In an EEOC suit claiming a nationwide practice of age discrimination by restaurants doing business as Seasons 52, a federal magistrate judge in Florida issued a lengthy opinion granting in part the agency’s motion seeking sanctions for alleged spoliation of evidence. The parties would be allowed to present to the jury their evidence concerning deleted emails and other lost evidence, but the court wasn’t ready to permit adverse inference instructions until the agency convinced the jury that any spoliation was done in bad faith. Central to the dispute was the extent of the agency’s investigation and whether Seasons 52 had a duty to issue a litigation hold nationwide—or only as to the restaurant where the two original claimants worked. The court adopted neither position, finding the defendants knew or had reason to know that they should have preserved evidence as to 11 restaurants (EEOC v. GMRI, Inc., November 1, 2017, Goodman, J.).
The EEOC filed an ADEA suit on behalf of a class of individuals against GMRI, Darden Restaurants, and related entities doing business as Seasons 52, self-described as a fresh grill and wine bar featuring a seasonally inspired menu in a casually sophisticated atmosphere. The agency claimed the defendants, operating as an integrated enterprise or single employer, had rejected older applicants. In addition to a pattern-and-practice claim, the agency filed intentional discrimination claims on behalf of two claimants who worked at a Coral Gables restaurant.
Nationwide hiring practice. The defendants, which have opened 35 restaurants nationwide since 2010, have a centralized and structured hiring process where teams go to new restaurants to train managers in hiring procedures. According to the EEOC, the defendants had a standard procedure of rejecting applicants over the age of 40. Hiring officials allegedly told rejected applicants things like “you are too experienced”; “we are looking for people with less experience”; “we are not looking for old white guys”; “we are looking for ‘fresh’ employees”; and Seasons 52 wanted a “youthful” image. The EEOC alleged that a sampling of the defendants’ hiring data nationwide showed that hiring of both front-of-house and back-of-house positions in the over-40 age bracket was significantly below expected hiring based on applications submitted and/or Census data.
Prior proceedings. In prior proceedings, the court denied the defendants’ motion to dismiss, ruling that the ADEA authorized the EEOC to bring a pattern-or-practice claim and that the complaint sufficiently alleged the defendants constituted an integrated enterprise or single employer. Also, in a 2016 decision, the court granted the agency’s request to bifurcate proceedings under the Teamsters framework, noting that the agency had discovered 151 claimants and expected many more. Stage one of discovery and trial will address liability and possible equitable relief. If the EEOC carries its burden, and the defense fails to rebut the inference of discrimination, the court may award equitable relief. Stage will address individual discrimination claims and damages.
Motion for spoliation sanctions. After Seasons 52 moved for summary judgment, the EEOC moved for sanctions, claiming Seasons 52 failed to preserve and intentionally destroyed paper applications and interview booklets, and failed to preserve emails sent by or to managers involved in the hiring decisions. The parties disputed whether the EEOC’s pre-suit investigation was national in scope and when Seasons 52 learned of that scope. This mattered because the agency had to show Seasons 52 was under a duty to preserve documents and electronically stored information (ESI) in order for spoliation sanctions to be imposed. According to Seasons 52, it was under a duty to preserve for only one restaurant because the two complaints triggering the investigation concerned only the Coral Gables location.
The agency sought a myriad of sanctions, including prohibiting Seasons 52 from introducing evidence about the content of lost emails, permitting the EEOC to introduce evidence of spoliation, considering spoliation on summary judgment, and permitting an adverse inference that the emails would have shown a preference for younger applicants.
Sanctions granted in part. After further briefing and a hearing on the spoliation issue, the court issued a lengthy opinion granting the EEOC’s motion in part. The parties can all introduce at trial evidence of missing documents and ESI, and the circumstances surrounding destruction or absence of records. The court also held that they can make arguments about the destruction (or non-destruction) of the evidence, possible motives, and the significance of missing material.
Possible adverse inference sanction, but not yet. The court refused to grant an adverse inference jury instruction about missing evidence at this time because the EEOC had not established two factors required by the Eleventh Circuit: (1) with respect to the paper applications and interview booklets, that the supposedly missing evidence was crucial to the EEOC’s case, and (2) for emails and other ESI (governed by Rule 37(e)(2)), that Seasons 52 acted in bad faith to deprive the EEOC of the information. If the EEOC persuades the jury that Seasons 52 acted in bad faith in destroying ESI, then the agency can seek an adverse inference. The court noted that mere negligence in losing or destroying records or evidence is not enough to justify an adverse inference jury instruction.
Scope of investigation and duty to preserve evidence. Central to the parties’ arguments were their competing views about the scope of the EEOC investigation―nationwide versus only one restaurant location―and the concomitant duty to preserve the evidence. The EEOC argued that Seasons 52 had a duty to preserve evidence for more than just the restaurant where the two original claimants worked because it sent an August 2011 letter to Seasons 52 expanding the investigation into a national one. Seasons 52 did not initially claim it did not receive that “expansion letter,” but at an October 2017 hearing it argued for the first time that never received the letter and was not on notice that the investigation was nationwide (so there was no duty to preserve information beyond the one restaurant).
Refusing to adopt either theory, the court found that Seasons 52 was under a duty to preserve documents and ESI for 11 restaurants. Though the EEOC investigator undoubtedly believed the 2011 expansion letter was received, there were too many vague circumstances to support that theory and Seasons 52’s witnesses unequivocally testified that they did not receive the letter. Thus, the agency did not establish that Seasons 52 received the 2011 letter. However, Seasons 52 knew or should have known to implement a litigation hold as to 11 restaurants because it did not dispute receiving a letter dated one day after the expansion letter, which expressly requested a large amount of information “due to an expansion of the case,” including an employment roster for all locations and applications and interview booklets for 10 locations (beyond the Coral Gables location). Moreover, Seasons 52 was regularly forwarding information about those restaurants and arranged for managers at restaurants other than Coral Gables to be interviewed.
The court further found that Seasons 52 failed to issue a litigation hold for any of the 11 restaurants other than Coral Gables, and the defense conceded that the lost emails could not be restored or replaced because they were deleted and could not be recovered.
Missing evidence not necessarily crucial. That said, the court found the extent of any prejudice caused by lost evidence debatable. For example, the applications did not list dates of birth, and managers who did interviews often did not fill out the booklets. Also, it was conceivable that some of the missing materials would have helped Seasons 52. Moreover, Seasons 52 had a logical argument that the missing materials were not crucial to the EEOC’s case because the agency’s expert was still able to complete his analysis and offer valid opinions. Because the missing paper materials (non-ESI) were not crucial to the EEOC’s case, an adverse inference instruction was not warranted at this time, and the court didn’t address whether the defense acted in bad faith as to those materials. It still had to address bad faith as to the ESI though.
Bad faith and Rule 37(e)(2). With respect to ESI, Rule 37(e)(2) permits the jury to reach an adverse inference without a finding of prejudice to the EEOC if Seasons 52 was shown to have destroyed ESI in bad faith. The court therefore would permit the EEOC to argue to the jury that it could reach an adverse inference about missing ESI, but only if the jury concludes that Seasons 52 acted in bad faith (”with the intent to deprive” the EEOC of the ESI).
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