EEOC Conciliation Subject to Court Scrutiny, But Scope of Review Is Limited, Justices Rule

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By Kevin McGowan

April 29 — Courts may review the Equal Employment Opportunity Commission's efforts to settle discrimination charges before filing a lawsuit under Title VII of the 1964 Civil Rights Act, but the scope of judicial review is narrow, the U.S. Supreme Court unanimously ruled April 29.

In a partial victory for employers facing EEOC investigations, the court reversed a U.S. Court of Appeals for the Seventh Circuit decision that Title VII shields the EEOC's pre-suit conciliation efforts from judicial review once the agency attests that it offered the employer conciliation and the parties failed to reach an agreement (738 F.3d 171, 121 FEP Cases 327 (7th Cir. 2013)).

Writing for the 9-0 court, Justice Elena Kagan said “judicial review of administrative action is the norm in our legal system” and nothing in Title VII “withdraws the court's authority to determine whether the EEOC has fulfilled its duty to attempt conciliation of claims.”

But the court also said Congress in Title VII granted the EEOC considerable discretion over the conciliation process and judicial review is limited.

If the EEOC presents a sworn affidavit that it has performed its conciliation duties, an employer must provide concrete evidence the agency didn't provide the requisite information about the underlying discrimination charge or failed to engage in settlement discussions to trigger a further judicial inquiry, the court said.

If a court finds for the employer regarding a conciliation shortfall, the appropriate remedy is a court order for the EEOC to undertake additional conciliation, not dismissal of the discrimination charge, the court said.

EEOC Applauds Ruling 

Though the court rejected the EEOC's “no judicial review” position, agency officials applauded the court for disallowing “intrusive review” of its conciliation efforts and discouraging protracted litigation over process rather than substance.

The ruling “puts the focus of the EEOC and the courts squarely on the merits of the discrimination claim,” EEOC Chair Jenny Yang said in the agency's April 29 statement. “The EEOC remains committed to its successful conciliation efforts as a means of voluntarily resolving charges of workplace discrimination, and this decision supports that process,” Yang said.

The court's ruling “brings to an end an era in which employers charged with discrimination too often could defend EEOC lawsuits by fighting about conciliation,” said John Hendrickson, the EEOC regional attorney in Chicago, whose office filed the sex discrimination lawsuit against Mach Mining LLC that led to the court's decision.

Both Sides Call Ruling a Mixed Bag

Management lawyers welcomed the justices' reversal of the Seventh Circuit's decision and its recognition that courts can review the EEOC's conciliation efforts. But some employer representatives said the court's rejection of a “good faith” standard means the EEOC can continue to make “take it or leave it” offers during conciliation with impunity.

On the employees' side, Michael Foreman of Pennsylvania State University's Dickinson School of Law said it's important the court ruled that even if an employer successfully challenges the EEOC, the remedy for a flawed agency process is more conciliation, not dismissal of the discrimination case.

That may discourage employers from mounting defenses based on alleged inadequate process, and it protects discrimination claimants from having their cases dismissed because the EEOC blundered, Foreman told Bloomberg BNA April 29.

The EEOC essentially won because no one really expected the court to rule that no judicial review was available and the court endorsed a “very deferential standard” of “bare bones review” of agency conciliation efforts, Foreman said.

The Penn State Civil Rights Appellate Clinic, led by Foreman, had filed an amicus brief in the case on behalf of the Impact Fund and other employee advocacy groups.

But plaintiffs' attorney Deborah Marcuse said the decision “will continue to push employees subjected to unlawful discrimination away from [EEOC] enforcement as a remedy” and toward private litigation, often under state and local anti-discrimination laws that offer more expansive protections “without some of the procedural hurdles that threaten to bar the door to justice” for discrimination claimants.

The decision is “a mixed bag,” and its effects ultimately will depend on how district courts interpret the court's opinion, said Marcuse, of Sanford Heisler Kimpel in New York.

“Much depends on whether lower courts will enforce it in the spirit” the Supreme Court “unanimously embraced,” that Title VII’s goal of eliminating unlawful discrimination “should not be hampered by a focus on process instead of substantive results,” Marcuse said in an e-mail to Bloomberg BNA.

“It's a very, very good decision for employers, and will have a definite, concrete impact” on how the EEOC conducts conciliation, said Gerald Maatman, of Seyfarth Shaw in Chicago.

One of employers' biggest complaints was that the EEOC was “hiding the ball” during conciliation, making it impossible for employers to negotiate without knowing the number of class members or their identities, for example, Maatman told Bloomberg BNA April 29.

But if the EEOC must answer to a federal judge, conciliation comes “out of the shadows” and the agency will have to divulge critical information to the employer, Maatman said. That should result in a “better airing of the issues” between the EEOC and employers during conciliation, he said.

Although the court's decision won't result in discrimination lawsuits being dismissed, it will favorably affect “the quantity and quality of information” that is exchanged by the parties in conciliation, Maatman said.

The court's decision has “good news” and “bad news” for employers, said Don Lewis, of Nilan Johnson Lewis in Minneapolis.

The court “made it very clear” the EEOC's conciliation efforts are subject to judicial review, Lewis said.

The Supreme Court also “put a little meat on the bone” regarding the EEOC's statutory responsibilities by saying the agency must provide detailed notice of the claim to the employer, including specifics about who the discrimination claimants are and how they have been harmed, and must give the employer an opportunity to discuss and remedy the alleged discrimination, Lewis told Bloomberg BNA April 29.

Given those rulings, Lewis said he would hope the EEOC “will take conciliation a little more seriously” and employers will receive “a better opportunity” to assess the value of a discrimination claim and resolve cases early.

But Lewis said the court set “a low bar” for the EEOC to meet. Instead of adopting a “good faith” standard, the court said in most cases, the EEOC can satisfy judicial review simply by submitting affidavits that conciliation has occurred and failed to produce an agreement.

Even if an employer succeeds in showing the EEOC didn't adequately conciliate, the remedy is more conciliation rather than dismissal of the suit, Lewis said.

Attorney Says EEOC Often Ready to Settle

From a practical standpoint, the number of EEOC lawsuits filed each year has dropped from more than 300 in fiscal year 2008 to about 120 to 130 lawsuits per year in the past three fiscal years, said Barry Hartstein of Littler Mendelson in Chicago.

Given the EEOC's limited resources, if an employer signals it's willing to settle a discrimination charge, the EEOC generally will work to conciliate, Hartstein told Bloomberg BNA April 29.

But in cases in which the EEOC is determined to litigate, for policy reasons or otherwise, “it's going to be very difficult” for an employer to resolve the case through conciliation, Hartstein said.

In those types of cases, the Supreme Court decision might give the EEOC “more leverage” in conciliation to make “take it or leave it” demands on the employer, Hartstein said. The court's failure to back a “good faith” standard means lower courts can't look behind and evaluate the conciliation process, and that's regrettable for employers, he said.

The Equal Employment Advisory Council, which represents large employers, is “certainly pleased and relieved” the court ruled judicial review of conciliation is available, said Rae Vann of Norris Tysse Lampley & Lakis in Washington, who is the EEAC's general counsel.

But the deferential standard of review isn't likely to deal with the EEOC's practice of making “all or nothing demands” on employers, Vann told Bloomberg BNA April 29.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

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

The opinion is available at http://www.bloomberglaw.com/public/document/Mach_Mining_LLC_v_EEOC_No_131019_US_Apr_29_2015_Court_Opinion.