Should attempts to settle discrimination lawsuits with the EEOC be made in good faith? Employers in Illinois, Wisconsin, and Indiana think so and hope the Supreme Court of the United States will agree.
Last month, the Supreme Court heard oral argument in an appeal from a case in the Seventh Circuit, which ruled last December that employers cannot defend a discrimination lawsuit based on the failure of the Equal Employment Opportunity Commission (“EEOC”) to engage in good faith conciliation efforts prior to suing an employer. This momentous case highlighted the divisions among the federal circuit courts that have long struggled with how to interpret the following statute, 42 U.S.C. § 2000e-5:
If the Commission determines after such investigation that there is reasonable cause to believe that the charge is true, the Commission shall endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion. Nothing said or done during and as a part of such informal endeavors may be made public by the Commission, its officers or employees, or used as evidence in a subsequent proceeding without the written consent of the persons concerned.
In Mach Mining, L.L.C. v. Equal Employment Opportunity Commission, one employee alleged sex discrimination in the employer-mining company’s failure to hire any female workers, despite receiving applications from many qualified women. Eventually, the EEOC determined that conciliation efforts had failed and sued the employer. Somehow, along the way, the EEOC developed the single claim into a discrimination suit brought by an entire class of female applicants. The EEOC has not been shy about explaining this strategy, directed by President Obama’s administration, of building bigger cases to send a stronger message to employers in this way.
The question posed to the Supreme Court, however, has nothing to do with the merits of the case. Rather, the employer raised an affirmative defense based on the EEOC’s lack of good faith efforts to settle under the conciliation statute. The employer contended that the EEOC did nothing more than make a vague, verbal demand before issuing written notice that conciliation efforts had failed to end the negotiations. Hence, the employer-coined phrase about the EEOC’s aggressive strategy: “Sue first, negotiate later.”
As a result, the Supreme Court has been asked to determine, by both the employer and the EEOC, a workable standard for the EEOC to follow to meet its statutory mandate to settle cases in good faith before bringing lawsuits against employers. Finding the correct standard will require the Supreme Court to balance the great discretion afforded to the EEOC by Congress against the thrust of the statute, which both mandates good faith settlement efforts and prohibits the publication of any statements or actions in such efforts without consent. In fact, publication of such information is subject to a fine and imprisonment.
At oral argument, the Supreme Court justices appeared disinterested in permitting the EEOC to completely insulate its conciliation efforts. Yet, they also expressed uneasiness about requiring a detailed and specific judicial inquiry into the EEOC’s conciliation actions, as requested by the employers. Some of the justices posed alternatives that may require employers to do more if they wish to raise the EEOC’s noncompliance as a defense. This could include preparing an affidavit to establish the bad faith actions of the EEOC in settlement negotiations, as suggested by Justice Kagan.
A decision is expected by June of this year. In the meantime, Virginia employers should know that while the Fourth Circuit permits judicial review of the EEOC’s efforts to settle a lawsuit to determine if a lawsuit should be dismissed, the EEOC only needs to demonstrate a minimum level of good faith. For example, in EEOC v. Radiator Specialty Co., 610 F.2d 178 (4th Cir. 1979), the EEOC appeared to do little more than invite the parties to conciliation and attend a meeting at the employer’s facilities where the charges were discussed but no negotiations apparently took place, before the EEOC notified the employer that efforts to negotiate would be a waste of time. Under these facts, the Fourth Circuit still ruled that the employer met the good faith standard required by the conciliation statute.
It is possible the Supreme Court could rule in favor of the EEOC and prohibit any judicial review of the agency’s conciliation efforts; however, this seems unlikely. After all a ruling adopting the EEOC’s position of complete insulation from judicial review would render the conciliation statute utterly meaningless. While the Supreme Court deliberates, Virginia employers faced with EEOC charges and suits should continue to hold the EEOC to a minimal level of good faith. They can do so by keeping track of and carefully documenting all settlement efforts by the EEOC. Employers should request specifics, preferably in writing, about the basis for the EEOC’s refusal to negotiate further—especially if the EEOC provides no or minimal response to an employer’s invitation to engage in settlement talks. This will only help an employer demonstrate the extent of the EEOC’s settlement actions and build a possible argument for dismissal.
