No. 06-10090 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. JEFFERSON DENTAL CLINICS, P.A., Defendant-Appellant. ______________________________ On Appeal from the United States District Court for the Northern District of Texas District Court No. 3:04-cv-1892 ______________________________ PETITION OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION FOR REHEARING ______________________________ RONALD S. COOPER General Counsel LORRAINE C. DAVIS Acting Associate General Counsel CAROLYN L. WHEELER Assistant General Counsel EQUAL EMPLOYMENT OPPORTUNITY JENNIFER S. GOLDSTEIN COMMISSION Attorney Office of General Counsel 1801 L Street, N.W. Washington, DC 20507 (202) 663-4733 TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................... ii STATEMENT OF THE ISSUE ........................................................ 1 COURSE OF PROCEEDINGS AND DISPOSITION OF THE CASE ................... 1 STATEMENT OF FACTS ............................................................................... 2 ARGUMENT Rehearing is necessary to correct the panel's error in its application of Texas res judicata law and in its failure to make the requisite "careful examination" into the particular circumstances of this Title VII case ................................................. 7 CONCLUSION .............................................................................. 12 ADDENDUM CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975) ........................... 10 Amstadt v. U.S. Brass Corp., 919 S.W.2d 644 (Tex. 1996) ....................... 7 Benson v. Wanda Petroleum, 468 S.W.2d 361 (Tex. 1971) ......................... 7 Brown v. Zimmerman, 160 S.W.3d 695 (Tex.App.-Dallas 2005) .................... 8 Burlington N. & Santa Fe Ry. v. White, 126 S.Ct. 2405 (2006) ................ 9 EEOC v. Waffle House, 534 U.S. 279 (2002) ............................ 1, 2, 6, 7 In re Bemis Co., 279 F.3d 419 (7th Cir. 2002) ................................ 11 Richards v. Jefferson County, Ala., 517 U.S. 793 (1996) ...................... 11 STATUTES and LEGISLATIVE HISTORY Title VII of the Civil Rights Act of 1964 ..................................... 4 42 U.S.C. § 2000e-5(f)(1) ................................................ 8 42 U.S.C. § 2000e-5(k) ................................................... 8 Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071 ................ 10 H.R. Rep. 102-40(I), reprinted in 1991 U.S.C.C.A.N. 549 ..................... 10 Tex.Civ.Prac. & Rem. Code Ann. §37.006(a) (Vernon 1997) ........................6 STATEMENT OF THE ISSUE Whether panel rehearing is necessary where the panel erred in its application of Texas res judicata law and in its failure to make the requisite "careful examination" into the particular circumstances of this Title VII case. COURSE OF PROCEEDINGS AND DISPOSITION OF THE CASE In this Title VII enforcement action, the Equal Employment Opportunity Commission (EEOC) claims that Jefferson Dental Clinics (JDC) failed to remedy sexual harassment by a supervisor against four of his subordinates, and that JDC retaliated against the four by firing or constructively discharging them. R.12. JDC moved for summary judgment, seeking to dismiss the EEOC's action on res judicata grounds. R.228. The district court denied JDC's motion, R.678, but subsequently certified the res judicata question for interlocutory review by this Court. R.756. This Court granted the petition for interlocutory review. A panel of this Court issued a decision on February 12, 2007, reversing the district court judgment in part and affirming it in part. The panel held that the EEOC could pursue "injunctive and equitable relief" against JDC. Op. at 12-13. Relying on the reasoning of Justice Thomas's dissent in EEOC v. Waffle House, 534 U.S. 279 (2002), the panel held that the EEOC was barred, on res judicata grounds, from pursuing "damages and any other make-whole relief." STATEMENT OF FACTS Defendant Jefferson Dental Clinics operates a chain of dental clinics in the Dallas area, and maintains a corporate office to oversee administrative functions. R.738. In 2003, four individuals – all women who had worked in JDC's corporate office – filed charges with the EEOC. R.520-26. Each of the women alleged that she was subjected to sexual harassment by Kadri Cumur, the chief financial officer for JDC, and the direct supervisor of all four women. Id. They alleged that after they complained about Cumur's conduct, JDC fired or constructively discharged them in retaliation for their complaints. According to the charging parties, Cumur constantly made inappropriate, sexually-suggestive comments. Cumur asked one charging party to tell him with whom she had sex. R.302. He asked her out to dinner and, when she refused, he called her a "whore." R.303. Cumur asked another charging party whether she and her husband "coordinate well" during sex, and whether she "like[s] it big." R.301. Cumur frequently made comments to a third female employee about her lips, her lipstick, her hair, and