Labor & Employment Law — 12/11/08

LA Weight Loss resolves systemic sex bias suit for $20 million

A Title VII pattern or practice sex discrimination lawsuit against LA Weight Loss Centers, Inc (renamed Pure Weight Loss, Inc, in early 2007), has been resolved for $20 million and other significant relief, the US Equal Employment Opportunity Commission (EEOC) announced December 2, 2008.

Pure Weight Loss had a nationwide policy of not hiring qualified males into the positions of counselor/sales, medical assistants, assistant managers, center managers, area supervisors, trainers and other field positions, according to the EEOC's lawsuit (No WDQ-02-CV-648), filed in the US District Court for the District of Maryland. Former Area Trainer Kathy Koch was disciplined and fired in retaliation for complaining about the company's policy of not hiring men and for interviewing male candidates, the EEOC also alleged.

Pure Weight Loss discontinued its business operations in January 2008 and filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code on January 11, 2008, in the US Bankruptcy Court for the Eastern District of Pennsylvania (No 08-10315-JKF), according to the EEOC. The bankruptcy trustee has agreed to the terms of the consent decree, which was approved by the bankruptcy court.

Under the consent decree and as approved by the bankruptcy trustee, the EEOC will have a claim in bankruptcy court of $20 million - $16,842,656 in back pay and $3,157,344 in punitive damages - payable to men whom the EEOC determined were subjected to hiring discrimination because of their sex during the period January 1, 1997 through the entry of the decree. The portion of the settlement, if any, that the EEOC will be able to obtain through its pending bankruptcy court claim is presently unknown. Koch settled with Pure Weight Loss in November, 2005.

Along with the monetary relief to the class members, the ten-year consent decree provides for significant injunctive relief. The decree, which applies to all Pure Weight Loss centers or to any successor resuming business operations:

prohibits Pure Weight Loss from discriminating against job applicants or employees because of sex and retaliating against any of its employees or applicants;
requires Pure Weight Loss to use an electronic applicant tracking system for each person hired and for any person who submits an application, and to provide specific information on applicants by sex and other categories defined by EEOC; and
mandates that Pure Weight Loss create a discrimination complaint procedure, post its commitment to equal opportunity and a diverse workforce, and report compliance to the EEOC.

Additional provisions require hiring of rejected male applicants and numerical benchmarks for hiring and/or promoting men to the positions from which they had been previously excluded; the conduct of quarterly reviews to assess attainment of hiring goals; and, at EEOC's option, employment of an outside expert to examine the hiring process to assist in achieving any unmet hiring goals.

"EEOC will strongly pursue employers who choose to flagrantly disregard federal law by engaging in systemic gender discrimination," said EEOC Supervisory Trial Attorney Tracy Hudson Spicer.

"The EEOC's systemic initiative was undertaken to combat company-wide discriminatory employment practices like this one," added EEOC Senior Trial Attorney Ronald L. Phillips.

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