Key Takeaways
- American Screening Corporation has faced significant legal action from both the EEOC and FTC for alleged race discrimination and deceptive business practices, resulting in settlements and substantial financial penalties.
- The EEOC lawsuit centered on allegations of race-based discrimination in employment, leading to a $50,000 settlement and mandated changes to company policies.
- The FTC lawsuit resulted in a $14.7 million judgment against American Screening for failing to deliver promised goods during the COVID-19 pandemic and violating federal consumer protection rules.
Overview of American Screening Corporation Lawsuits
American Screening Corporation, a company known for manufacturing and distributing drug testing and medical screening products, has been the subject of several high-profile legal disputes in recent years. These cases have involved federal agencies such as the U.S. Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC), as well as private parties. The legal issues at stake have ranged from employment discrimination to deceptive business practices and contract disputes.
This guide provides a detailed overview of the most significant lawsuits involving American Screening Corporation, focusing on the facts, legal arguments, outcomes, and broader implications for employers and businesses.
EEOC Lawsuit: Allegations of Race Discrimination
Background and Allegations
In 2022, the U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit against American Screening, LLC, alleging that the company violated Title VII of the Civil Rights Act of 1964. The EEOC claimed that American Screening terminated a Black employee because of her natural hair texture, which the agency argued constituted unlawful race discrimination. According to the EEOC, the company’s actions reflected a broader pattern of discriminatory employment practices.
The EEOC’s official press release on the case can be found here, and the settlement details are available in this PDF document.
Legal Basis
Title VII of the Civil Rights Act prohibits employers from discriminating against employees on the basis of race, color, religion, sex, or national origin. The EEOC argued that terminating an employee due to her natural hair texture is a form of race-based discrimination, as it disproportionately affects Black employees.
Settlement and Outcomes
To resolve the lawsuit, American Screening agreed to pay $50,000 to the affected employee and to implement new policies prohibiting race-based discrimination. The company also committed to providing training to its staff and reporting to the EEOC on its compliance efforts for a specified period.
This case underscores the importance of compliance with federal anti-discrimination laws and the potential consequences for employers who fail to do so. The settlement serves as a reminder that employment decisions based on characteristics closely associated with race, such as natural hair texture, are subject to legal scrutiny.
FTC Lawsuit: Deceptive Business Practices During COVID-19
Background and Allegations
In a separate and highly publicized case, the Federal Trade Commission (FTC) filed a lawsuit against American Screening, LLC, and its executives, including the Kilgarlins. The FTC alleged that the company engaged in deceptive acts or practices in violation of the FTC Act. Specifically, the complaint focused on the company’s failure to deliver on promises regarding the timely shipment of personal protective equipment (PPE), such as face masks, during the COVID-19 pandemic.
The FTC’s official case summary is available here, and the agency’s answering brief can be reviewed here.
Legal Issues and the MITOR Rule
The FTC’s lawsuit also cited violations of the Mail, Internet, or Telephone Order Merchandise Rule (MITOR). This rule requires sellers to ship ordered merchandise within the time promised or, if no time is stated, within 30 days. If the seller cannot meet the promised shipping time, they must notify the customer and offer a refund.
According to the FTC, American Screening failed to deliver products as promised and did not provide timely refunds or notifications to customers. These actions were deemed deceptive and unfair under the FTC Act and MITOR.
Court Proceedings and Judgment
The district court granted summary judgment in favor of the FTC, ordering American Screening and its executives to return nearly $14.7 million to consumers. The court found that the company’s conduct during the pandemic caused significant harm to consumers who relied on timely delivery of PPE.
Further details on the appellate proceedings and the court’s reasoning can be found in the case summary here.
Broader Implications
This case highlights the risks companies face when they fail to comply with consumer protection laws, especially during emergencies. The FTC’s enforcement action demonstrates the agency’s willingness to pursue substantial penalties against businesses that engage in deceptive practices, particularly when public health is at stake.
Contract Dispute: UCP Biosciences, Inc. v. American Screening
Background
In addition to federal enforcement actions, American Screening has been involved in private litigation. One notable case is a contract dispute with UCP Biosciences, Inc., filed in the U.S. District Court for the Northern District of California. The case involves allegations of fraud and breach of contract related to business dealings between the two companies.
The docket and court documents for this case are available here.
Legal Arguments
UCP Biosciences alleged that American Screening engaged in fraudulent conduct in connection with a contract for the supply of goods. American Screening, in turn, argued that the claims were essentially contract disputes and should not be treated as fraud-based claims.
Status and Outcome
As of the latest filings, the court has considered motions to dismiss certain claims. The case illustrates the complexities that can arise in commercial litigation, especially when parties dispute whether conduct amounts to mere breach of contract or rises to the level of fraud.
Lessons for Employers and Businesses
Compliance with Anti-Discrimination Laws
The EEOC case against American Screening demonstrates the importance of maintaining workplace policies that comply with federal anti-discrimination laws. Employers should ensure that employment decisions are based on legitimate business reasons and not on characteristics associated with race or other protected categories.
Adherence to Consumer Protection Standards
The FTC’s action against American Screening underscores the need for businesses to honor their commitments to consumers, especially regarding delivery times and refunds. Companies should have clear procedures for communicating with customers and handling delays.
Managing Contractual Relationships
The contract dispute with UCP Biosciences highlights the value of clear, well-drafted contracts and the importance of good faith in commercial dealings. Businesses should document their transactions and seek legal advice when disputes arise.
Conclusion
American Screening Corporation’s legal challenges serve as a cautionary tale for employers and businesses across industries. The company’s experiences with the EEOC and FTC illustrate the serious consequences of failing to comply with federal laws governing employment practices and consumer protection. In addition, private litigation can further complicate a company’s legal landscape.
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Disclaimer: This guide provides a general overview of legal actions involving American Screening Corporation. It is not legal advice. Some cases discussed are ongoing, and information is based on current public filings and allegations, which may be subject to change. For specific legal advice, consult a qualified attorney.