her smell, and he would ask her intimate questions about her personal life. R.299-300. More disturbing for the employees was that Cumur also touched them inappropriately. Cumur reached inside one employee's blouse to touch her bra, and then told her she should wear a bra that pressed down on her "top part." He also grabbed that employee, held her tightly, and kissed her. R.302-03. Another employee described how Cumur would play with her blouse, unbuttoning it, and how he caressed her neck. R.301. On several occasions, Cumur approached the employee while she was sitting, stood in front of her, and rocked back and forth, with his groin in her face. Id. Finally, Cumur touched another female employee inappropriately – he kissed her while she was sitting at her desk, he put his arm around her and pulled her close, he brushed against her breasts on several occasions, and touched the back of her neck with his hands. R.299-300. The four women repeatedly complained to Cumur about his conduct, to no avail, and so they then went to David Alameel, JDC's president and owner. R.299, 301, 304. After listening to the complaints, Alameel acknowledged that his wife and son previously had expressed concerns to him about Cumur's behavior. R.304. Alameel initially fired Cumur, but almost immediately changed his mind and rehired him. R.306. A few days later, Alameel announced new workplace rules: female employees had to conform with a new dress code that prohibited sleeveless shirts and dresses, and female employees were not permitted to "talk out of turn." R.307. In fact, employees were not permitted to speak to Cumur at all without a newly hired Office Manager present. R.305. Three days later, Alameel announced that since JDC was his company, he was firing three of the complaining employees. R.308. The fourth employee resigned after Alameel told her that JDC was an "at will" company and she was welcome to leave if she did not like his decision to rehire Cumur. R.523. Each of the four women understood that Alameel's actions were taken in reaction to their complaints about Cumur. R.520-26. Shortly after filing charges with the EEOC – and well before the EEOC had concluded its investigation of the charges – the four terminated employees filed an action in Texas state court against JDC and Cumur individually. R.257. The employees never alleged a violation of Title VII of the Civil Rights Act or the Texas statutory equivalent, the Texas Commission on Human Rights Act (TCHRA). Instead they only pursued – before a state jury – Texas tort claims that focused on: (1) whether Cumur's conduct toward them was "extreme and outrageous" (tort of intentional infliction of emotional distress), and (2) whether JDC retained Cumur knowing he was "incompetent or unfit" (tort of negligent retention). R.269-72.<1> What was not presented to the state jury was any claim relating to Alameel's decision to fire the female employees who had come to him with complaints about Cumur. JDC was largely responsible for the omission of any challenge to Alameel's conduct. Prior to the state court trial, JDC successfully urged the state court to dismiss a third tort claim – wrongful discharge – on the ground that the EEOC was, at the time, pursuing Title VII retaliation and harassment claims against JDC, and that retaliation and harassment claims were covered by the TCHRA and thus no remedy was available in tort. R.667. As JDC emphasized to the state court, the EEOC had filed suit by the time of the state court trial. Specifically, the EEOC suit alleged that JDC violated Title VII by retaliating against the female employees for their opposition to unlawful conduct, and by subjecting the employees to a hostile work environment. The complaint sought both monetary relief and injunctive relief. At the time the EEOC filed its suit, it was aware that the pending state court action included no statutory employment discrimination claims. The state trial ended with a verdict for JDC on the two tort claims presented. JDC then moved in federal court for summary judgment against the EEOC. JDC argued that the state tort action, to which the EEOC was not a party and which included no claim relating to the individuals' firings, nonetheless should preclude both the EEOC's Title VII retaliation and harassment claims on res judicata grounds. The district court disagreed with JDC and held that, under Texas law, the EEOC was not bound by the earlier action because it was neither a party to that action nor in privity with the private individuals who pursued the tort claims. R.687-95. In reaching this conclusion about the lack of privity, the court relied on Waffle House, and held that the EEOC "‘does not function simply as a vehicle for conducting litigation on behalf of private parties.'" R.690 (quoting Waffle House, 534 U.S. at 288). Even when EEOC is pursuing entirely victim-specific relief, it is "‘vindicat[ing] the public interest'" R.691 (quoting Waffle House, 534 U.S. at 296). The court concluded that the interests of the EEOC and charging