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123UNITED STATES DISTRICT COURT4NORTHERN DISTRICT OF CALIFORNIA567U.S. EQUAL EMPLOYMENTOPPORTUNITY COMMISSION,Plaintiff,8910Northern District of CaliforniaUnited States District Court11andPlaintiff-Intervenor,vs.1315ORDER GRANTING PLAINTIFFS’ MOTION FORPARTIAL SUMMARY JUDGMENT ANDDENYING DEFENDANTS’ CROSS-MOTION FORPARTIAL SUMMARY JUDGMENTUMME-HANI KHAN,1214Case No.: 11-cv-03162-YGRABERCROMBIE & FITCH STORES, INC.,d/b/a HOLLISTER CO., HOLLISTER CO.CALIFORNIA, LLC,16Defendants.1718Pending before the Court are cross-motions for partial summary judgment. Plaintiff U.S.1920Equal Employment Opportunity Commission (“EEOC”) filed this action against Defendants1 on June2127, 2011 alleging discrimination on the basis of religion in violation of Title VII, 42 U.S.C. section222000e-2(a)(1). (Dkt. No. 1.) On September 9, 2011, Plaintiff-Intervenor Umme-Hani Khan (“Khan”)23filed a Complaint in Intervention for Damages and Injunctive and Declaratory Relief for Employment24Discrimination.2 (Dkt. No. 28.)25126Defendants are Abercrombie & Fitch Stores, Inc., d/b/a Hollister, Hollister Co. California, LLC.Hereafter, the Court will refer to Defendants as “Abercrombie.”27228Khan alleges four claims: (1) Unlawful Discrimination and Discharge on the Basis of Religion inViolation of Title VII, 42 U.S.C. section 2000e-2(a)(1); (2) Unlawful Failure to AccommodateReligious Beliefs in Violation of Title VII, 42 U.S.C. section 2000e(j); (3) Unlawful Discrimination

The EEOC and Khan (collectively, “Plaintiffs”) have jointly filed a Motion for Partial12Summary Judgment (“Motion”), seeking judgment in their favor as to (i) liability on the claims3regarding religious accommodation and (ii) Abercrombie’s sixth, eighth, and tenth affirmative4defenses based on failure to exhaust administrative remedies, undue hardship, and infringement upon5Abercrombie’s right to commercial free speech, respectively. (Dkt. No. 97.) Abercrombie opposes6Plaintiffs’ Motion, and filed a Cross-Motion for Partial Summary Judgment (“Cross-Motion”) seeking7(i) dismissal of the EEOC’s claims on the grounds the EEOC failed to conciliate in good faith and8(ii) summary judgment on Plaintiffs’ claims for injunctive relief and punitive damages. (Dkt. No.9103.) On June 18, 2013, the Court held oral argument on the pending motions. (Dkt. No. 117.)3Having carefully considered the papers submitted and the pleadings in this action, theNorthern District of CaliforniaUnited States District Court1011arguments of counsel, and for the reasons set forth below, the Court hereby GRANTS Plaintiffs’12Motion for Partial Summary Judgment and DENIES Defendants’ Cross-Motion for Partial Summary13Judgment.14I.FACTUAL AND PROCEDURAL BACKGROUND15A.Abercrombie and the Look Policy16Defendant Abercrombie & Fitch, Inc. operates retail stores across the country under the brand17names Abercrombie & Fitch, Hollister Co., abercrombie kids and Gilly Hicks. (UMF No. 2.)418Employees who work in both the stock room and on the sales floor to restock merchandise are titled19“Impact” or Part-Time Impact (“PTI”) employees (sometimes referred to as associates). (UMF No. 4;20Declaration of Marcia Mitchell in Support of Plaintiffs EEOC’s and Khan’s Motion for Partial2122232425262728and Discharge on the Basis of Religion in Violation of the California Fair Employment and HousingAct (“FEHA”), Cal. Gov’t Code section 12940; and (4) Unlawful Failure to Accommodate ReligiousBeliefs in Violation of FEHA, Cal. Gov’t Code section 12940.3The parties attempted to provide the Court with supplemental authority and/or additional evidenceand argument after the hearing on the motions. The Court struck those documents from the record.(Dkt. No. 119.)4“UMF” refers to the Parties’ Joint Statement of Undisputed Material Facts. (Dkt. No. 102.) Unlessotherwise noted, the references to the material facts include the underlying evidence referenced insupport of the fact. Although the parties did not number the UMFs, the Court will refer to the facts innumerical order.2

