Court Holds Sherwood Food Distributors in Contempt for Violation of EEOC Consent Decree in Class Sex Discrimination Case

CLEVELAND – A federal judge has entered an opinion and order finding Detroit-head­quartered Sherwood Food Distributors, LLC in contempt of court for failing to pay its payroll tax liability in violation of the consent decree previously entered by the court to resolve the EEOC’s class sex discrimination suit against the company, the federal agency announced today.

Ruling on an EEOC Emergency Motion for Civil Contempt Sanctions, Federal District Judge Donald C. Nugent found on Feb. 24 that, without good reason, Sherwood knowingly failed to comply with the court’s order to pay its payroll tax liability, delaying compliance with the decree’s Dec. 14, 2021 deadline to send back-pay checks to eligible claimants from a $3.6 million settlement fund. The court rejected Sherwood’s argument that it had been trying to negotiate with the EEOC for an extended schedule to pay its payroll tax in installments and found that Sherwood did not take all reasonable steps to comply with the decree.

“Attempting to negotiate an extension ten days before a deadline that Defendant has been aware of for more than three years is insufficient,” Judge Nugent explained. “Upon Plaintiff’s un­willingness to negotiate, Defendant should have complied with the Decree and the Administrator’s request for payment.”

Judge Nugent found Sherwood in contempt for its violation of the consent decree and ordered Sherwood to pay the full amount of its payroll tax liability within 30 days. The $408,749.23 in payroll taxes Sherwood must pay includes a $46,749.23 increase over what the taxes would have been if the company had timely made the payment in 2021. Judge Nugent rejected Sherwood’s argument that it should not be required to pay the increase, finding, “But for the Defendant’s own delay, the amount of taxes owed would not have increased.”

The court also ordered that if Sherwood fails to timely make the payroll tax payment again, it must submit to a financial review by a third-party accountant identified by the EEOC, at Sherwood’s expense. Further, the court ordered that Sherwood is responsible for paying any additional costs of the settlement fund administrator incurred in fulfilling its duties under the decree.

Sherwood has been under the terms of a five-year consent decree, approved and entered by Judge Nugent on Oct. 16, 2018. The decree resolved EEOC’s lawsuit in U.S. District Court for the Northern District of Ohio (EEOC v. Sherwood Food Distributors, LLC, 1:16-cv-02386). The lawsuit, originally filed Sept. 27, 2016, alleged that Sherwood had discriminated against a class of female applicants at its warehouses in Cleveland and Detroit by refusing to hire them for entry-level positions because of their sex, in violation of Title VII of the Civil Rights Act of 1964. Under the terms of the decree, Sherwood had to pay $3.6 million into a qualified settlement fund for distribution to eligible female applicants. In the time provided by the decree, EEOC identified 373 eligible claimants to receive awards from the fund.

Debra Lawrence, regional attorney for the Philadelphia District Office, said, “Consent decrees are an important part of EEOC’s enforcement regime. Employers should take notice that we will not hesitate to move for contempt when an employer has blatantly disregarded the terms of a decree.”

The EEOC’s Philadelphia District Office has jurisdiction over Pennsylvania, Maryland, Delaware, West Virginia, and parts of New Jersey and Ohio. The legal staff of EEOC also prosecutes discrim­ination cases in Washington, D.C. and parts of Virginia.

The EEOC advances opportunity in the workplace by enforcing federal laws prohibiting employment discrimination. More information is available at www.eeoc.gov. Stay connected with the latest EEOC news by subscribing to our email updates.