AutoZone Race Segregation Case Won’t Get Full 7th Cir. Rehearing

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By Jay-Anne B. Casuga

The Equal Employment Opportunity Commission won’t get a second shot at having its race segregation claim against AutoZone Inc. reconsidered by a full federal appeals court.

The case turned on whether the EEOC must show adverse effects on an employee for an employer to be held liable under Title VII of the 1964 Civil Rights Act for engaging in alleged workforce segregation. The federal civil rights agency argued that no such showing is required. It said AutoZone discriminated against a black sales manager when it transferred him from a store in a predominantly Hispanic neighborhood in Chicago to one in a predominantly black area.

A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit earlier this year disagreed and dismissed the EEOC’s claim. It found that the manager experienced no adverse employment action because the lateral transfer didn’t diminish his wages, benefits, or employment opportunities.

The agency asked the full Seventh Circuit to rehear the case, but the appeals court 5-3 denied that request Nov. 21 ( EEOC v. AutoZone, Inc. , 7th Cir., No. 15-3201, rehearing en banc denied 11/21/17 ).

Strong Dissent Urged Rehearing

Chief Judge Diane Wood and Judges Ilana Rovner and David Hamilton issued a strong dissent. They argued that the case is “worth the attention of the full court” because of the “importance of the question and the seriousness with which we must approach all racial classifications.”

Deliberate racial segregation “by its very nature has an adverse effect on the people subjected to it,” the dissenting judges said.

Under the panel’s reasoning, an employer’s intentional “separate-but-equal” work arrangements would be permissible under Title VII if an employee can’t show an adverse action to himself, they said. That conclusion “is contrary to the position that the Supreme Court has taken in analogous equal protection cases as far back as Brown v. Board of Education,” they said.

No Segregation Occurred, Company Says

AutoZone doesn’t condone racial segregation in “any form or fashion irrespective of the Seventh Circuit’s specific legal holding in this case,” a company spokesman told Bloomberg Law Nov. 22.

“The undisputed facts reveal that there is no segregation involved in this litigation,” he said. “Indeed, the panel noted that the only evidence of alleged segregation was plaintiff’s uncorroborated testimony. That testimony was discredited by the fact that plaintiff’s manager was African American and remained at the store from which the plaintiff was transferred, and new African American employees were hired to work at the same store.”

The EEOC didn’t immediately respond to Bloomberg Law’s Nov. 22 request for comment.

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

For More Information

The order and dissent are available at http://src.bna.com/uqf.

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