Court Finds Company’s Conduct ‘Unfair, Unwarranted, Unprincipled and Unacceptable,’ Orders $100,000 Fine and Other Sanctions

A federal judge ordered sanctions on July 3, 2012, including a $100,000 penalty, against Fry’s Electronics, Inc., due to its actions in a sexual harassment and retaliation lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced. The penalized behavior includes intentionally withholding evidence, raising a “fallacious” argument and demonstrating a “disturbing lack of candor to the tribunal.” According to U.S. District Court Judge Robert S. Lasnik, “The Court finds that defendant’s conduct in this respect was unfair, unwarranted, unprincipled, and unacceptable.”

This is the second sanctions order Judge Lasnik has issued against Fry’s Electronics in this litigation. On May 10, the court found that Fry’s had willfully destroyed evidence -- the hard drives where relevant information would have been stored -- and ordered that the jury be instructed to make an adverse inference on one of Fry’s defenses. Fry’s is represented by the law firm of Jackson Lewis.

The EEOC brought suit against Fry’s on Sept. 29, 2010, alleging that an assistant store manager sexually harassed a young female employee, America Rios. The agency also alleged that the company fired supervisor Ka Lam in retaliation for complaining to Fry’s management about the harassment Rios suffered. Lam intervened as a plaintiff in the agency’s lawsuit, which seeks relief for both individuals. The court found that Fry’s withheld, among other evidence, detailed allegations of sexual harassment against the same assistant store manager made by another female subordinate in 2001. Though this evidence was requested by the plaintiffs, Fry’s withheld it until May 30, 2012 – just a few weeks prior to a related arbitration held in this matter last month. Seattle attorney Scott Blankenship represented both individuals at the arbitration.

Judge Lasnik’s July 3 order held, “Defendant has deliberately engaged in deceptive practices that undermine the integrity and orderly administration of these proceedings.”

As a result, the court struck Fry’s affirmative defenses related to its efforts to prevent and correct harassment in the workplace, and the plaintiffs’ alleged failure to utilize protective and corrective opportunities; ordered documents related to prior complaints of sexual harassment involving the alleged harasser be admitted at trial; sanctioned Fry’s in the amount of $100,000 to offset the plaintiffs’ excessive costs caused by the company’s conduct and to “punish unacceptable behavior” and deter future bad conduct. The money is to be shared by the court, the EEOC, and plaintiffs Lam and Rios. Additionally, the court stayed the matter pending the verification and certification of all previous discovery requests and the appointment of a special master (to be paid for by Fry’s) to review the defendant’s document retention, search and disclosure activities throughout the course of the litigation.

“As trial attorneys, we all expect zealous advocacy from the other side, but we also expect all parties to a lawsuit to play fair,” said EEOC Supervisory Trial Attorney John Stanley. “Violating discovery rules and orders of the court drags our profession down and does nothing to further the cause of justice.”

EEOC Regional Attorney William Tamayo said, “Judge Lasnik took this matter seriously and sent a strong message to this employer and other litigants that the court will not tolerate discovery abuses and hide-the-ball litigation tactics.”

EEOC v. Fry’s Electronics, Inc. is set for trial in U.S. District Court for the Western District of Washington beginning Nov. 5.