parties therefore are not "‘identical'" as required to establish privity under Texas law, and that in no sense did the charging parties "represent the EEOC." R.691 (citation omitted). On interlocutory appeal, a panel of this Court held that while the EEOC could pursue claims for injunctive relief, its interests in pursuing monetary relief were "not sufficiently independent" of the charging parties. Op. at 13. The panel held that the EEOC therefore was barred by res judicata from pursuing such relief. ARGUMENT Rehearing is necessary to correct the panel's error in its application of Texas res judicata law and in its failure to make the requisite "careful examination" into the particular circumstances of this Title VII case. Under Texas res judicata law, which governs in this case, a judgment against a party in one action generally does not prejudice the rights of a non-party. Tex.Civ.Prac. & Rem. Code Ann. §37.006(a) (Vernon 1997). The judicially created concept of privity represents an exception to this rule, and the Texas courts have recognized, as a matter of law, three situations in which a non-party may be found to be in privity with a party: (1) the non-party controls the party's prior litigation, (2) the non-party's "interests can be represented by a party to the action," and (3) the non- party is a successor in interest deriving its claim through the party. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652-53 (Tex. 1996). There is also a case-specific, factual component to any privity finding, because "no generally prevailing definition of privity . . . can be automatically applied to all cases." Benson v. Wanda Petroleum, 468 S.W.2d 361, 363 (Tex. 1971). Thus, the "determination of who are privies requires careful examination into the circumstances of each case as it arises." Id. The panel in this case held that the second privity exception applied to the EEOC's claim for monetary relief. Op. at 11-12. In so holding, the panel ruled broadly that when an individual employee seeks monetary relief, the employee is serving the public interest to the same extent that the EEOC does when it seeks monetary relief. Op. at 12 (citing EEOC v. Waffle House, 534 U.S. 279, 307 n.10 (2002) (Thomas, J., dissenting)). The panel did not consider the particular circumstances of this case, and so appears to have ruled that the EEOC's interest in obtaining monetary relief for Title VII violations is always adequately represented when an individual pursues monetary relief for claims arising from the same conduct. The per se nature of the panel's ruling is at odds with Texas privity law. See Benson, 468 S.W.2d at 363 (court must look at circumstances of each case before applying privity definition); Brown v. Zimmerman, 160 S.W.3d 695, 703 (Tex.App.- Dallas 2005) (same). Had the panel considered the particular circumstances of this case, it could not have found that the four individuals represented the EEOC's interests to such an extent that privity existed. The panel acknowledged that the EEOC's interest "in eradicating workplace discrimination is unique." Op. at 9 (internal quotations omitted). The EEOC pursues this interest in part through litigation: Congress authorized the EEOC to bring suit and seek the full range of remedies against employers that the EEOC believes have violated Title VII. See 42 U.S.C. § 2000e-5(f)(1).<2> The EEOC's interest in eradicating discrimination was not represented by the four individuals when they pursued state tort claims. The four individuals did not bring any statutory discrimination or retaliation claims under Title VII or the TCHRA. The individuals chose only to pursue state tort claims. As a result, the facts surrounding what the EEOC believes was a blatantly retaliatory act by JDC's president – the act of firing female employees because they complained of harassment – were never presented to the state jury. Leaving alleged retaliation unscrutinized and unchallenged is particularly damaging to the public interest, because "Title VII depends for its enforcement upon the cooperation of employees who are willing to [make] complaints." Burlington N. & Santa Fe Ry. v. White, 126 S.Ct. 2405, 2414 (2006); see also id. ("Plainly, effective enforcement could thus only be expected if employees felt free to approach officials with their grievances.") (internal quotation omitted). The facts surrounding the harassment claim were before the jury, but were put before that jury under the auspices of the intentional infliction of emotional distress tort – a tort with an extremely high standard for establishing liability. See R.54 (jury instructed it must find that Cumur acted "intentionally or recklessly with extreme and outrageous conduct," which means conduct "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community"). Even assuming as a general matter that an individual can vindicate the public interest in deterring retaliation and harassment by pursuing monetary relief against an employer, it is difficult to see how the four individuals pursued that