Northern District of CaliforniaUnited States District Court1Summary Judgment [“Mitchell Motion Decl.” (Dkt. No. 98)], Ex. 11 [Videotaped Deposition of Amy2Yoakum (“Yoakum Dep.”)] 59:9–245.) Abercrombie also employs “Models” who work on the sales3floor. (UMF No. 3; Mitchell Motion Decl., Ex. 7 [Deposition of Chad W. Moorefield (“Moorefield4Dep.”] 50:8–51:146.)5Abercrombie maintains a “Look Policy” which was effective at all times relevant to this case.6(UMF No. 5.) The Look Policy is a grooming policy that gives employees guidelines regarding their7appearance and the clothing they are expected to wear while at work. (Mitchell Motion Decl., Ex. 48[Deposition of Deon Riley, Ph.D. (“Riley 3/14/12 Dep.”)] 135:16–25.) The Look Policy requires9employees to wear clothes similar to those sold in Abercrombie stores, though they are not required to10wear Abercrombie clothing. (Id. 202:4–8.)7 In 2010, the Look Policy prohibited employees from11wearing headwear. (Mitchell Motion Decl., Ex. 6; Yoakum Dep. 255:19–25; Clark Decl., Ex. E.12[30(b)(6) Deposition of Christopher Fugarino (“Fugarino Dep.”)] at Ex. 26 at 29–30.)In addition to the Look Policy, Abercrombie’s marketing strategy seeks to create an “in-store1314experience” for customers that conveys the principal elements and personality of each Abercrombie15brand. (Mitchell Motion Decl., Ex. 2 [Abercrombie & Fitch Co., Annual Report (Form 10-K)16(January 30, 2010)] at 2.) The in-store experience is the “primary vehicle for communicating the17spirit of each brand.” (Id.) “[S]ales associates . . . reinforce the aspirational lifestyles represented by18the brands” and “are a central element in creating the atmosphere of the stores.” (Id.) Abercrombie192021222324Additional excerpts of the Yoakum Dep. were attached to the Declaration of Daniel J. Clark inSupport of Defendants’ Opposition to Plaintiffs’ Partial Motion for Summary Judgment and CrossMotion for Partial Summary Judgment [“Clark Decl.” (Dkt. No. 104)], Ex. F and the Declaration ofMarcia Mitchell in Support of Plaintiffs’ Reply to Defendants’ Combined Opposition to Plaintiffs’Motion for Partial Summary Judgment and Cross-Motion for Partial Summary Judgment [“MitchellReply Decl.” (Dkt. No. 108)], Ex. 21.52562672728Additional excerpts of the Moorefield Dep. were attached to the Mitchell Reply Decl., Ex. 26.The Look Policy also requires employees to wear specific types of shoes (flip flops, Conversesneakers, or Vans sneakers), prohibits facial hair and clothing with obvious logos from nonAbercrombie stores, and restricts the type of jewelry may be worn. (Riley 3/14/12 Dep. 136:1–137:9,140:17–141:3, 204:2–11.)3

1considers the in-store experience to be its main form of marketing, although it also engages customers2through social media and mobile commerce. (Id. at 3.)All store employees, including Impact and PTI employees, are required to comply with theNorthern District of CaliforniaUnited States District Court34Look Policy. (UMF No. 6.) Applicants for employment are informed of the Look Policy during the5interview process. (UMF No. 7.) New employees sign an acknowledgement of the Look Policy when6they are hired, and the Look Policy also appears in the Abercrombie employee handbook. (UMF No.78.)8B.Khan’s Employment with Abercrombie9Plaintiff Umme-Hani Khan is Muslim. (UMF No. 1.) Khan believes that Islam dictates that10she wear clothes that she considers modest. (Mitchell Motion Decl., Ex. 1 [Videotaped Deposition of11Umme-Hani Khan (“Khan Dep.”)] 23:7–15.)8 She further believes that Islam requires her to wear a12head scarf, also known as a hijab, when in public or in the presence of men who are not immediate13family members. (Id. 17:13–16, 22:7–14, 46:16–48:3.) At the time of her hire, Khan had fully14adopted the practice of wearing a hijab in public or when in the presence of males outside of her15immediate family. (Id. 