The opinion of the court was delivered by: Judge Joan B. Gottschall
MEMORANDUM OPINION AND ORDER
This is an employment discrimination suit brought by the Equal Employment Opportunity Commission ("EEOC") against International Profit Associates, Inc. ("IPA") pursuant to 42 U.S.C. § 2000e-2 (2006) and 42 U.S.C. § 2000e-5 (2006). The EEOC alleges that IPA fostered a hostile work environment at its business offices in Buffalo Grove, Illinois, because IPA's female employees were routinely subjected to severe and pervasive sexual harassment and IPA failed to take appropriate action to stop the abuse. The EEOC seeks injunctive relief pursuant to the pattern or practice theory of employer liability, see Int'l Brotherhood of Teamsters v. United States, 431 U.S. 324, 335-36 (1977), and also compensatory and punitive damages on behalf of each of the 113 individual claimants that make up the "class"*fn1 pursuant to 42 U.S.C. § 1981a (2006).
The issues currently before the court arise from the court's opinion of March 16, 2007, EEOC v. Int'l Profit Assocs., Inc., No. 01 C 4427, 2007 WL 844555 (N.D. Ill. Mar. 16, 2007). The court's prior opinion dealt with IPA's motion for summary judgment, in which IPA argued that judgment as a matter of law should be entered on many of the individual class members' claims because those claimants cannot establish the requisite elements of a hostile work environment sexual harassment claim. Id. at *4. In response to IPA's motion, the EEOC argued that it is not required to prove each claimant's case individually-even though individual damages are sought-because this is a pattern or practice action and the focus of such an action is the employer's work environment as a whole. Id. at *5. The EEOC contended that certain elements of the individual claimants' cases would be established through proof that IPA engaged in a pattern or practice of unlawful discrimination (i.e., proven as to the entire class), and that the court therefore could not reach IPA's summary judgment motion until the pattern or practice aspect of this case was complete. Id.
Obviously, the parties had very different ideas about the manner in which this case should proceed. Unfortunately, neither the EEOC nor IPA had addressed key issues that required resolution before the court could rule on IPA's summary judgment motion. Specifically, the parties disagreed on numerous prefatory legal issues, but had not directly addressed the method of proof for the EEOC's claims. The court was uncomfortable ruling without giving the parties the opportunity to provide specific, focused input regarding the applicable legal framework, id. at 4, so the prior opinion simply resolved several preliminary disputes, outlined the remaining issues, and directed the parties to submit briefs addressing a number of discrete legal questions, id. at * 6-14. IPA's motion for summary judgment was denied without prejudice, and the court indicated that a new schedule for dispositive motions would be set after the court ruled on the governing legal standards. Id. at *1.
Specifically, the court rejected IPA's suggestion that the EEOC cannot maintain this case as a pattern or practice suit because the EEOC is proceeding under section 706 of Title VII, 42 U.S.C. § 2000e-5 (which sets forth the procedures the EEOC must follow when it brings suit based on a charge of discrimination filed by an employee, as in this case) as opposed to section 707 of Title VII, 42 U.S.C. § 2000e-6 (2006) (which specifically authorizes a the EEOC to bring a "pattern or practice" action on its own initiative). Int'l Profit Assocs., 2007 WL 844555, at *6-9. As the court previously stated, the EEOC is statutorily authorized to bring a pattern or practice action to enjoin systemic unlawful employment practices, as defined by 42 U.S.C. § 2000e-2(a)(1), under either section 706 or section 707. Id. at *9.
The court also determined that the EEOC may bring a pattern or practice suit premised on the hostile work environment theory of sexual harassment, a point that should be obvious since the Supreme Court has long held that sexual harassment that constructively alters the terms and conditions of employment by creating a hostile work environment is an unlawful employment practice. See id. at *9 (citing, inter alia, Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 752 (1998)). Less obvious, however, is how a pattern or practice case involving the hostile work environment theory of sexual harassment should be tried. Id. at 11.
As the court detailed in its previous opinion, the traditional "pattern or practice" framework was developed by the Supreme Court in Teamsters, a case dealing with racially discriminatory hiring and promotion practices. Id. at *6. In Teamsters, the Court adapted the well-known McDonnell Douglas race discrimination test to the pattern or practice method of proof, holding that the EEOC can establish a prima facie pattern or practice of race discrimination by proving that the employer regularly and systematically discriminated in its employment decisions-i.e., "that 'discrimination was the company's standard operating procedure.'" Id. (quoting Teamsters, 431 U.S. at 336). If the EEOC does so (and the employer does not rebut the EEOC's prima facie case), the employer may be held liable for violating Title VII by discriminating on the basis of race, and the EEOC can obtain "'prospective relief.'" Id. at *7 (quoting Teamsters, 431 U.S. at 361).