public interest in this case. Of course, under the panel's ruling, the four individuals' state court litigation does not preclude the EEOC from challenging the alleged retaliation and harassment altogether; the EEOC can still pursue injunctive relief against JDC. And if injunctive relief were sufficient to deter discrimination, the individuals' state court litigation – while perhaps not pursuing the EEOC's interests – nonetheless would not have harmed the EEOC's interest in deterring Title VII violations of the kind that allegedly occurred here. But injunctive relief alone is an inadequate tool for deterring discrimination. The Supreme Court has long recognized the importance of monetary relief – and not simply injunctive relief – in achieving the public interest goals of Title VII. In Albemarle Paper Co. v. Moody, 422 U.S. 405, 417 (1975), for example, the Court emphasized that "[i]f employers faced only the prospect of an injunctive order, they would have little incentive to shun practices of dubious legality." It is only the "reasonably certain prospect of a backpay award that provide[s] the spur or catalyst which causes employers . . . to endeavor to eliminate [discrimination]." Id. at 417-18 (internal quotations omitted). Congress subsequently amplified the range of monetary relief available in Title VII cases, precisely because of the need for greater deterrence. The Civil Rights Act of 1991 states: "The Congress finds that - (1) additional remedies under Federal law are needed to deter unlawful harassment and intentional discrimination in the workplace; . . . and (3) legislation is necessary to provide additional protections against unlawful discrimination in employment." Civil Rights Act of 1991, Pub. L. No. 102-166, §§ 2(1), 2(3), 105 Stat. 1071. The legislative history of the Act has a considerable discussion of the critical importance of monetary relief in achieving adequate deterrence. See H.R.Rep.102-40(I) at 69-70, reprinted in 1991 U.S.C.C.A.N. 549, 607-08. In short, what guided Congress in amending Title VII was its understanding that "if discrimination costs money, people will stop doing it." Id. If the four individuals had represented the EEOC's interests in the state litigation, they would have brought statutory discrimination and retaliation claims. Because they failed to do so, and because JDC successfully moved to dismiss the wrongful discharge tort by pointing to the EEOC's pending lawsuit, the EEOC may now be deprived of the most potent remedy Congress made available to deter violations of the kind alleged here. The panel should consider the particular circumstances of this case, as is required under Texas law, and hold that the EEOC was not in privity with the four individuals in the state court litigation.<3> CONCLUSION For the foregoing reasons, this Court should grant the Commission's petition. Respectfully submitted, RONALD S. COOPER General Counsel LORRAINE C. DAVIS Acting Associate General Counsel CAROLYN L. WHEELER Assistant General Counsel ________________________ JENNIFER S. GOLDSTEIN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION ADDENDUM CERTIFICATE OF SERVICE I hereby certify that two copies of this petition were mailed, first class, postage prepaid, on this day to the following: Ron Chapman, Jr., Esq. Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 700 Preston Commons 8117 Preston Road Dallas, TX 75225 Robert E. Sheeder Peggy L. Facklis JENKENS & GILCHRIST, P.C. 1445 Ross Avenue, Suite 3200 Dallas, Texas 75202-2799 ____________________________ JENNIFER S. GOLDSTEIN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W. Washington, DC 20507 (202) 663-4733 March 28, 2007 *********************************************************************** <> <1> The private suit also sought no injunctive relief, but only monetary damages. R.274. The EEOC played no role in the filing of this action – the EEOC did not suggest or encourage the individuals to file the state action, nor did the EEOC review the petition filed in state court. <2> The only remedy available in private actions but not in EEOC actions is an attorney’s fee award. See 42 U.S.C. § 2000e-5(k). <3> The fact that the individuals may benefit if the EEOC is successful does not mean the parties are in privity. See Richards v. Jefferson County, Ala., 517 U.S. 793 (1996) (no privity between class of individuals challenging constitutionality of an occupational tax and prior litigants who unsuccessfully challenged the tax even though prior litigants would benefit financially if tax were declared unconstitutional in subsequent litigation where taxpayers in first litigation did not adequately represent interests of taxpayers in subsequent litigation) (Alabama res judicata law). As the Seventh Circuit observed, the EEOC’s “primary role is that of a law enforcement agency and it is merely a detail that it pays over any monetary relief obtained to the victims of the defendant’s violation rather than pocketing the money itself.” In re Bemis Co., 279 F.3d 419, 421 (7th Cir. 2002).