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by Lee Bantle / 5 comments

How Not to Settle Employment Discrimination Suits

Note: This article was published in the New York Law Journal in the Outside Counsel column.

Some attorneys dream about taking their employment discrimination cases all the way to the Supreme Court and winning, trouncing their adversaries and deflating their self-righteous hubris at every step of the way. They want to battle it out in court and emerge victorious, believing settlement is a polite word for surrender.

However, for an attorney representing employers, the cost of litigation is potentially enormous and in many cases will exceed any settlement amount the plaintiff is likely to accept. The liberal discovery rules permit plaintiffs’ lawyers to beat a path to the doors of the top-level company officials, and depositions and trial can be very disruptive. The defendant’s risk of losing is not only bad public relations, but also entitles the plaintiff to attorneys’ fees thus bestowing upon the employer the dubious honor of paying both to prosecute and defend the case.

For attorneys representing employees, the years of litigation may turn into an obsession for the plaintiff where little else in life matters but seeking vindication. The plaintiff’s past will be investigated within an inch of his or her life. A jury perceived to be sympathetic may not ultimately decide the case if the employer wins summary judgment, or worse, judgment notwithstanding the verdict.

The attorney may still want to avoid settlement and forge ahead to trial even after considering all of these difficulties. If so, following the simple rules set forth below will achieve this goal.

Under the employment-at-will rule in New York, a private-sector employee without a contract or union membership may generally be fired for any reason so long as it is not an illegal reason.¹ The original federal list of prohibited discriminatory reasons — race, color, religion, sex and national origin have been expanded to include age and disability under federal law and marital status and sexual orientation, among others, under some state and local laws.

Terminations almost always seem unfair to the employee who has lost a job, but it must be explained to the potential client that unfairness alone does not rise to the level of a cause of action. The termination must have been motivated in significant part because the employee was African-American, female, gay or in some other way protected.

Most discriminatory discharge cases will come down to a dispute over whether the employer’s stated reasons for termination are pretextual. As the U.S. Supreme Court has explained, while the plaintiff bears the ultimate burden of proving discrimination, “rejection of the defendant’s proferred reasons [for termination], will permit the trier of fact to infer the ultimate fact of intentional discrimination.²

A plaintiff’s attorney screening potential cases must ask the following questions:

1. What does the employee believe was the true reason for termination? (The employee must be pressed for a complete answer on this point or the attorney may face some nasty surprises down the road.)
2. What evidence exists or is believed to exist that the stated reason was not the true reason?
3. What evidence exists that discharge was motivated by the employee’s membership in a protected group?
4. If the termination resulted from a reduction in force, did the layoffs fall disproportionately on members of a protected group?

If the attorney takes the case without satisfactory answers to these questions, it is likely that the case will not settle.

Demand Letters

No one likes to be accused of discrimination, especially in public documents filed at the federal or state courthouse. As plaintiff’s attorney, one sure way to avoid an early settlement is to start the war without sending a demand letter and providing any opportunity for talks, that might lead to peace.

Some attorneys fear wasting time or revealing too much of their case early by sending a detailed demand letter setting forth the basis for the claim. Yet, the risk may be well worth taking. Reinstatement and substantial settlements for clients may be obtained in response to such letters.

However toughly worded, the demand letter is an invitation to the employer to resolve the case before tens or hundreds of thousands of dollars are spent on litigation. The defense attorney, whether in-house or outside counsel, who eschews settlement should, of course, respond with a “drop dead” letter. A meeting to share information that will be routinely available in discovery anyway (e.g., employee reviews, disciplinary records, reduction in force statistics) is too likely to lead to a dialogue where the case will be resolved out of court.

Insulting the Adversary

Insulting the adversary is the most satisfying and creative part of litigation and inevitably ensures that the adversary would rather rot in hell than settle the case. Because the adversary obviously has serious personal deficiencies by virtue of his or her agreement to represent “that side” in the case, there is no need to be friendly with such a person.

What are some effective ways to be insulting? The attorney could offer everyone at the deposition coffee but the adversary; insist in briefs that the adversary’s arguments constitute a fraud on the court and run afoul of disciplinary rules; interrupt the adversary repeatedly in oral argument; threaten the adversary with sanctions at the least provocation and add a request for sanctions as boilerplate to all motions; and point out the adversary’s ignorance of the law, a particularly effective technique if clients are present.

If the attorney has succumbed to an exploratory settlement meeting, keeping the adversary waiting for at least a half hour in the reception room and sneering derisively when he or she presents the client’s position is another effective insult. When communicating in writing, attorneys who loathe settlement could draft and mail letters in the heat of fury at something the adversary has done. Truly skillful practitioners can make every sentence communicate disdain for the intelligence of their opponents. Letters are best closed by suggesting in so many lawyerly words that the adversary should call after realizing the absurdity of his or her position. This will assure that no return call will be forthcoming and thus the attorney can proceed happily with the case.

