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United States Equal Employment Opportunity Commission v. Watkins Motor Lines

March 26, 2008


The opinion of the court was delivered by: Judge Rebecca Pallmeyer


In response to a series of three incidents of worker-on-worker violence in its facilities, in June 2004 Watkins Motor Lines, Inc. ("Watkins") adopted a policy of refusing to hire individuals convicted of violent crimes. Two months later, Watkins rejected the employment application of Lyndon Jackson, who had pleaded guilty to criminal sexual assault in 1994. This decision was admittedly based on his conviction. Jackson filed a charge of race discrimination against Watkins with the United States Equal Employment Opportunity Commission ("EEOC" or "Commission") on September 14, 2004. In February 2005, during the EEOC's investigation, Watkins proposed a settlement in which it would make certain changes to its policy; the EEOC rejected this offer, however, and on April 8, 2005, issued a subpoena for records. Meanwhile, Watkins successfully negotiated a settlement directly with Jackson, who sought to withdraw his charge in January 2006. The Code of Federal Regulations empowers the EEOC to refuse to consent to withdrawal if that withdrawal would defeat the purposes of Title VII. In this case, the EEOC refused its consent. Based on Jackson's desire to withdraw, however, Watkins refused to comply with the pending subpoena. The EEOC has filed this action to enforce the subpoena.

Existence of a valid charge of discrimination is a jurisdictional prerequisite to this sort of enforcement action, and Watkins contends that there is no valid charge here. Watkins argues, first, that the Federal Regulation permitting the EEOC to withhold consent to withdrawal of a charge of discrimination--29 C.F.R. § 1601.10--is invalid. In the alternative, Watkins, which has ceased its business operations, argues that the EEOC's refusal to consent to withdrawal in this case was an abuse of discretion. Watkins thus asks the court to dismiss the EEOC's action for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1).*fn1 The court declines to address Watkins' challenge to the validity of the EEOC regulation but, for the reasons explained below, Watkins' motion to dismiss the EEOC's enforcement action is granted.


I. Watkins' Contested Policy

Until it went out of business in September 2006, Watkins was a "less-than-truckload" trucking company headquartered in Lakeland, Florida. (Watkins Mem. at 1.) As of June 2004, Watkins had experienced three incidents of worker-on-worker violence in the previous five years. (Id.) In August 1999, a Watkins employee shot and killed another employee and then himself at a Charlotte, North Carolina terminal. (Id. at 2.) In June 2001, a Watkins employee shot another employee at a Lakeland, Florida print shop. (Id.) Then, in November 2003, a former employee went on a shooting rampage at a Watkins terminal in Cincinnati, Ohio, murdering two Watkins employees and attempting to murder three others. (Id. at 1-2.) Although there is no indication in the record that any of the three perpetrators had been convicted of a violent crime before the incidents in question, Watkins became concerned about the safety of its workplaces. In June 2004, Watkins instructed its human resources managers that they were not to hire individuals with convictions for violent crimes. (Id. at 2.)

The EEOC's position is that an employer's policy of refusing to hire applicants who have been convicted of crimes is generally unlawful. The EEOC manual states that such a policy "has an adverse impact on Blacks and Hispanics in light of statistics showing that they are convicted at a rate disproportionately greater than their representation in the population." (EEOC Compliance Manual: Appendix A--Conviction Records, Ex. B to Watkins Mem.) Thus, "in the absence of a justifying business necessity," such a policy is unlawful under Title VII. (Id.) To demonstrate a justifying business necessity, an employer must show that it has considered the nature and gravity of the offense, the time that has passed since conviction and/or completion of the sentence, and the nature of the job held or sought. (Id.) An employer need not consider an individual's employment history or efforts at rehabilitation. (Id.)

