Fifth Circuit Increases Burden on Employers and Opens the Door to Monetary Damages in Pattern and Practice Cases

After announcing several years ago its intent to focus on claims of systemic discrimination, the Equal Employment Opportunity Commission (“EEOC”) has increased the number of systemic discrimination lawsuits that it has filed, particularly claims of pattern and practice discrimination. The EEOC has set as a goal that by 2018, 22-24% of its active litigations will involve claims of systemic discrimination.

In June 2016, after approximately five years of litigation against Bass Pro Outdoor World, LLC (“Bass Pro”), the EEOC secured a victory in the typically employer-friendly Fifth Circuit in connection with a pattern and practice claim. In EEOC v. Bass Pro Outdoor World, LLC, 826 F.3d 791 (5th Cir. 2016), the Fifth Circuit ruled for the first time that monetary damages, rather than only remedial relief, may be awarded to individuals in connection with pattern and practice claims. The court further adopted a framework for determining liability that places significant burden of proof on employers.

The EEOC brought claims against Bass Pro under Sections 706 and 707 of Title VII of the Civil Rights Act of 1964, alleging that the sporting goods company engaged in a pattern and practice of discriminatory hiring with respect to African American and Latino individuals and seeking monetary damages and equitable relief. Section 706 is the commonly used basis for lawsuits brought under Title VII and authorizes the award of compensatory and punitive damages, but it does not reference pattern and practice claims in any respect. Section 7 specifically authorizes the pursuit of pattern and practice claims, but permits only awards of remedial relief.

Bass Pro moved for summary judgment on the EEOC’s claims, arguing that the EEOC could pursue a pattern and practice claim only under Section 707 and could not pursue claims for compensatory and punitive damages under Section 706. The district court rejected Bass Pro’s contentions, prompting Bass Pro’s appeal to the Fifth Circuit, which affirmed the lower court’s decision. Finding that Sections 706 and 707 must be read in tandem, the court held that the EEOC could bring a pattern and practice claim pursuant to Section 706, and thus could seek and recover both compensatory and punitive damages. This significant expansion of the remedies available to complainants in a pattern and practice action results in an enormous increase in the potential monetary implications of an employer’s defeat in such cases.

The Fifth Circuit also held that pattern and practice claims are to be analyzed utilizing the framework set forth in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), a Supreme Court pattern and practice decision under Section 707, rather than the McDonnell Douglas framework typically used in discrimination cases. Under the Teamsters framework, a plaintiff must demonstrate that discrimination was the employer’s standard operating procedure and that he or she was subjected to an adverse employment action. After the plaintiff makes such a showing — concededly a high burden — the presumption shifts. At that point, it is presumed that the adverse actions experienced by each plaintiff were the result of the discriminatory pattern and practice, and the employer bears the burden of proving that each decision was based upon lawful, nondiscriminatory reasons.

Although the initial burden on the plaintiff is high, the Teamsters standard ultimately poses a heavier burden on employers than does the McDonnell Douglas standard, under which the defendant must merely articulate a legitimate, nondiscriminatory reason for an adverse action, after which the burden shifts back to the plaintiff to demonstrate that the proffered reason is a pretext for discrimination. Bass Pro claimed that the use of the Teamsters standard in this matter would violate employers’ rights to due process because they would be forced to settle pattern and practice claims if plaintiffs successfully proved the existence of a discriminatory practice rather than face the prospect of having to prove a lawful reason supporting each employment decision with respect to each individual plaintiff. The Fifth Circuit squarely rejected this argument, finding that while the Teamsters approach creates trial-management challenges that must be addressed by the district court, the enhanced risk faced by employers does not implicate due process.

Pattern and practice discrimination actions remain relatively rare. Nonetheless, Bass Pro increases the risk associated with such actions: Once a plaintiff class demonstrates a discriminatory pattern and practice, the employer faces an arduous litigation framework, with potentially hundreds, thousands or more individual claimants for whom it must demonstrate a lawful reason regarding each claimed adverse action, and failure to sustain that burden of proof will subject to the employer to both monetary damages and remedial relief.