Filing Deadlines

Probably the easiest way for the plaintiff’s attorney to ensure the case does not settle is to miss filing deadlines. In order to bring suit for discrimination under federal law, a charge in New York State must be filed with the EEOC within 300 days of the act giving rise to the claim.³ (In states where there is no state or local agency to handle discrimination claims, the charge must be filed within 180 days.⁴) If the EEOC has not resolved the case or filed suit on behalf of the charging party within 180 days, it will issue a right to sue letter upon request.⁵

At present, because the EEOC in New York City is backlogged and is unlikely to investigate most charges within 180 days, it will issue the right to sue letter upon request before the passage of 180 days. However, federal courts have differed on whether a suit may be commenced before the statutory 180-day period has run.⁶ Once the right to sue letter has been issued, a federal action must be commenced within 90 days.⁷

Under state law, employees must choose between filing administratively with the New York State Division of Human Rights (in which case the claim will be heard by an administrative law judge) or filing a complaint in state court.⁸ The administrative filing must be done within one year of the act of discrimination⁹ while a suit in state court must be brought within three years.¹⁰

Under New York City human rights law, employees similarly must choose between filing with the New York City Human Rights Commission within one year¹¹ or suing in state court within three years.¹² The luxuriously long three-year statute for state court complaints can be a saving grace for plaintiffs’ lawyers who decide late in the game they do not want to lose out on a settlement because they missed a filing deadline.

Remedies

Another strategy for avoiding settlement is attorney uncertainty about what is necessary to resolve the case. If the attorney has only a vague idea of the client’s position on the following items, there is little chance of reaching an agreement to end the case.

1. Reinstatement. Is the company willing to take the employee back – perhaps in some different capacity?
2. Compensation for Release. What will the company pay in order to obtain a full release of all discrimination claims? The amount selected should take account of what could be proved at trial for back pay (lost wages from date of termination to trial); front pay (lost wages from date of trial forward); pain and suffering and other damages arising from the discrimination; and the potential for an award of punitive damages.
3. Other compensation. Leaving aside compensation for the discrimination claim, what is the employee entitled to under company policy for severance pay, unused vacation pay, unused sick leave and prorated bonus payments?
4. Benefits. How long will the company continue paying for the employee’s health insurance before the employee must convert to a COBRA plan? Is there a life insurance policy that the employee can assume? Does the employee have a 401-K plan that can be rolled over or a pension that is vested? May the employee exercise stock options or other miscellaneous benefits that may have been promised during the period of employment?
5. Outplacement Services. Will the company pay for outplacement services (i.e., counseling and /or office support) to assist the employee with finding a new job?
6. References and Records. Will the company provide a positive reference or at least promise to give the increasingly popular non-response (“The policy of our company is to provide only dates of employment and position held.”) If there are negative records in the personnel file, will the company agree to cleanse the file?
7. Unemployment. Will the company agree not to contest the employee’s application for unemployment compensation?
8. Relocation Allowance. If the company moved the employee to the job site, will it provide a moving allowance so the employee can return to his or her former home?
9. Legal Fees. Will the company pay any of the legal costs incurred by the employee in pursing the claim?
10. Confidentiality. The employer may insist that the terms of the settlement agreement remain confidential. However, employees should not be gagged as to the facts that gave rise to the discrimination.

Conclusion

The above guidelines on how to avoid settlement are virtually foolproof. Attorneys will ignore them at their peril. If they carefully screen cases, adhere to filing deadlines, invite a dialogue about the claims before filing suit, treat their adversaries with consideration, and think through what relief they really need for their clients, they run serious risk of striking a compromise that will settle the case long before trial.

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1. Murphy v. American Home Products Corp., 58 NY2d 293, 305, 461 NYS2d 232, 237 (1983).
2. St. Mary’s Honor Center v. Hicks, 125 L.Ed.2d 407, 418, 113 S.Ct. 2742 (1993).
3. 42 USCA §2000e-5(e)(1).
4. 42 USCA §2000e-5(e)(1).
5. 42 USCA §2000e-5(f)(1)
6. Henschke v. New York Hospital-Cornell Medical Center, 821 F.Supp. 166 (S.D.N.Y. 1993) and Saulsbury v. Wismer & Becker, Inc., 644 F2d 1251 (9th cir. 1980).
7. 42 USCA §2000e-5(f)(1).
8. N.Y. Exec. L. §297(9).
9. N.Y. Exec. L. §297(5).
10. Murphy v. Home Products Corp., 58 NY2d 293, 307, 461 NYS2d 232, 239 (1983).
11. N.Y.C. Admin. Code §8-109(e).
12. N.Y.C. Admin. Code §8-502(d).