LA Weight Loss Settles Nationwide Sex Discrimination Suit for $20M

Holding:

LA Weight Loss Centers, Inc., ("LA Weight Loss," renamed Pure Weight Loss, Inc., in early 2007) has settled a nationwide sex discrimination suit for $20 million. In particular, LA Weight Loss agreed to pay $16,842,656 in back pay and $3,157,344 in punitive damages to men whom plaintiff the Equal Employment Opportunity Commission ("EEOC") determined were subjected to hiring discrimination because of their gender during the period January 1, 1997, through the entry of the consent decree. Additionally, the consent decree required hiring of rejected male applicants and included numerical benchmarks for hiring and/or promoting men to the positions from which they had been previously excluded; required LA Weight Loss to conduct quarterly reviews to assess attainment of its hiring goals; and, at EEOC’s option, required LA Weight Loss to employ an outside expert to examine the hiring process to assist in achieving any unmet hiring goals.

Detailed Summary:

According to EEOC’s suit, LA 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. 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, EEOC also alleged.

LA 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 U.S. Bankruptcy Court for the Eastern District of Pennsylvania (Case No. 08-10315-JKF). The bankruptcy trustee has agreed to the terms of the consent decree, which was approved by the bankruptcy court.

According to the EEOC, refusing to hire qualified applicants because of their gender, maintaining sex-specific job classifications, and retaliating against employees who protest unlawful discriminatory practices violate Title VII of the Civil Rights Act of 1964.

Pursuant to the consent decree and as approved by the bankruptcy trustee, 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 EEOC will be able to obtain through its pending bankruptcy court claim is presently unknown. Ms. Koch settled with LA 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 applies to all Pure Weight Loss centers or to any successor resuming business operations. The decree:

—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.

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