50:18–24.) She wore a headscarf when she was interviewed for her position,16and knew that Abercrombie did not sell headscarves. (UMF Nos. 10 & 11.) When hired, Khan17acknowledged the Look Policy and agreed to abide by it. (Khan Dep. 79:15–80:10, 89:8–11.)In October 2009, Khan began work as a PTI employee at a Hollister store in the Hillsdale1819Shopping Center in San Mateo. (UMF No. 9.) As a PTI employee, she was responsible for ensuring20that merchandise was prepared for the sales floor, which included folding clothes received in21shipments, placing those items on the floor, and replacing those items as clothes are sold. (Yoakum22Dep. 59:9–24; Khan Dep. 76:6–13 (also ensured shipments were complete); Moorefield Dep. 34:16–2323 (impact associate’s job is “to process shipment and fill the sales floor”).) Khan’s duties were24performed primarily in the stockroom. (Khan Dep. 77:5–8; Yoakum Dep. 60:5–9.) While the25unpacking and folding of items would take place in stockrooms, Khan would restock clothes on the26floor anywhere from one to four times per shift. (Khan Dep. 77:9–20.)27288Additional excerpts of the Khan Dep. were attached to the Clark Decl., Ex. J.4

12She regularly wore long-sleeved shirts and jeans purchased at Hollister along with a pair of flip-flops3to work. (Plaintiff-Intervenor Umme-Hani Khan’s Declaration in Support of Plaintiffs’ Motion for4Partial Summary Judgment [Dkt. No. 99] ¶ 4.) Local supervisors permitted Khan to wear her5headscarf so long as it matched company colors. (Khan Dep. 69:5–23.) During that time, the store6managers never informed her she was not complying with the Look Policy. (Id. 84:16-21.)Northern District of California7United States District CourtKhan wore her headscarf at work from October 2009 until her termination in February 2010.On or around February 10, 2010, during a regularly scheduled store visit to the Hillsdale store,8District Manager Adam Chmielewski noticed that Khan was not in compliance with the Look Policy.9(UMF No. 12.) When he saw Khan on that occasion, he did not know that she had been employed by10Abercrombie for several months. (UMF No. 13.) Chmielewski contacted Amy Yoakum, Senior11Manager of Human Resources, for guidance on how to address the situation. (UMF No. 14.) On12February 15, 2010, Yoakum discussed the situation with Chmielewski and Khan over the phone.13(UMF No. 15.) During that phone conversation, Yoakum told Khan that her headscarf was in14violation of the company’s Look Policy and asked her if she could take it off. (UMF No. 16.) Khan15told Yoakum that she could not take the headscarf off because it was part of her religion. (UMF No.1617.) Yoakum informed Khan that Abercrombie would suspend her shifts but continue to pay her17while they investigated. (Yoakum Dep. 63:5–15.)18Khan returned to the store on February 22, 2010 for a second phone conversation with19Yoakum and Chmielewski. (UMF No. 18.) Prior to the phone call, Abercrombie prepared Khan’s20final paycard (equivalent to a paycheck). (Yoakum Dep. 101:23–103:3.) During the call, Yoakum21asked again whether Khan could remove her headscarf while she was on the clock. (UMF No. 19.)22Khan responded, again, that she could not do so because of her religious beliefs. (UMF No. 20.)23Yoakum terminated Khan’s employment for non-compliance with the company’s Look Policy. (UMF24Nos. 21 & 22.) Khan’s refusal to remove her hijab was the sole reason for her suspension and25termination. (Mitchell Motion Decl., Ex. 9; Yoakum Dep. 61:11–23, 62:24–64:19, 99:13–18.)26Eleven days later, on March 5, 2010, Abercrombie extended Khan an unconditional offer of27reinstatement with the accommodation of being allowed to wear her headscarf to work. (UMF No.2823.) Khan declined the offer of reinstatement. (Khan Dep. 140:6–8.)5

