The EEOC Litigation Review - 2023 - Report - Page 24
complaints seeking to add as defendants Jai Hanuman, LLC (“Jai”), which purchased
the hotel from RW2 in 2014, and SGI, LLC (SGI), which purchased the hotel from Jai in
2016. The district court dismissed the EEOC’s claims against SGI on the grounds that
the EEOC failed to adequately allege a basis for successor liability against SGI. Id. at
140. The district court dismissed the EEOC’s claims against Jai on the grounds that the
EEOC failed to adequately allege a basis for successor liability against Jai, and it
ordered RW2 to pay compensatory damages to the EEOC in the total amount of
$35,000. On appeal, the Tenth Circuit reversed in part and affirmed in part the district
court’s ruling. The Tenth Circuit agreed with the district court’s ruling that the matter
should be dismissed as to Jai, but it reversed the district court’s conclusion as to SGI.
The Tenth Circuit ruled that the EEOC sufficiently established that SGI should have
known that there was an outstanding lawsuit against RW2, and that the information
would have been uncovered had there been a proper investigation prior to the
purchase. The Tenth Circuit also struck down the $35,000 award as problematic
because the district court failed to explain the rationale behind the award. The Tenth
Circuit thus reversed the district court’s dismissal of the EEOC's claims against the
defendant SGI, affirmed dismissal of the EEOC's claims against the defendant Jai,
reversed the district court's compensatory damage award, and remanded for further
proceedings.
In EEOC v. Ryan's Pointe Houston, LLC, 2022 U.S. App. LEXIS 27079 (5th Cir. Sept.
27, 2022), the Commission filed an action on behalf of Magali Villalobos, alleging that
the defendants, several apartment complex owners, subjected her to discrimination on
the basis of her sex and national origin in violation of Title VII. The district court granted
summary judgment in favor of the defendants. On appeal, the Fifth Circuit reversed and
remanded the district court’s ruling. Villalobos was originally from Mexico and worked
for the defendants as a property manager until she was terminated from her
employment. The EEOC asserted that the defendants terminated Villalobos’s
employment on the basis of her race, that the defendants’ management stated a desire
to change "the demographics" of the complex, management referred to Villalobos as “a
trashy Mexican,” and management made disparaging comments regarding Mexican
tenants. The district court found that Villalobos could not make out a prima facie case of
discrimination because she was not qualified to serve as the complex’s property
manager in the first place, and that she was terminated for poor performance and not
for any discriminatory reason. On appeal, the EEOC argued that the district court erred
in granting summary judgment. The Fifth Circuit found that the district court erred
because the evidence demonstrated a clear discriminatory motive on its face without
the need for an inference. Id. at *10. The Fifth Circuit determined that the statements of
the defendants’ management team were clearly made with discriminatory animus
and were proximate in time to the adverse employment action. The Fifth Circuit further
determined that the defendants’ reason for Villalobos’s termination was pretextual,
because she was never counseled on her allegedly poor performance and was given no
time to correct any performance deficiencies prior to her termination. The Fifth Circuit
also ruled that the EEOC sufficiently established a pretext for sex-based discrimination
because Villalobos was terminated while she was pregnant, and was replaced by a nonpregnant person. The Fifth Circuit therefore reversed and remanded the district court’s
ruling granting the defendants’ motion for summary judgment.
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© Duane Morris LLP 2023
The EEOC Litigation Review – 2023