Where individual relief is also sought, however, the EEOC must still prove that the individual claimants were victims of the discriminatory policy. Id. For unlawful hiring and promotion claims, the EEOC's initial burden is not a particularly onerous one; the EEOC must show only that the individual claimants sought but did not receive a job or promotion during the time the discriminatory policy was in place. Id. By virtue of the pattern or practice finding, the employer's individual employment decisions are then presumed to be the result of the discriminatory policy. Id. Of course, the employer can rebut this presumption by demonstrating a non-discriminatory reason for a particular decision, and the EEOC is then entitled to offer evidence that employer's proffered reason is pretextual. Id.
As the court explained in its previous decision, in a race discrimination case it is clear why a pattern or practice finding should have an effect on an employer's liability to individual claimants. If an employer has an established policy of making employment decisions with racial animus in violation of Title VII, it is likely that any specific employment decision also violates Title VII, and if a particular decision was not discriminatory, the employer is in the best position to show why. Id. at 11; see also Teamsters, 431 U.S. at 359 n.45 ("[T]he employer was in the best position to show why any individual employee was denied an employment opportunity."). However, the impact of a pattern or practice finding in a hostile work environment sexual harassment case is not so clear. In contrast with a race discrimination case-where the focus is on the employer's basis for making an employment decision that adversely affected the claimant-a sexual harassment case centers on the gravity of the conduct to which a claimant was exposed. Int'l Profit Assocs., 2007 WL 844555, at *11. The sexual harassment suffered by the claimant must have been severe or pervasive enough (measured both objectively and subjectively) to constructively alter the terms or conditions of the claimant's employment by creating a hostile work environment. Id. (citing Harris v. Forklift Sys., Inc., 510 U.S. 17, 21-22 (1992); Whittaker v. N. Ill. Univ., 424 F.3d 640, 645 (7th Cir. 2005)). Otherwise, no Title VII violation has occurred. Id. at *9-10. Therefore, a finding that an employer had a pattern or practice of tolerating sexual harassment in violation of Title VII does not necessarily establish that an individual claimant was exposed to harassment or that the harassment an individual claimant suffered violates Title VII. It is thus unclear what effect a pattern or practice finding should have on an individual claimant's suit for damages.*fn2 Id. at *11.
The Supreme Court has never considered how a hostile work environment sexual harassment case should be tried under the pattern or practice model and, to this court's knowledge, neither has any court of appeals. In the briefing on IPA's motion for summary judgment, the EEOC identified several district court cases that have wrestled with the issue, see, e.g., EEOC v. Dial Corp., 156 F. Supp. 2d 926 (N.D. Ill. 2001) (modified by EEOC v. Dial Corp., 259 F. Supp. 2d 710, 712-16 (N.D. Ill. 2003)); EEOC v. Foster Wheeler Constructors, Inc., No. 98 C 1601, 1999 WL 528200, at *2-3 (N.D. Ill. July 13, 1999) (considering method of proof in hostile work environment pattern or practice case involving individual damages); EEOC v. Mitsubishi Motor Mfg. of Am., Inc., 990 F. Supp. 1059, 1069-82 (C.D. Ill. 1998) (same), but the court had reservations as to whether the lead case, Mitsubishi, properly applied Teamsters to the Supreme Court's hostile work environment jurisprudence and, in any event, the court wanted the parties to provide briefing on the difficult issues presented by this case before making its decision. Int'l Profit Assocs., 2007 WL 844555, at *14 n.20. The court therefore directed the parties to brief the following issues:
(1) what, specifically, the EEOC must prove in order to establish that IPA has violated Title VII by allowing a pattern or practice of employment discrimination; (2) what, specifically, the EEOC must prove in order to recover damages under section 1981a on behalf of the individual claimants; and (3) what effect, if any, a finding in the EEOC's favor as to the pattern or practice aspect of this case should have on the individual aspects of this case.
Id. at *14. The parties have done so, and the court commends them for their efforts. The parties' briefs are well-focused and comprehensive, and the court has found the parties' submissions extremely helpful in considering the full implications of the decision at hand.
In conjunction with its brief regarding the applicable trial framework, the EEOC renewed its motion for bifurcation, as this court invited it to do in the previous order. See id. at *14 n.21. This opinion therefore addresses not only the method of proof for the EEOC's case but also the EEOC's motion. For the reasons set forth in further detail below, this case will be bifurcated into two phases, a pattern or practice phase ("Phase I") and an individual phase ("Phase II"), but will be decided by one jury according to the principles set forth in this opinion.