Watkins notes that an employer has an obligation to "furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." 29 U.S.C. § 654(a)(1). Steven H. Newhouse, Vice President of Human Resources for Watkins since May 1991, attested that Watkins' policy was intended to protect employees from experiencing the sort of tragic events to which they had been subject in prior years. (Newhouse Decl. dated 3/14/05 ¶¶ 2, 5, Ex. A to Watkins Mem.) According to Newhouse, Watkins employees had "a strong sense of family," so the tragedies hit them particularly hard. (Id. ¶ 5.) Newhouse was concerned in particular that a number of new hires whose files he reviewed had been convicted of assault, manslaughter, and domestic violence. (Id. ¶ 6.) He therefore told human resources staff that, no matter how long ago the crimes had occurred, he did not want such individuals hired. (Id.) He acknowledged, however, that clearly-written laws that prohibit discrimination based on criminal convictions would take precedence over his directives. (Id.) Watkins contends that its policy does not constitute race discrimination under the EEOC's manual because it is justified by business necessity.

II. The EEOC's Investigation

In April 1994, Lyndon Jackson pleaded guilty to aggravated criminal sexual abuse against his wife, resulting from a September 1993 domestic dispute. (Jackson Aff. dated 9/12/07, Ex. 1 to EEOC Resp.) In January 1994, he and his wife reconciled and, eventually, had two more children, in addition to the two they already had. (Id.; EEOC Resp. at 2.) In 1995, Griffin Wheel Company, Jackson's employer since 1992, promoted Jackson from the position of CAD/Drafter to CAD/Designer. (Id.; Jackson Aff.) While the parties do not discuss the details of Jackson's employment in any depth, the EEOC contends that he continues to work as a CAD/Designer today, after nearly fifteen years of work with the same employer. (EEOC Resp. at 2.) Jackson held a second job as a security guard from 1995 until his resignation in 2000; he was promoted to the position of Security Supervisor in 1997. (Jackson Aff.) Jackson has a stable personal life; he has lived in the same building for over ten years and serves as president of his condominium association. (Id.)

Jackson applied to work at Watkins in 2004 as a package handler or dock worker in its Schaumburg, Illinois facility. (Employment App. dated 7/27/04, Ex. G to Watkins Mem.; EEOC Resp. at 10.) In response to a question in the application, Jackson disclosed his criminal sexual abuse conviction. (Employment App.) On or about August 12, 2004, Watkins declined to hire Jackson. (Watkins Mem. at 4.) On September 14, 2004, Jackson filed a Charge of Discrimination with the EEOC, claiming that Watkins's refusal to hire him constituted race discrimination. (Charge of Discrimination dated 9/14/04, Ex. H to Watkins Mem.) Watkins acknowledges that Jackson was not hired because of his criminal sexual abuse conviction. (Watkins Mem. at 4.) Newhouse attested that Watkins explained to the EEOC in November 2004 and January 2005 that its policy is to exclude applicants based on the nature of the crime (in Jackson's case, a violent crime) rather than focus on whether the crime was classified as a misdemeanor or as a felony. (Newhouse Decl. ¶ 9.) It is not clear whether Watkins automatically excluded all individuals convicted of violent crimes from employment. But Watkins also informed the EEOC that hiring decisions are otherwise based on the nature of the job and the crime and that the company does consider the time between conviction and job application on a case-by-case basis. (Id.)

The EEOC continued its investigation. On January 20, 2005, the EEOC submitted to Watkins a Request for Information ("RFI"); the EEOC requested that Watkins respond to the RFI by February 14, 2005. (Letter from A. Burkholder to T. Clinnin of 1/20/05, Ex. J to Watkins Mem.) The EEOC also invited Watkins to contact the EEOC if it wished to enter into settlement negotiations. (Id.) The EEOC clarified the RFI by e-mail dated January 23, 2005 and offered to photocopy the requested documents. (Application for an Order to Show Cause Why Subpoenas Should Not be Enforced ("Application") ¶ 6.) On February 17, 2005, Watkins articulated a proposal for settlement of the charges. (Letter from J. Canny to A. Burkholder of 2/17/05 with attached Proposed Settlement Agreement , Ex. K to Watkins Mem.) In that settlement proposal, Watkins offered to adopt a new policy regarding consideration of convictions in employment applications in exchange for the EEOC's agreement to terminate its investigation. (Id.) Watkins' new policy would make clear that a conviction does not automatically bar employment and that, when evaluating the significance of a conviction, Watkins would take into account the nature and gravity of the offense, the time passed since conviction or completion of the sentence, and the nature of the job held or sought. (Id.) For one year, Watkins would provide the EEOC with quarterly reports identifying the number of applicants to the Schaumburg facility with convictions, the nature of the convictions, the applicant's race or national origin, and disposition of the application. (Id.) The proposed settlement agreement does not afford relief to Jackson himself. (Id.)

