EEOC Must Engage in Conciliation Before Bringing Title VII Suit Against CVS: Seventh Circuit | Practical Law

EEOC Must Engage in Conciliation Before Bringing Title VII Suit Against CVS: Seventh Circuit | Practical Law

In EEOC v. CVS Pharmacy, Inc., the US Court of Appeals for the Seventh Circuit held that Title VII does not authorize the Equal Employment Opportunity Commission (EEOC) to sue an employer without first engaging in informal resolution and alleging that the employer engaged in discrimination. The court upheld a grant of summary judgment to CVS, finding that the EEOC's claim that the pharmacy retailer's severance agreement violated Title VII failed to state a discrimination or retaliation claim.

EEOC Must Engage in Conciliation Before Bringing Title VII Suit Against CVS: Seventh Circuit

by Practical Law Labor & Employment
Published on 31 Dec 2015 • USA (National/Federal)
In EEOC v. CVS Pharmacy, Inc., the US Court of Appeals for the Seventh Circuit held that Title VII does not authorize the Equal Employment Opportunity Commission (EEOC) to sue an employer without first engaging in informal resolution and alleging that the employer engaged in discrimination. The court upheld a grant of summary judgment to CVS, finding that the EEOC's claim that the pharmacy retailer's severance agreement violated Title VII failed to state a discrimination or retaliation claim.
On December 17, 2015, in EEOC v. CVS Pharmacy, Inc., the US Court of Appeals for the Seventh Circuit held that Title VII does not authorize the EEOC to sue an employer without first engaging in conciliation and alleging that the employer engaged in discrimination. The court rejected the EEOC's argument that Title VII confers broad powers on the agency to dispense with Title VII's pre-suit procedures when bringing actions alleging employers have engaged in a pattern or practice of denying employees' full Title VII rights. The court upheld a grant of summary judgment to CVS on the EEOC's claim that the pharmacy retailer's severance agreement violated Title VII by deterring employees from filing EEOC charges. ( (7th Cir. Dec. 17, 2015).)

Background

CVS offered certain terminated employees a severance agreement that included a:
  • Broad release of employment-related claims.
  • Covenant not to sue CVS in any court or agency, except in agencies enforcing anti-discrimination laws.
A terminated employee who signed CVS's severance agreement in 2011 filed a discrimination charge with the EEOC. In June 2013, after reviewing the employee's severance agreement, the EEOC informed CVS by letter that:
  • It was engaged in a "pattern or practice of resistance" to employees' full Title VII rights.
  • CVS's severance agreement was unenforceable because it interfered with employees' rights to:
    • file EEOC charges;
    • communicate with the EEOC; and
    • participate in EEOC investigations.
  • CVS had 14 days to agree to a consent decree to be filed in court providing that CVS would, among other things:
    • discontinue use of the existing severance agreement; and
    • include language in future severance agreements that employees retained the right to file EEOC charges and to communicate and cooperate with the EEOC.
In response, CVS requested that the EEOC comply with Title VII's pre-suit procedures and conciliate the matter. In February 2014 the EEOC filed a lawsuit in federal district court alleging that CVS violated Title VII by using the severance agreement. The district court granted summary judgment to CVS, finding that the EEOC was required to conciliate its claim before filing a lawsuit. The EEOC appealed to the Seventh Circuit.

Outcome

The Seventh Circuit upheld the district court's grant of summary judgment to CVS, holding that:
  • Title VII:
    • requires the EEOC to engage in pre-suit procedures prior to filing a lawsuit alleging that an employer engaged in a pattern or practice of resistance to employees' Title VII rights; and
    • authorizes the EEOC to challenge employers' discriminatory and retaliatory practices, but not to oppose employers' non-discriminatory actions that the agency might dislike.
  • The EEOC's lawsuit against CVS failed to state a claim for either discrimination or retaliation.
The Seventh Circuit noted that Title VII's:
  • Section 706 provides that the EEOC may:
    • investigate charges and resolve them with informal dispute resolution methods including conciliation; and
    • sue employers for engaging in discrimination or retaliation if informal dispute resolution methods like conciliation fail.
(42 U.S.C. § 2000e-5(b); 42 U.S.C. § 2000e-5(f)(1).)
  • Section 707(a) authorizes the EEOC to sue employers for engaging in discriminatory patterns or practices of resistance to employees' full Section 7 rights (42 U.S.C. § 2000e-6(a)).
  • Section 707(e) requires the EEOC to conduct Section 707 suits in accordance with Section 706's procedures (42 U.S.C. § 2000e-6(e)).
  • EEOC regulations require the EEOC to:
    • pursue conciliation when it identifies an unlawful employment practice; and
    • bring a civil action only when it has been unable to reach an acceptable conciliation agreement.
(29 C.F.R.§ 1601.24(a); 29 C.F.R. § 1601.27.)
The Seventh Circuit rejected the EEOC's expansive interpretation of its Title VII powers, finding that:
  • A suit challenging a "pattern or practice of resistance" to employees' full Title VII rights under Section 707(a) is no different than a suit challenging a "pattern or practice of discrimination" under 707(e).
  • Section 707(e) and the EEOC's own regulations plainly require that EEOC actions alleging an employer engaged in a "pattern or practice of resistance" must be conducted by following Section 706's pre-suit procedural requirements.
  • Section 707(a) does not confer broad enforcement powers on the EEOC to remedy non-discriminatory employment practices it dislikes.
  • Adopting the EEOC's interpretation of 707(a) would effectively eliminate any requirement that the EEOC engage in conciliation because the EEOC could always claim that it was acting under its broad Section 707(a) power.
  • The EEOC's complaint failed to state a claim under Title VII because:
    • it did not allege that CVS engaged in discrimination or retaliation; and
    • conditioning severance on not filing EEOC charges is not actionable retaliation under Title VII.
(Isbell v. Allstate Ins. Co., 418 F.3d 788, 793 (7th Cir. 2005).)

Practical Implications

The Seventh Circuit's decision in CVS sends a clear message to the EEOC that it cannot bring lawsuits under Section 707 of Title VII without:
  • Complying first with Section 706 pre-suit requirements like conciliation.
  • Alleging that an employer has engaged in actionable discrimination or retaliation.