue, nor have any of the other Federal appellate courts.  However, now, a glimmer of hope exists for employers after their eleven years of concern, which commenced in 1998 with the Chrysler Mitsubishi decision. 

As stated, the IPA decision was reported in local papers.  Some commentators have speculated that the decision may be followed by other district courts and will weaken the hand of the EEOC.  Certainly, the EEOC is disappointed with the opinion.  And, more certainly, it is good news for employers because at least one federal court in the Northern District of Illinois will not permit a wholesale award of damages to individual employees without proof that they specifically suffered from “severe and pervasive conduct.”  However, the majority of federal district court judges in Illinois have not yet been presented with this issue.  Ultimately, it will be a matter for the Seventh Circuit, and possibly, the U.S. Supreme Court, to rule on.

As a practical matter, the most immediate impact on employers is the need to provide evidence that employee complaints were monitored and employees reported no individual harassment complaints.

√ Require employees to sign an annual anti-discrimination/harassment audit statement.  (e.g., Ask:  “have you experienced discrimination or harassment?”)

√ List in the audit statement multiple channels to report harassment.  Have it signed by the employee.

√ Conduct annual updates of training.