EEOC: “LA WEIGHT LOSS SETTLES NATIONWIDE SEX DISCRIMINATION LAWSUIT WITH EEOC”

December 7, 2008 Franchise Publicity

Just about a year ago, a company named Pure Weight Loss (formerly known as LA Weight Loss) announced that it would be closing all 400 of its weight loss centers nationwide on January 4, 2008. The employees of its corporate office and hundreds of centers rang in the new year unemployed, many with bounced paychecks as a bonus and the good feeling one gets knowing that the members they signed up would be getting stiffed out of $500,000 of prepaid products and services.

Pure Weight Loss declared bankruptcy (see Pure Weight Loss Files Chapter 7 Bankruptcy Protection), claiming it had In a court document, the company said it had more than 100,000 creditors. It estimated its assets at $1 million to $10 million and its liabilities at $10 million to $50 million. It was subsequently sued (along with its founder, Vahan Karian) by the Attorney General of PA for fraud (see Pure Weight Loss Lawsuit Filed by PA Attorney General).

Now, a year later, the EEOC has declared victory on behalf of the male applicants who were deprived of the Pure Weight Loss Employment Experience.

Below, I have posted the December 2, 2008 EEOC press release in its entirety. I will write my commentary on this historic employment coup separately, when I am finally sure that I am neither dreaming this nor have been slipped some sort of hallucinogen (by myself or others). This is just a little too surreal:

The U.S. Equal Employment Opportunity Commission
FOR IMMEDIATE RELEASE December 2, 2008

CONTACT: Jacqueline H. McNair Regional Attorney
(215) 440-2666/2670
TTY: (215) 440-2610

Tracy Hudson Spicer
Supervisory Trial Attorney
(202) 419-0711

M. Patricia Tanner
Program Analyst
(410) 209-2721
LA WEIGHT LOSS SETTLES NATIONWIDE SEX DISCRIMINATION LAWSUIT WITH EEOC

Company Refused to Hire Men into Weight Loss Counselor and Other Jobs, Agency Alleged

BALTIMORE – The U.S. Equal Employment Opportunity Commission (EEOC) announced today that it has resolved its pattern or practice sex discrimination lawsuit against LA Weight Loss Centers, Inc., (renamed Pure Weight Loss, Inc., in early 2007), for $20 million and other significant relief.

According to the EEOC’s suit (WDQ-02-CV-648), filed in the U.S. District Court for the District of Maryland, 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. 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 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.

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, 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 10-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 the 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.

Additionally, the consent decree requires hiring of rejected male applicants and includes numerical benchmarks for hiring and/or promoting men to the positions from which they had been previously excluded; requires Pure Weight Loss to conduct quarterly reviews to assess attainment of its hiring goals; and, at the EEOC’s option, requires Pure Weight Loss to employ an outside expert to examine the hiring process to assist in achieving any unmet hiring goals.

“We brought this lawsuit to advance the legal right to a workplace free of sex discrimination and to remind employers that they must make employment decisions based on the applicant’s ability to perform the duties of the job,” said EEOC Philadelphia Regional Attorney Jacqueline McNair, whose jurisdiction includes Maryland.

“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. Added EEOC Senior Trial Attorney Ronald L. Phillips, “The EEOC’s systemic initiative was undertaken to combat company-wide discriminatory employment practices like this one.”

The EEOC’s Baltimore Field Office litigation team included EEOC attorneys Tracy Hudson Spicer, Ronald L. Phillips, Corbett Anderson and Cecile Quinlan. Applying the Commission’s national law firm model, the Baltimore team was also assisted in this case by attorneys from EEOC’s New York, Boston, St. Louis, Pittsburgh, Indianapolis, Dallas, and Chicago offices.

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at www.eeoc.gov.