Duane Morris Class Action Review - 2023 - Report - Page 164
adduced summary judgment evidence to create a question of fact regarding whether the
defendant properly implemented the harassment policy. Finally, the defendant asserted
that it could not have acted with malice or reckless indifference when no owner or
member of upper management had knowledge of the alleged discriminatory conduct.
The Magistrate Judge rejected this argument. It held that a reasonable jury could infer
that the defendant acted in the face of a perceived risk and violation of each claimants’
rights under Title VII. Id. at *37. Accordingly, the Magistrate Judge ruled that because
there existed genuine issues of fact, the defendant was not entitled to summary
judgment on the issue of punitive damages. For these reasons, the Magistrate Judge
recommended denying the defendant’s motion for summary judgment.
J.
Litigation Over EEOC Consent Decrees
Settlement of EEOC lawsuits is effectuated through consent decrees. As a matter of
policy, the Commission will not resolve a lawsuit on a confidential basis. Any resolution
must be approved by a court by way of a public record consent decree.
Courts typically retain jurisdiction over consent decrees, and the EEOC polices an
employer’s compliance with obligations contained within the consent decrees. The
Commission is very aggressive in monitoring consent decree obligations, as shown by
its prosecution of a contempt motion in 2022 in EEOC v. Sherwood Food Distributors,
Inc., 2022 U.S. Dist. LEXIS 32921 (N.D. Ohio Feb. 24, 2022), where the court held an
employer in contempt for failing to pay its payroll tax liabilities, as required by an EEOC
consent decree that resolved a systemic discrimination lawsuit. In addition to paying the
outstanding payroll tax, the court ordered the employer to pay an additional $46,858.55
resulting from the 3.8% tax rate increase during the time of the contempt dispute, as
well as potential settlement administrator fees. On September 27, 2016, the EEOC filed
a lawsuit against Sherwood, alleging that it engaged in discriminatory hiring practices
that adversely impacted female applicants in violation of Title VII of the Civil Rights Act
of 1964. The parties subsequently settled the litigation and entered into a consent
decree, whereby Sherwood agreed to place $3.6 million into a Qualified Settlement
Fund (QSF) account administered by a third-party administrator within 30 days of entry
of the consent decree. Id. at *2. These funds were to provide monetary relief to
individuals that the EEOC determined were subjected to the alleged discrimination. Id.
The monetary relief constituted both back pay and other monetary damages available
under Title VII. Id. The EEOC was given the authority to determine what type of
monetary relief would be paid to the eligible claimants. The EEOC asserted that
Sherwood subsequently violated the consent decree by refusing to pay its payroll tax
liability and therefore preventing the distribution of the $3.6 million to the claimants by
December 14, 2021. In relevant part, the consent decree stated that Sherwood was
responsible for paying its share of all applicable pay roll taxes and that the administrator
would inform Sherwood, “of the amounts of back pay distributed to each person from
the QSF and all other information necessary for [Sherwood] to satisfy its payroll tax
liabilities.” Id. The administrator notified Sherwood’s counsel on December 1, 2021, of
the amount that it owed in payroll taxes and provided notice that payment of the payroll
taxes must be received on December 10, 2021, for the award checks to be timely
distributed. The EEOC’s counsel communicated with Sherwood’s counsel in an attempt
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Duane Morris Class Action Review – 2023