Northern District of CaliforniaUnited States District Court1C.Post-Termination Conduct Between EEOC and Abercrombie2Khan filed a Charge of Discrimination with the EEOC and DFEH on March 1, 2010.3(Declaration of Michael Baldonado in Support of Plaintiff’s Motion for Partial Summary Judgment4[“Baldonado Decl.” (Dkt. No. 100)], Ex. 1.) On March 8, 2010, the EEOC notified Abercrombie of5the charge. (Baldonado Decl., Ex. 2.)6In 2010, the EEOC was involved in two other cases with Abercrombie: (1) EEOC v.7Abercrombie & Fitch Stores, Inc., d/b/a Abercrombie Kids, No. 10-cv-03911-EJD (N.D. Cal.) and8(2) EEOC v. Abercrombie & Fitch Stores, Inc., d/b/a Abercrombie Kids, No. 09-cv-602-GKF-FHM9(N.D. Okla.). In the Northern District of California action (hereafter, “Banafa”), the EEOC alleged10that Abercrombie refused to hire Halla Banafa as a PTI associate because she wore a hijab. (Mitchell11Reply Decl. ¶ 4.) In the Northern District of Oklahoma case (hereafter, “Elauf”), the EEOC alleged12that Abercrombie refused to hire Samantha Elauf into a Model position because she wore a hijab. (Id.13¶ 5.) On or about September 16, 2010, the EEOC informed Abercrombie’s counsel that it would be14interested in jointly negotiating a settlement of the Banafa and Elauf cases. (Id. ¶¶ 7–8 & Ex. 2.)15On September 24, 2010, the EEOC sent Abercrombie a “Determination” letter stating that16there was reasonable cause to believe it had discriminated against Khan in violation of Title VII.17(Baldonado Decl., Ex. 3; Mitchell Reply Decl. ¶ 9; Declaration of Stacia Marie Jones, Esq. [Dkt. No.18104-14] ¶ 4.) In the Determination, the EEOC invited Abercrombie to conciliate the charge19informally. Also on September 24, the EEOC sent a conciliation offer letter to Abercrombie20recommending compensatory damages and other forms of non-monetary relief, to which Abercrombie21replied with a counteroffer. (Clark Decl., Ex. O.)22The EEOC and Abercrombie jointly discussed settlement of Banafa and Elauf in October232010. (Mitchell Reply Decl., Ex. 3.) Marcia Mitchell, the attorney assigned to negotiate with24Abercrombie in Banafa and in the instant action (which was then in conciliation) understood that the25parties were pursuing a global settlement of all three matters. (Id. ¶¶ 10 & 12.) The discussions in26October 2010 included exchanging draft consent decrees containing terms to resolve all three matters.27(Id. ¶ 14.) Negotiations regarding the consent decrees continued into November 2010. (Id. ¶¶ 16–23286

1& Exs. 4–11.) On December 10, 2010, the parties participated in a settlement conference in Elauf2before a magistrate judge, but the case did not settle. (Id. ¶ 25.)On December 17, 2010, the EEOC presented Abercrombie with proposed language to adopt asNorthern District of CaliforniaUnited States District Court34company policy. (Clark Decl., Ex. M [Deposition of Hussam Ayloush Pursuant to Federal Rule530(b)(6) on Behalf of CAIR-California] at Ex. 48.)9 The EEOC stated that “[i]f Hollister is willing to6incorporate the above language in its policies, then the EEOC would be happy to continue with7conciliation efforts on issues of money and other injunctive relief.” (Id.) In addition, the EEOC8“included the new requests from Charging Party [Khan] and her counsel.” (Id.) Abercrombie9rejected the conciliation demand on December 20, 2010 because the EEOC’s proposed language10mandated that all employees be allowed to wear headscarves in the future and did not permit11consideration on a case-by-case basis. (Id.) The rejection email from Abercrombie concluded with12the statement: “To the extent the EEOC continues to force us to do more than is required under the13law and in the EEOC’s own guidance, this matter will not resolve.” (Id.)On January 6, 2011, the EEOC emailed CAIR, who was representing Khan, and informed1415CAIR that its intent was to “fail conciliation” with Abercrombie. (Id. at Ex. 48 (also seeking Khan16and CAIR’s input on failing conciliation).) On January 11, 2011, CAIR informed the EEOC that17Khan did not object to failing conciliation. (Id. at Ex. 50.) On January 18, 2011, the EEOC notified18Abercrombie that it had “determined