Court Finds Workers Not Entitled to “Two Bites At The Apple”

A federal appellate court recently held that the Equal Employment Opportunity Commission (EEOC) may not seek monetary relief or reinstatement on behalf of four workers who brought and lost a state court action based on the same set of facts. According to the court, “[t]he EEOC’s public interest does not justify giving the [workers] two chances to receive make-whole relief.” EEOC v. Jefferson Dental Clinics, PA, No. 06-10090, Fifth Circuit Court of Appeals (February 12, 2007).

Factual Background

Carol Cantu, Linda Householder, Heather Scooter and Esmeralda Jimenez were all employed by Jefferson Dental Clinics (JDC). The workers filed a charge of discrimination with both the EEOC and the Texas Commission on Human Rights, alleging violations of Title VII of the Civil Rights Act of 1964 and state law. Three of the women alleged that their supervisor at JDC’s Dallas office made sexual comments and inappropriately touched them, while the fourth employee witnessed the alleged misconduct.

Approximately two weeks later, the workers filed a lawsuit in state court against JDC, its president, and one of its former employees. The suit sought damages for intentional infliction of emotional distress, negligent reten-tion, and wrongful discharge _ all of which were based on the same circumstances described in the workers’ EEOC charges. Following a trial, the court entered judgment in favor of JDC. Before the state court lawsuit reach-ed trial, the EEOC filed an action in federal court seeking monetary and injunctive relief for the four workers. After JDC won the state court lawsuit, it asked the trial judge assigned to the federal case to dismiss the EEOC’s claims, arguing that they were barred by the “doctrine of res judicata.” Under this legal principle, “a final judgment by a court of competent jurisdiction is conclusive upon the parties in any subsequent litigation involving the same cause of action.”

The trial judge denied JDC’s request to dismiss the case, finding that the doctrine of res judicata did not apply because the EEOC was not involved in the state court action. Noting the inherent unfairness in permitting the parties to “indirectly receiv[e] a second bite at the apple,” the judge authorized an immediate appeal to the Fifth Circuit Court of Appeals (which has jurisdiction over Texas) and stayed the EEOC’s lawsuit pending that ruling.

Legal Analysis

In a unanimous decision, the Fifth Circuit held that while the EEOC’s suit was not entirely barred by the doctrine of res judicata, the agency’s claim for monetary or “make-whole” relief (such as back pay, compensatory and punitive damages, or reinstatement) was barred. “In the context of make-whole relief,” the court wrote, “the interests of the EEOC stack up poorly against the principle of res judicata.” In this case, the court found, the EEOC was seeking monetary relief for employees who already had initiated their own litigation. Therefore, the agency’s interest in enforcement on behalf of the public “does not justify giving the plaintiffs two chances to receive make-whole relief.”

The Fifth Circuit held that the EEOC may proceed with the suit and seek general injunctive relief, not related specifically to these four individuals. According to the court, the issuance of an injunction may benefit the public generally or other JDC workers, but should not directly benefit the four former workers. Thus, the Fifth Circuit returned the case to the lower court with instructions to enter summary judgment in favor of JDC on the claims for back pay, damages and reinstatement, but allowing further proceedings on the EEOC’s claims for injunctive relief.

Practical Impact

According to Ron Chapman, Jr., a shareholder in the firm’s Dallas office, the ruling should comfort employers. “Under the district court’s ruling, most employers would decline to settle with an individual who had a pending EEOC charge for fear that the EEOC never-theless would pursue litigation. In contrast, the Fifth Circuit’s ruling prohibits such an attempt at double recovery.” Mr. Chapman has a keen appre-ciation for the impact of the case, as he represented JDC in both the state and federal lawsuits and argued the case to the Fifth Circuit.

After winning the state court jury trial and receiving the favorable ruling from the Fifth Circuit, Chapman complimented JDC’s fortitude in not backing down to the four-plaintiff lawsuit or the companion case filed by the EEOC. “I just really admire my client,” Chapman said. “Without their determination and willingness to stand up for what they believe in, these two cases could have set a very bad precedent for employers across the country. Fortunately, JDC refused to let that happen.” 

Note: This article was published in the February/March 2007 issue of The Employment Law Authority. 

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