The EEOC asks the court to bifurcate the trial of this case into two phases pursuant to Rule 42(b) of the Federal Rules of Civil Procedure: a "liability" phase and a "remedial" phase. EEOC's Renewed Mot. to Bifurcate 3. According to the EEOC, the liability phase would focus on the pattern or practice aspect of the case, but would also include a verdict on punitive damages. Thus, punitive damages would be awarded as to the entire class, but not allocated amongst individual class members until the conclusion of the remedial phase.*fn3 A finding that IPA engaged in a pattern or practice of Title VII discrimination at the liability phase would also allow the court to award the EEOC injunctive relief. Under the EEOC's theory, the remedial phase would then focus on the individual claimants' compensatory damages claims.
The EEOC acknowledges that in this case, as with any individual case, it must prove every element of the hostile work environment sexual harassment cause of action in order to prevail. The elements of such a claim were set forth in the court's prior opinion, and are as follows: (1) the alleged misconduct must have been based on sex (i.e., directed at the plaintiff because of her sex); (2) the conduct must have been severe or pervasive enough to render the plaintiff's work environment both objectively and subjectively hostile; and (3) there must be a basis for holding the employer liable for the harassment to which the plaintiff was exposed (i.e., negligence, unless the harassment was perpetrated by a supervisor). See EEOC v. Int'l Profit Assocs., Inc., No. 01 C 4427, 2007 WL 844555, at *9-10 (N.D. Ill. Mar. 16, 2007) (citing, inter alia, Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 115 (2002), Harris v. Forklift Sys., Inc., 510 U.S. 17, 21-23 (1992), and Whittaker v. N. Ill. Univ., 424 F.3d 640, 645 (7th Cir. 2005)). The EEOC contends, however, that because this is a pattern or practice sexual harassment case, certain of these elements should be proven with respect to the entire class (i.e., at the liability phase) and others should be proven with respect to the individual claimants (i.e., at the remedial stage). In other words, the EEOC advocates a split method of proof. Specifically, the EEOC argues that every element of the hostile work environment cause of action, with the exception of the subjective component of the severe or pervasive inquiry, should be proven at the pattern or practice stage. Thus, according to the EEOC, the liability phase jury should decide whether the sexual harassment that occurred at IPA during the relevant time period, taken as a whole, was so severe or pervasive that a reasonable woman would find the work environment at IPA to be hostile. The liability phase jury would also consider whether IPA had a "policy of tolerating (and therefore condoning and/or fostering)" such an environment. EEOC Renewed Mot. to Bifurcate 10. The EEOC concedes that this latter inquiry-which goes to the question of IPA's liability-should be resolved under the negligence standard that applies to harassment by co-workers, as opposed to the strict liability standard that applies to harassment by supervisors (subject to the affirmative defenses established in Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Indus., Inc. v. Ellerth, 524 U.S. 742 (1998)).
See Int'l Profit Assocs., 2007 WL 844555, at *10. This is because the pattern of harassment that the EEOC accuses IPA of tolerating was perpetrated by the claimants' supervisors and co-workers alike, and it is therefore impossible to distinguish between the actions taken by the two types of perpetrators for purposes of assessing IPA's pattern or practice liability.*fn4 Therefore, according to the EEOC, IPA should be found negligent, and thus liable, if IPA had notice (actual or constructive) that regular or systematic sexual harassment was occurring but did not take adequate steps to address the problem on a company-wide basis. The EEOC asserts that if it establishes these two components- objectively severe or pervasive sexual harassment and a company policy of tolerating it- IPA must be found liable for the pattern or practice. Under the EEOC's theory, this would justify not only injunctive relief but also punitive damages. A finding with respect to the latter is appropriate at the liability stage, the EEOC asserts, because the showing that the EEOC must make to receive punitive damages-that IPA acted with malice or reckless disregard for the federally protected rights of its employees, see 42 U.S.C. § 1981a(b)(1) (2006)-overlaps with the proof it (and IPA, in rebuttal) will offer on the pattern or practice elements.
Once it has established IPA's pattern or practice liability, the EEOC argues, the remedial stage will focus on the individual claimants' subjective perception of the harassment to which they were exposed and the extent of their damages. Thus, according to the EEOC, at the remedial stage it must only prove (through the testimony of the individuals themselves and relevant witnesses) for each claimant that she was exposed to the pattern or practice of a hostile work environment (i.e., that she worked at IPA during the relevant time period and that she ...