2nd Cir. Says Judicial Review Limited for EEOC Probes

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Jon Steingart

Sept. 9 — The Equal Employment Opportunity Commission is entitled to limited judicial review of whether it satisfied its obligation under Title VII of the 1964 Civil Rights Act to investigate a charge of discrimination before filing a lawsuit, a federal appeals court ruled Sept. 9, deciding an issue of first impression raised in a case in which the commission alleged that Sterling Jewelers Inc. engaged in a nationwide practice of sex-based pay and promotion discrimination.

Reversing summary judgment to Sterling, which operates Kay Jewelers, Jared the Galleria of Jewelry and other retail stores chains, the U.S. Court of Appeals for the Second Circuit said a lower court improperly analyzed the sufficiency of the EEOC's investigation. The appeals court said the lower court's inquiry should have been simply whether the commission conducted an investigation.

The lower court had adopted a magistrate judge's report that concluded the commission failed to show it conducted a nationwide investigation prior to filing its nationwide class action.

Judge John M. Walker wrote the court's opinion, joined by Judges Gerard E. Lynch and Raymond J. Lohier.

Investigation Suspended During Mediation

Between 2005 and 2007, the EEOC received 19 charges of discrimination by women employed at Sterling stores in nine states, the court said. The women and Sterling entered mediation, which the EEOC joined. The EEOC agreed to suspend its investigation during the mediation, but resumed it when mediation was unsuccessful.

The women sent the EEOC investigator a copy of a statistical analysis it hired a labor economist to produce based on data acquired during mediation, which showed “that Sterling paid female employees less and promoted them at slower rates than similarly situated male employees,” the court said. The EEOC filed a lawsuit based in part on the economist's analysis, but the district court granted summary judgment to Sterling based on the magistrate judge's conclusion.

Supreme Court Precedent Provides Guidance

Title VII places several administrative requirements on the EEOC to complete before it may bring an enforcement action in response to a charging party's complaint of discrimination, the court said. One of these requirements is to “make a good faith effort to conciliate the charges,” which the Supreme Court addressed earlier this year. In Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 126 FEP Cases 1521 (2015), it said nothing in Title VII “withdraws the court's authority to determine whether the EEOC has fulfilled its duty to attempt conciliation of claims”. However, the high court said that scope is limited because Title VII grants the EEOC considerable discretion over the conciliation process.

Another pre-lawsuit requirement is to “investigate the charge,” the appeals court said. The purpose of this requirement is for the commission to determine whether there is a basis to believe the allegations contained in a complainant's charge of discrimination are true.

The reasoning in Mach Mining also applies to Title VII's investigation requirement, the appeals court said. “Mach Mining did not address the EEOC’s obligation to investigate, but we conclude that judicial review of an EEOC investigation is similarly limited,” the court said.

Allowing judicial review into the sufficiency of the commission's investigation would burden the EEOC's scarce resources and would “delay and divert” it from eliminating workplace discrimination, the court said.

“The EEOC need not,” the court said, “describe in detail every step it took or the evidence it uncovered. As with the conciliation process, an affidavit from the EEOC, stating that it performed its investigative obligations and outlining the steps taken to investigate the charges, will usually suffice.” A court shouldn't second guess the choices the commission makes in how it conducts its investigation, the court said.

EEOC Greets Ruling With Applause

EEOC Associate General Counsel Jennifer S. Goldstein hailed the ruling, telling Bloomberg BNA by e-mail Sept. 9, “The court of appeals recognized that Title VII gives the EEOC ‘expansive discretion' in investigating claims of discrimination.” She also said the commission was “pleased that the Second Circuit recognized that court scrutiny of EEOC investigations would divert attention away from the purpose of Title VII—eliminating discrimination in the workplace.”

David A. Bouffard, vice president for corporate affairs at Sterling's parent company, Signet Jewelers Ltd., insisted the allegations “are not substantiated by the facts and do not reflect the culture of our company.” He told Bloomberg BNA by e-mail Sept. 9, “It is important to note that this ruling does not address the merits of the case and we will continue to vigorously defend the company against these unjustified legal claims.”

EEOC Investigated Nationwide Class, Says Court

The court said the district and magistrate judges correctly recognized that the scope of a district court's inquiry is only whether an investigation occurred. However, the court agreed with the EEOC's contention that the magistrate judge actually considered the investigation's sufficiency while purporting to ascertain its existence.

As evidence the commission conducted an investigation, the court pointed to “the 2,600 page investigative file” the EEOC investigator assembled, which included “numerous documents” the commission requested and obtained from the company and the charging parties. Even though the investigator “acknowledged in discovery that he did not remember much about the investigation, that testimony—given some seven years after the investigation concluded—is not tantamount to an admission that he failed to conduct an investigation,” the court said.

There also could be no doubt that the investigation was nationwide, the court said. In a deposition, the investigator testified that he reviewed the individual charges and investigated them as class charges. The magistrate judge said in his report there was ambiguity in the investigator's use of the term “class” to describe whether he was investigating a “local, regional, or nationwide” class.

The court found no ambiguity. “We are,” it said, “at a loss to think of a locality or region that would include California, New York, and Texas,” referring to three of the nine states where the women charging discrimination lived.

EEOC attorneys represented the commission. Seyfarth Shaw LLP and Weil, Gotshal, & Manges, LLP represented Sterling.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at mailto:smgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/Equal_Employment_Opportunity_C_v_Sterling_Jewelers_Inc_Docket_No_/1.