The EEOC promptly rejected this offer as "unacceptable" without further explanation. (Letter from A. Burkholder to J. Canny of 2/22/05, Ex. Z to Watkins Mem.) In the same letter, the EEOC reminded Watkins of the outstanding RFI. (Id.) Watkins failed to respond to the RFI, prompting the Commission to issue a subpoena on April 8, 2005. (Application ¶ 7.) Watkins filed a Petition to Revoke Subpoena with the EEOC on April 19, 2005. (Id. ¶ 8.) The EEOC granted the petition in part and denied it in part eighteen months later, on October 18, 2006 (there is no explanation in the record for the delay). (Id.) In the interim, two significant events occurred: first, at some unspecified point, Watkins and Jackson began their own settlement negotiations, ultimately resulting in a settlement in principle. As part of that agreement, Jackson sought to withdraw his charge of discrimination in January 2006. (Request for Withdrawal of Charge of Discrimination dated 1/24/06, Ex. P to Watkins Mem.) The EEOC denied that request on February 13, 2006, on the ground that, in the EEOC's view, withdrawal would defeat the purposes of the law. (Notice of Determination filed in Watkins v. EEOC, Ex. R to Watkins Mem.) Second, in September 2006, Watkins sold its assets to Federal Express; in connection with this asset sale, Watkins terminated its employees, ceased operations, and went out of business. (Linebarier Decl. dated 8/20/07 ¶¶ 2-3, Ex. V to Watkins Mem.) Although Watkins continues to exist as a Florida corporation, it no longer is engaged in business and has no offices, facilities, or employees. (Id. ¶ 4.) Following these developments, Watkins treated the EEOC's October 2006 determination as a modified subpoena, out of what it characterizes as "an abundance of caution, (Watkins Mem. at 7), and filed a Petition to Revoke Modified Subpoena with the EEOC on November 6, 2006. (Application ¶ 9.) Then, on June 25, 2007, Watkins notified the EEOC that it would not comply with the modified subpoena. (Id.)

On July 23, 2007, the EEOC filed this action, seeking an order directing Watkins to appear and show cause why an order should not issue directing Watkins to comply with the modified subpoena; an order directing Watkins to comply; an award of its costs in bringing the action; and such further relief as may be necessary and appropriate. (Application at 2-3.) The action was filed in the Northern District of Illinois because the EEOC's Chicago District Office is investigating Jackson's charge. (EEOC Resp. at 10.) Jackson had applied to work at Watkins' Schaumburg, Illinois facility; in addition, many decision makers, as well as other applicants allegedly excluded because of Watkins' policy, are located in the Chicago area. (Id.) On July 27, 2007, the EEOC moved the court to direct Watkins to comply with the EEOC subpoena. (Docket Entry No. 7.) The court initially granted that motion and directed Watkins to file a written response and appear at a September 5, 2007 hearing. (Docket Entry No. 8.) On August 22 and 23, 2007, Watkins filed four motions: a motion to dismiss for lack of jurisdiction (Docket Entry No. 9), a motion to clarify the court's August 2 order (Docket Entry No. 11), a motion to stay (Docket Entry No. 12), and a motion to dismiss the EEOC Application for lack of subject matter jurisdiction (Docket Entry No. 13). Those motions were stricken (Docket ...

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