The U.S. Equal Employment Opportunity Commission (EEOC) today announced a class litigation settlement under Title VII of the Civil Rights Act for one half million dollars and significant remedial relief in a case against Fire Mountain Restaurants LLC, doing business as Ryan’s Family Steakhouse (Ryan’s).

According to the EEOC’s lawsuit, filed in September 2008 in U.S. District Court for the Western District of Kentucky, Paducah Division (Civil Action No. 5:08-cv-00160-TBR), Ryan’s subjected black and female employees to a sex-based and race-based hostile work environment, as well as adverse terms and conditions of employment. In some instances, black workers were terminated because of their race. The EEOC charged that white employees were also harassed because of their association with black coworkers and family members. The mistreatment included being referred to as “n----r lovers” and “race traitors” by white managers.

The EEOC also asserted that female workers were harassed because of their gender, and all complainants suffered retaliation for reporting the discrimination. The sex-based hostile work environment included male managers physically intimidating women, making sexual advances, and calling them gender-related epithets such as "b-----s."

“Any company – whether large, mid-sized or small – should know better than to allow discrimination and harassment to run rampant,” said EEOC Acting Chairman Stuart J. Ishimaru. “No one should ever have to endure a hostile workplace in order to make a living. Employers that continue to violate federal anti-discrimination laws risk enforcement action by the EEOC.”

EEOC Regional Attorney Laurie Young of the Indianapolis District Office, which has jurisdiction for Kentucky, said, “We are pleased with the monetary relief obtained for the seven class members in this case, particularly in light of the company’s bankruptcy and reorganization proceedings. Further, the remedial relief contained in the consent decree, which is binding on any successor, will help create a discrimination-free workplace going forward.”

Buffets Holdings, Inc. and all of its subsidiaries, including Fire Mountain Restaurants, LLC, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on January 22, 2008, in the U.S. Bankruptcy Court for the District of Delaware (Buffets Holdings, Inc., et al., Case No. 08-10141-MFW). On March 11, 2009, the debtors filed their Third Amended Joint Plan of Reorganization and the Plan was confirmed by the Bankruptcy Court on April 17, 2009.

The parties settled the case pursuant to an EEOC consent decree. Under the consent decree, and as compensation for pre-petition harm, three claimants will each receive $25,000 as allowed unsecured non-priority claims, while three others will each receive $50,000 as allowed unsecured non-priority claims – all to be paid pursuant to the confirmed Plan. A seventh claimant will receive two separate allowed unsecured non-priority claims, one for $25,000 and one for $200,000, both to be paid pursuant to the confirmed Plan. As compensation for post-petition harm, four of the claimants will also receive a portion of a $50,000 cash settlement fund for compensatory and punitive damages.

Along with the monetary relief, the two-year consent decree provides for substantial remedial relief. The Paducah restaurant is enjoined from engaging in harassment on the basis of race and sex and from retaliating against employees who complain about it. The employer also agreed to monitoring by the EEOC, training its managers on anti-discrimination laws, and posting a notice stating its commitment to maintaining an environment free of racial and sexual harassment and retaliation. The consent decree is binding on any successors and assigns in interest.