At the WSJ Law Blog, The Rising Tide of Job Bias Claims:

There’s often a debate about whether litigation in counter-cyclical. Do lawsuits increase when the economy heads south?

In one area of litigation, there’s no debate: employment discrimination claims. A lot of folks have been fired, and many of them are are claiming that they were let go because of their race, age, gender, or because of a disability.

Job bias claims, to put it mildly, are through the roof, according to this WSJ article.

For the six months that ended April 30, more than 70,000 people filed claims with the Equal Employment Opportunity Commission saying they had suffered job discrimination, a 60% increase in bias claims compared with the same period a year earlier. Not all of these complainants will sue, but plenty will.

"Plenty" will, but the EEOC’s own statistics show that most of those claims will go nowhere.

A little under 1 in 5 of them will be closed for "administrative" reasons, like if the claimant fails to timely prosecute the claim, if the claimant withdraws the claim without a settlement, or if the EEOC thinks the claim is outside its jurisdiction.

The bulk of them — more than 3 in 5 — will be dismissed by the EEOC after an investigation for "no reasonable cause." After the dismissal, the employees can, in theory, still bring a lawsuit, but they likely won’t. Most employment discrimination lawyers won’t touch a claim that has been dismissed.

Most of the remaining 1 in 5 claimants, about 17% of the overall claims, will reach some sort of favorable settlement (i.e., formal settlement, withdrawal with benefits, or successful conciliation). Dividing the total value of the merits resolutions (~$290 million annually) by the number of merits resolutions (~17,500 annually) gives us an average settlement of about $16,500.

The last little bit remaining — 3% of overall claims, fewer than 3,000 claims nationwide — will have a "reasonable cause" determination that isn’t settled thereafter, leading to litigation. I suppose that’s "plenty," as the WSJ Law Blog says, but not in the big picture. 3,000 lawsuits nationwide is a tiny fraction of the civil justice system.

They are right about this part:

“In a down economy, companies look to replace older workers with younger workers who they can hire at lower salaries,” said Cliff Palefsky, a San Francisco plaintiffs’ attorney.

In other words, young lawyers, forget bankruptcy law. That’s so 2009. Employment litigation is where it’s at.

True, but most of the action is, unfortunately, on the defense side, in front of the EEOC and the state agencies. I’ve seen modestly-valued employment discrimination claims in the agency process that turned into endless paper wars, with the employer’s lawyers submitting dozens, sometimes hundreds, of pages of repetitive letters to the investigator raising preposterous and contradictory arguments. There is indeed money to be made engaging in a flame war against someone who just lost their job.

I don’t know if most lawyers are cut out to do employment discrimination defense work, though. The lawyers don’t get much control over which cases they take or when to settle them, and the cases can turn personal — we’re talking about discrimination after all, not some contract dispute between business — really quickly. That’s even harder to swallow when, in a lot of the cases, the claim has a substantial merit.

From the plaintiff’s side, there can be money in employment discrimination claims, and the EEOC statistics only tell part of the story, since there are state agencies, too. But unless you can get a class action certified — tricky, but possible, like in Dukes v. Wal-Mart, 603 F.3d 571 (9th Cir. 2010), which the largest companies in America have asked the Supreme Court to reverse — these claims are tough to win, even tougher to make a living doing, moreso since Ashcroft v. Iqbal made them even harder to file, much less win.

  • Michael Carin

    I think your readers/plaintiff lawyers should also look at the 7th Circuit to gain an insight into incredible mental gymnastics appellate justices take in employment disrimination cases.
    First, see Gacek v. American Airlines, 09-3131. Judge Posner affirms an order for summary judgment based upon video surveilance. Big deal, you say? The video was not part of the uderlying motion, not part of the record, and unless the judge specifically sought the video tape, never SAW the video tape.
    Ok, ok, that represents ‘motion practice’ and judges clearly displeased with some aspect of these particular litigants. Once past the motion for summary judgment, smooth sailing, right?
    Not so fast. Lets say an employer acts bad, you proceed and obtain a 1.1 million dollar verdict. YOU WIN, right? Judge Eastbrook – also of the 7th Circuit – disagrees. In Cassanova v. American Airlines 09-1020, Judge Easterbrook uses fun language to vacate the judgment for the plaintiff and enter judgment as a matter of law for the Defendant pursuant to FRCP 50. What the? Why? Judge Easterbrook held – despite the fact Defense counsel agreed with Plaintiffs counsel that the trial judge properly instructed the jury – in fact “the trial was hijacked by plaintiff’s counsel.”
    The moral of the story? Not only must you select cases that pass the introductory investigation stage, pleading stage (Iqbal, the motion & trial stage, but the plainitff must also pass an openly hostile appellate stage which considers 1. evidence not in the record – nor even profferred for examination and 2. ignores juries.