Dozens of former employees plan to sue Bowlero alleging discrimination after EEOC closes case, lawyer says

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Dozens of former employees who say they were fired from Bowlero based on their age or out of 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 claimants said Monday. Bowlero, the world's largest owner and operator of bowling centers, had been embroiled in an EEOC investigation since 2016 involving more than 70 former employees who claim they were unlawfully fired, the company previously disclosed in securities filings. They alleged in complaints to the EEOC that Bowlero fired them for being too old as it worked to transform its hundreds of locations from what the company has referred to as "dingy" bowling alleys to upmarket experiences with elevated food and drink 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 successful stocks to emerge from the SPAC boom. It owns two of the biggest brands in bowling — AMF and Lucky Strike — and operated more than 300 bowling centers across 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's stock is down about 21% year to date, as of Monday's close. On Monday, Bowlero disclosed in its fiscal third-quarter earnings release and quarterly securities filing that the EEOC has closed its case and will not move forward with a lawsuit. "The Company has received positive updates on the status of the age discrimination claims that had been pending with the EEOC … the EEOC issued Closure Notices for the individual age discrimination charges that had been filed, in most cases, many years ago with the EEOC," Bowlero said in its press release. "The notices provide the claimants, as a matter of course, with an individual right to sue." Bowlero noted it received letters from the EEOC stating the agency has decided not to bring litigation against the company. In one of the letters, the agency said the closure of the cases doesn't clear the company of wrongdoing. "By terminating the handling of this case, the Commission does not certify that [Bowlero] is in compliance. Also, our termination of the investigation does not affect the rights of any aggrieved persons to file a private lawsuit or the Commission's right to sue later or intervene later in a private civil action," said the EEOC's letter, sent Friday. During the company's earnings call with Wall Street analysts later Monday, executives said that the EEOC investigation was now behind them and would no longer be a distraction. "Over eight-and-a-half years, the company has vigorously denied and contested 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, finance chief Robert Lavan said "there's been a few million dollars" that have flowed through the income statement, but "more importantly, it's been a distraction." "So we're happy to focus 100% now on our business and get this behind us," said Lavan. However, Daniel Dowe, a lawyer representing dozens of claimants, said the case hasn't gone away — it will now just take another form. The EEOC's decision allows the former employees to move forward with their own lawsuits, and Dowe expects 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 brought against Bowlero, and the rest were still under investigation when the agency closed its case, according to Bowlero's securities filings and Dowe. The employees who still had cases pending with the EEOC also have the right to sue and are among the potential plaintiffs that Dowe is representing, he said. The company disclosed in the filings that the EEOC's investigation also resulted in a determination of reasonable cause that Bowlero had been engaging in a "pattern or practice" — a term that indicates systemic issues — 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 shows. Under EEOC procedure, when the agency finds that discrimination has occurred, it works to resolve the situation between the employer and the victim, it explains on its website. If the parties are unable to come to a solution, the EEOC must decide whether to sue the employer — a matter the EEOC's commissioners need to vote on. "Because of limited resources, we cannot file a lawsuit in every case where we find discrimination," the EEOC explains on its website. The EEOC tried to settle the complaints with Bowlero for $60 million in January 2023, but those efforts failed last April, CNBC previously reported. It's unclear if the question of whether to sue Bowlero made it to a vote with the EEOC's commissioners. The EEOC declined to comment because most of its processes are confidential under federal law. Dowe said that he requested the agency close its case last month so his clients could move forward with their own lawsuit. He added that he's "delighted" the matter is now ready for private action. "The investigations were thorough and deep and they resulted in 58 to zero decisions in our favor, so our clients felt we should let the EEOC do its work," Dowe said. He added that age discrimination is "one of the worst forms of discrimination. Most of what you hear about in discrimination cases is about race and gender, but age is awful because people are at the end of their careers, they can't go back to college and retool. It's humiliating, it kind of ends their life in a disaster." He told CNBC he plans to sue Bowlero for $80 million, plus legal fees. As of March 31, Bowlero had approximately $212.4 million in available cash 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 has said previously. Dowe said he is confident that his clients will prevail in federal court and there is "strong" case precedent in their favor. In response, Bowlero's attorneys Alex Spiro and Hope Skibitsky at law firm Quinn Emanuel said they "are pleased with the outcome of the EEOC investigation." The attorneys said the company will fight any claims filed by its past 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 request from former Bowlero executive Thomas Tanase to countersue the bowling chain for claims of extortion and retaliation was denied in Virginia federal court last week. Tanase's attorneys previously said if the request is denied, the suit can and "likely will" be filed as a new action. Bowlero also denies Tanase's claims. Tanase's attorneys didn't immediately respond to a request for comment.