Court Review of EEOC's Title VII Pre-suit Investigation is Narrow: Second Circuit | Practical Law

Court Review of EEOC's Title VII Pre-suit Investigation is Narrow: Second Circuit | Practical Law

In EEOC v. Sterling Jewelers Inc., the US Court of Appeals for the Second Circuit found that under Title VII of the Civil Rights Act of 1964 (Title VII), a court can review whether the Equal Employment Opportunity Commission (EEOC) conducted an investigation prior to a lawsuit, but not the sufficiency of that EEOC investigation.

Court Review of EEOC's Title VII Pre-suit Investigation is Narrow: Second Circuit

Practical Law Legal Update 3-618-6788 (Approx. 6 pages)

Court Review of EEOC's Title VII Pre-suit Investigation is Narrow: Second Circuit

by Practical Law Labor & Employment
Published on 14 Sep 2015 • USA (National/Federal)
In EEOC v. Sterling Jewelers Inc., the US Court of Appeals for the Second Circuit found that under Title VII of the Civil Rights Act of 1964 (Title VII), a court can review whether the Equal Employment Opportunity Commission (EEOC) conducted an investigation prior to a lawsuit, but not the sufficiency of that EEOC investigation.
On September 9, 2015, in EEOC v. Sterling Jewelers Inc., the US Court of Appeals for the Second Circuit vacated a district court's summary judgment order in favor of the employer and found that under Title VII, a court can review whether the EEOC fulfilled its statutory obligation of conducting an investigation prior to a lawsuit, but not the sufficiency of that EEOC investigation (No. 14-1782, (2d Cir. Sept. 9, 2015)).

Background

Between 2005 and 2007, 19 employees of Sterling Jewelers filed charges with the EEOC, alleging "unlawful employment practices throughout its stores nationwide." The charges were reviewed by several investigators and eventually transferred to David Ging. The EEOC requested and received extensive policy and hiring information from Sterling.
In 2006, Sterling and the charging parties entered mediation and signed a Mediation and Confidentiality Agreement. The EEOC agreed:
  • To suspend its investigation during the mediation.
  • Not to rely on or introduce as evidence any information disclosed during mediation in any subsequent judicial and arbitration proceedings.
The parties agreed by addendum that if mediation was unsuccessful, documents exchanged in mediation could be:
  • Given to Ging.
  • Placed in the EEOC investigative file.
Mediation failed in 2007 and the charging parties sent evidence and information to Ging. In January 2008, the EEOC issued a Letter of Determination finding that Sterling discriminated against the charging parties and a nationwide class of female employees.
On September 23, 2008, the EEOC sued Sterling, alleging sex-based pay and promotion discrimination in violation of Title VII. Seven years after the EEOC investigation, Ging and another investigator were deposed, but recalled little about the investigation. Sterling moved for summary judgment, claiming that the EEOC had not satisfied its statutory obligation to conduct a pre-lawsuit investigation.
The magistrate judge recommended summary judgment for Sterling, determining that there was no evidence that the EEOC performed a nationwide class investigation. The district court adopted the magistrate judge's Report and Recommendation, granting summary judgment to Sterling and dismissing the EEOC's action (See Legal Update, District Court May Examine Whether EEOC Conducted Requisite Nationwide Pre-suit Investigation). The EEOC appealed to the Second Circuit.

Outcome

The Second Circuit:
  • Vacated the district court's summary judgment order for Sterling.
  • Remanded the case for further proceedings.
The Second Circuit noted that:
  • The EEOC is required to fulfill certain administrative obligations (including conducting an investigation of the charge) before bringing a Title VII enforcement action (Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1649‐50 (2015)).
  • Title VII does not define "investigation" or give steps that the EEOC must follow to conduct an investigation (Newsome v. EEOC, 301 F.3d 227, 231 (5th Cir. 2002)).
  • Congress has empowered federal courts to review whether the EEOC's administrative obligations have been met (Mach Mining, 135 S. Ct. at 1653).
  • The US Supreme Court has found that, in the context of the EEOC's obligation to conciliate:
    • judicial review of the EEOC's obligations should be narrow; and
    • the conciliation requirement is usually satisfied by a sworn EEOC affidavit stating that it satisfied its conciliation obligations but failed to reach agreement.
      (Mach Mining, 135 S. Ct. at 1653-56.)
  • Similarly, regarding an EEOC investigation:
    • the scope of judicial review of an EEOC investigation is limited to review of the investigative obligation; and
    • an EEOC affidavit stating that it performed the investigative obligation is sufficient to meet the obligation.
  • To prove that its pre-suit investigation obligation is fulfilled, the EEOC must show that it took steps to determine whether there was reasonable cause to believe the truth of the charge's allegations (42 U.S.C. § 2000e-5(b)).
  • A limited review is appropriate because that approach:
The Second Circuit found that:
  • The magistrate judge improperly considered the sufficiency of the EEOC's investigation rather than just the existence of the investigation.
  • The EEOC investigators properly took steps to investigate the claims against Sterling, evidenced by:
    • Ging's testimony that he reviewed all investigative files and investigated all charges as class charges; and
    • the EEOC's requests for documents from Sterling.
  • Other circuit courts that held that the EEOC did not satisfy its investigation requirement did so in situations where the EEOC actually conducted no investigation prior to the lawsuit.
  • Although Sterling listed steps that the EEOC failed to take in its investigation, the extent of the EEOC's investigation is within the agency's discretion (Keco, 748 F.2d at 1100).
  • The EEOC's investigation was demonstrated to be "nationwide" by the following:
    • Ging investigated charges alleging class-wide discrimination from women in nine states as "class charges";
    • the EEOC obtained a doctor's statistical analysis that was based on company-wide computer data;
    • Sterling's pay and promotion policies applied nationwide;
    • contrary to the magistrate judge's assertion, the word "class" is not ambiguous enough that California, New York and Texas would be perceived as part of a class that is regional rather than nationwide; and
    • since the parties' confidentiality agreement addendum allowed the doctor's analysis to be given to Ging if mediation failed, the EEOC was permitted to rely on that analysis when making its internal reasonable cause determination.

Practical Implications

After Sterling, employers can still establish a defense to a nationwide class action discrimination claim if the EEOC fails to conduct a pre-suit investigation. However, they should be aware that courts may not review the sufficiency and quality of the EEOC's investigation and must respect the agency's discretion in conducting discrimination claim investigations.