The Cases Companies Are Watching: EEOC v. Peoplemark, Inc.

A recent disparate impact case out of the United States District Court for the Western District of Michigan highlights the importance of continually reassessing and evaluating the strengths and weaknesses in a case as litigation proceeds. In EEOC v. Peoplemark, Inc. [the enhanced version of the opinion is available to lexis.com subscribers], the court awarded Peoplemark over $750,000 in attorneys' fees, expert witness fees, and costs following the dismissal of the EEOC's claims.

The litigation was a "large, multi-state disparate impact case" against Peoplemark. The EEOC alleged the temporary staffing company maintained a policy which automatically denied the hiring or employment of any person with a criminal record, and that this blanket policy adversely affected African Americans in violation of Title VII. The EEOC has generally taken the position that an employer's policy or practice of excluding individuals from employment based on an applicant's criminal history has an adverse impact on African American and Hispanic applicants, and any such policy is unlawful unless it is job related and justified by business necessity.

In this case, however, it turned out that Peoplemark didn't have such a policy. In fact, 22% of the 286 individuals who were supposedly not hired because of their felony convictions were actually hired by the company. As part of a three-year investigation, over 18,000 pages of documents - "virtually the entire universe of Peoplemark's personnel documents" - were produced to the EEOC. Peoplemark argued that the authority of the EEOC is not without limits and requested its fees for having to defend against the EEOC's "meritless litigation strategy." In particular, Peoplemark claimed that the EEOC should have realized its claim that Peoplemark had a blanket policy excluding felons was not well-grounded - especially since the EEOC had the 286 names upon which it relied during the administrative investigation before the lawsuit even began. While reducing the amount of attorneys' fees requested by Peoplemark, the court acknowledged that it "is left with the impression that plaintiff's counsel were content to simply place the matter in the hands of their experts and let them run with it."

This case should cause all litigants to stop and consider whether their claims or defenses continue to be viable as litigation progresses and as information and facts are brought to light through discovery. Even the perfect strategy or theory of a case that makes sense on day one, needs to be continually reevaluated.

Read more articles on employment law issues at Employment and the Law, a blog by Ashley Kasarjian

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