that efforts to conciliate the[] cases as required by [its]19procedures and policies have been unsuccessful.” (Baldonado Decl., Ex. 4.) A letter was also sent to20CAIR and Khan informing them that the EEOC would next determine whether to file a civil action.21(Clark Decl., Ex. M at Ex. 52.)22In March 2011, the parties re-engaged in settlement negotiations for all three matters.23(Mitchell Reply Decl. ¶ 28 & Ex. 12.) Emails and/or conference calls occurred on March 7, 8, 9, 14,2415, 21, 23, 30 and 31, wherein monetary and non-monetary demands were made on behalf of Khan.25(Id. ¶¶ 27–36 & Exs. 12–16.) Further settlement negotiations occurred via email and conferences on26April 7, 11, 12, 19, 20 and 27. (Id. ¶¶ 37–43 & Exs. 17–20.)27289CAIR-California is the Council on American-Islamic Relations, California.7

On May 13, 2011, the EEOC requested a status update from Abercrombie. (Id. ¶ 44 & Ex.1220.) Abercrombie rejected the demands made by the EEOC. (Id. ¶ 45.) The EEOC informed3Abercrombie that it had been “holding off on filing the lawsuit with the hope of resolving all of the4cases at once” and that if there was nothing further to discuss, the EEOC would “proceed with filing5Ms. Khan’s case.” (Id., Ex. 20.) Abercrombie responded on May 19, 2011 that it appeared the parties6were at an impasse. (Id.) The EEOC filed the instant action on June 27, 2011. (Dkt. No. 1.)7II.Northern District of CaliforniaUnited States District Court8LEGAL STANDARDSummary judgment is appropriate when no genuine dispute as to any material fact exists and9the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A party seeking10summary judgment bears the initial burden of informing the court of the basis for its motion, and of11identifying those portions of the pleadings, depositions, discovery responses, and affidavits that12demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317,13323 (1986). Material facts are those that might affect the outcome of the case. Anderson v. Liberty14Lobby, Inc., 477 U.S. 242, 248 (1986). The “mere existence of some alleged factual dispute between15the parties will not defeat an otherwise properly supported motion for summary judgment; the16requirement is that there be no genuine issue of material fact.” Id. at 247–48 (dispute as to a material17fact is “genuine” if there is sufficient evidence for a reasonable jury to return a verdict for the non-18moving party).19Where the moving party will have the burden of proof at trial, it must affirmatively20demonstrate that no reasonable trier of fact could find other than for the moving party. Soremekun v.21Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where the non-moving party will22bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district23court that the non-moving party lacks evidence to support its case. Id. If the moving party meets its24initial burden, the opposing party must then set out “specific facts” showing a genuine issue for trial25in order to defeat the motion. Id. (quoting Anderson, 477 U.S. at 250). The opposing party’s26evidence must be more than “merely colorable” but must be “significantly probative.” Id. at 249–50.27Further, that party may not rest upon mere allegations or denials of the adverse party’s evidence, but28instead must produce admissible evidence that shows a genuine issue of material fact exists for trial.8

Northern District of CaliforniaUnited States District Court1Nissan Fire & Marine Ins. Co. v. Fritz Cos., Inc., 210 F.3d 1099, 1102–03 (9th Cir. 2000); Nelson v.2Pima Cmty. College Dist., 83 F.3d 1075, 1081–1082 (9th Cir. 1996) (“mere allegation and speculation3do not create a factual dispute”); Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 922 (9th4Cir. 2001) (“conclusory allegations unsupported by factual data are insufficient to defeat [defendants’]5summary judgment motion”).6When deciding a summary judgment motion, a court must view the evidence in the light most7favorable to the non-moving par