Dozens of former employees who say they were fired bolero based on their age or for a retaliation plan to sue the bowling chain after the U.S. Equal Employment Opportunity Commission closed its case against the company, the attorney representing the plaintiffs.
Bowlero, the world's largest owner and operator of bowling centers, had been involved in an EEOC investigation since 2016 involving more than 70 former employees who claimed they were illegally fired, the company previously disclosed in securities filings.
In their complaints to the EEOC, they alleged that Bowlero fired them for being too old as it worked to transform its hundreds of locations from what the company has called “dirty” bowling alleys to upscale experiences with elevated food and beverage offerings, CNBC previously reported. . . Bowlero denies the claims.
The company, which went public in late 2021 through a special purpose acquisition company, was among the select blockbuster stocks to emerge from the SPAC boom. It owns two of the largest bowling brands, AMF and Lucky Strike, and operated more than 300 bowling centers in North America as of July, which is the most recent data available. Between 2021 and 2023, Bowlero nearly tripled its annual revenue, from $395 million to $1.06 billion, according to company filings. Bowlero shares are down about 21% so far this year, as of Monday's close.
On Monday, Bowlero disclosed in its fiscal third-quarter earnings release and quarterly securities filing that the EEOC closed its case and will not pursue a lawsuit.
“The Company has received positive updates on the status of age discrimination claims that had been pending before the EEOC… the EEOC issued Closing Notices for the individual age discrimination charges that had been filed, in most cases. cases, many years ago before the EEOC,” Bowlero said in his press release. “The notices give plaintiffs, of course, an individual right to sue.”
Bowlero said he received letters from the EEOC indicating that the agency decided not to pursue litigation against the company. In one of the letters, the agency said that the closure of the cases does not exempt the company from irregularities.
“By concluding the processing of this case, the Commission does not certify that [Bowlero] is in compliance. Furthermore, our termination of the investigation does not affect the rights of any aggrieved person to file a private complaint or the Commission's right to later sue or intervene later in a private civil action,” said the EEOC letter, sent on Friday.
During the company's earnings call with Wall Street analysts later Monday, executives said the EEOC investigation was now behind us and would no longer be a distraction.
“For eight and a half years, the company has vigorously denied and disputed the false allegations made against it,” CEO Thomas Shannon said in his opening remarks. “We are pleased to report these very positive developments on behalf of our shareholders.”
Later, when asked about the financial impact the EEOC investigation has had, Chief Financial Officer Robert Lavan said that “a few million dollars have passed through” the income statement, but “the most important thing is It's been a distraction.”
“That's why we're happy to now focus 100% on our business and put this behind us,” Lavan said.
However, Daniel Dowe, a lawyer representing dozens of plaintiffs, said the case has not gone away: It will now simply take another form.
The EEOC's decision allows former employees to move forward with their own lawsuits, and Dowe hopes to file a single lawsuit on behalf of more than 70 former employees, he told CNBC. Dowe plans to seek monetary damages in connection with the case.
The EEOC had previously found reasonable cause in 58 of the complaints filed against Bowlero, and the rest were still under investigation when the agency closed its case, according to Bowlero and Dowe's securities filings. Employees who still had pending cases with the EEOC also have the right to sue and are among the potential plaintiffs Dowe represents, he said.
The company disclosed in the documents that the EEOC investigation also resulted in a reasonable cause determination that Bowlero had been engaging in a “pattern or practice” (a term indicating systemic problems) of age discrimination since at least 2013, which Bowlero also denies. . The EEOC's pattern or practice investigation was also closed, Bowlero said.
When the EEOC finds reasonable cause in a complaint, it means it believes discrimination occurred. The agency typically makes that determination in only a small fraction of cases each year, EEOC data show.
Under EEOC procedure, when the agency discovers that discrimination has occurred, it works to resolve the situation between the employer and the victim, it explains on its website. If the parties cannot reach a solution, the EEOC must decide whether to sue the employer, a matter on which EEOC commissioners must vote.
“Due to limited resources, we cannot file a lawsuit in every case where we find discrimination,” the EEOC explains on its website.
The EEOC attempted to reach a settlement with Bowlero for $60 million in January 2023, but those efforts failed last April, CNBC previously reported.
It's unclear whether the question of whether to sue Bowlero came to a vote with EEOC commissioners. The EEOC declined to comment because most of its proceedings are confidential under federal law.
Dowe said he asked the agency to close his case last month so his clients could move forward with their own lawsuit. He added that he is “delighted” that the matter is now ready for private action.
“The investigations were thorough and in-depth and resulted in 58-0 decisions in our favor, so our clients felt we should let the EEOC do its job,” Dowe said.
He added that age discrimination is “one of the worst forms of discrimination. Most of what you hear in discrimination cases has to do with race and gender, but age is terrible because people are at the bottom of their careers, they can't go back. “Going to college and restructuring is humiliating, it's like ending your life in a disaster.”
He told CNBC that he plans to sue Bowlero for $80 million, plus legal fees. As of March 31, Bowlero had approximately $212.4 million in cash on hand and cash equivalents, according to its quarterly securities filing. Dowe said he has until mid-July to file the lawsuit.
Some of the complaints against Bowlero are years old and could be challenged under the statute of limitations, the company previously said. Dowe said he is confident his clients will prevail in federal court and that there is “solid” precedent in his favor.
In response, Bowlero's attorneys, Alex Spiro and Hope Skibitsky of the law firm Quinn Emanuel, said they “are pleased with the outcome of the EEOC's investigation.” Lawyers said the company will fight any claims brought by its former employees.
“Bowlero will defeat those claims,” the attorneys said. In previous statements they denied the claims against Bowlero.
In a separate but related matter, a federal court in Virginia last week denied a request by former Bowlero executive Thomas Tanase to counter the bowling chain over allegations of extortion and retaliation. Tanase's attorneys previously said that if the request is denied, the lawsuit can and “likely will” be filed as a new action. Bowlero also denies Tanase's claims.
Tanase's lawyers did not immediately respond to a request for comment.
