By Gerald L. Maatman, Jr., Laura J. Maechtlen, and Joshua M. Henderson

Under Title VII, the EEOC has an obligation before filing suit to engage in conciliation in good faith with an employer that is the subject of the Commission’s investigation and good cause determination. This conciliation requirement is not a perfunctory task, or a mere box that needs to be checked before the EEOC can file a complaint in court. Good-faith conciliation is intended to provide adequate notice to an employer of the nature of the charges against it, and an opportunity to resolve the matter before litigation ensues. Against this backdrop, and as this blog has noted before here and here, federal courts are taking a closer look at the EEOC’s litigation tactics. In a new decision by Judge Leslie Kobayashi of the U.S. District Court of Hawaii granting the employer’s motion to dismiss in EEOC v. ALTRES, Inc., et al., Case No. 11-CV-799 (D. Haw. Aug. 22, 2012), these two issues were joined in an opinion that will likely reverberate in EEOC matters throughout the country.

The key issues considered by the Court in EEOC v. ALTRES, Inc., et al. were: (i) whether the EEOC’s conciliation obligation is a jurisdictional prerequisite to filing suit, or whether it was a requirement that could be waived if not pleaded as an affirmative defense; and (ii) whether the EEOC did, in fact, engage in conciliation in good faith before filing its lawsuit under section 706 of Title VII to recover on behalf of an unspecified number of female employees that the EEOC alleged were subjected to sexual harassment and retaliation by their employer.

The Court held that the EEOC’s statutory duty to conciliate in good faith before filing a lawsuit is jurisdictional. The Ninth Circuit (in which the District Court of Hawaii sits) held in a case decided 30 years ago – the case of EEOC v. Pierce Packing, 669 F.2d 605 (9th Cir. 1982) – that it is indeed jurisdictional, but the EEOC argued that the Ninth Circuit’s decision had been eroded (if not overruled) by subsequent U.S. Supreme Court authority, such as Arbaugh v. Y&H Corp., 546 U.S. 500 (2006). Significantly, Judge Kobayashi declined to follow the lead of her colleague on the same court who held in EEOC v. Global Horizon, Inc.,2012 U.S. Dist. LEXIS 928160 (D. Haw. Mar. 16, 2012), that the obligation is not a jurisdictional prerequisite to filing a lawsuit.  Likewise, she rejected many other rulings from throughout the United States that have accepted the EEOC’s contention.

On the second issue, the Court concluded that the EEOC had failed to conciliate with the employer in good faith: “[T]he Court finds that the EEOC failed to conciliate in good faith when it failed to provide either Defendant with any information with which they could evaluate the EEOC’s claims.” (The case involved two defendants, an employer and a PEO, or Professional Employer Organization, which provided human resources services to the employer). 

Judge Kobayashi also had some sharp words for the manner in which the EEOC conducted itself: “The EEOC’s obstinate refusal to offer any information, including the results of its investigation, does not demonstrate ‘a willingness to work toward settlement,’ because ‘a fundamental element of working toward settlement is providing a reasonable amount of information to make settlement a possibility.’ The statute requires EEOC to conduct conciliation and therefore Congress must have intended it to be done in a meaningful way. In order to be meaningful, conciliation must have context and provide for an exchange of relevant and specific information between the parties. It is no surprise that Defendants, faced with little information, were unwilling to entertain the EEOC’s ‘take-it-or-leave-it’ offer. The EEOC cannot expect employers to make substantial offers of settlement when they are provided with no information with which to evaluate their liability.” 

Rather than dismiss the case outright, however, the Court granted leave to the EEOC to file an amended complaint, but only after engaging in conciliation in good faith. In its order, the Court identified the information that the EEOC would need to provide to satisfy its statutory obligation: “The EEOC is instructed to provide Defendants with information such as the number or identity of Claimants identified during its investigation, specific incidents of harassment or discrimination, and any other information reasonably necessary for Defendants to evaluate the claims and formulate a reasonable offer of settlement.” 

Perhaps this strong language will provide further impetus for the EEOC to rethink its approach to prosecution of litigation, an issue that is receiving increased attention recently with the EEOC’s meeting on its Strategic Enforcement Plan. That being said, the decision in EEOC v. ALTRES, Inc., et al. will be a powerful litigation tool for employers facing recalcitrant EEOC positions over good faith conciliation issues.

Readers can also find this post on our Workplace Class Action Blog here.