By Christopher DeGroff, Matthew Gagnon, and Reema Kapur

Will the Seventh Circuit immunize the entire conciliation process from judicial review? It will if the EEOC has its way.

The EEOC is pressing its view that the courts do not have any authority to review how it conducts the conciliation process. It has made this argument in two recent decisions in Illinois district courts.

EEOC Commissioner Chai Feldblum also advanced this point in a panel discussion at the 2013 National ABA EEO conference. “EEOC v. CRST Van Expedited: Effect on the EEOC’s ‘Litigation Vehicles’ and Conciliation Process.” She explained that the EEOC is actively pursuing the position that courts have no authority to review EEOC investigations or conciliations.

According to Commissioner Feldblum, the question of what is a quality investigation should not be dictated by courts. She said that the EEOC is already, on its own, examining its conciliation process and courts should not intrude on this function. The EEOC’s position is that as long as it has engaged in good faith conciliation, that is enough. According to the EEOC, there is no room for further  judicial review of its investigation process.

The EEOC has aggressively pursued this theory by attacking defendants’ failure-to-conciliate affirmative defenses in two recent district court cases in the Seventh Circuit — in EEOC v. Mach Mining, LLC, No. 11-CV-879-JPG-PMF, 2013 WL 319337 (S.D. Ill. Jan. 28, 2013), and EEOC v. St. Alexius Medical Center, No. 12-CV-7646, 2012 WL 6590625 (N.D. Ill. Dec. 18, 2012).

In EEOC v. Mach Mining, the EEOC alleged a pattern or practice of not hiring women for mining and related positions, or, in the alternative, maintaining a neutral hiring policy that has a disparate impact on women. The company asserted a number of affirmative defenses, including that the EEOC failed to conciliate in good faith. The EEOC moved for summary judgment on just that defense, arguing that the Seventh Circuit’s decision in EEOC v. Caterpillar, Inc., 409 F.3d 831 (7th Cir. 2005), compelled the conclusion that the EEOC’s conciliation process is not subject to judicial review. Mach Mining, 2013 WL 319337, at *1.

In EEOC v. St. Alexius Medical Center, the EEOC alleged that the employer violated the Americans With Disabilities Act when it refused to accommodate the charging party’s disability and fired her because of her disability. As in EEOC v. Mach Mining, the employer asserted an affirmative defense that “Plaintiff’s disability claim is barred because plaintiff did not make a sincere and reasonable effort to conciliate in good faith.” 2012 WL 6590625, at *1 (quoting defendant’s answer and affirmative defenses). The EEOC moved for judgment on just that affirmative defense pursuant to Rule 12(c). The EEOC again argued that EEOC v. Caterpillar precludes any judicial inquiry into the adequacy of the EEOC’s pre-suit conciliation efforts. Id. at *2.

The EEOC clearly believes that the Seventh Circuit’s decision in EEOC v. Caterpillar opens up an opportunity for the Commission to make this argument. But that case held that the probable cause determination is not judicially reviewable; it did not touch on the conciliation process.

In EEOC v. Caterpillar, the EEOC brought a claim of gender discrimination on behalf of a class of female employees at Caterpillar’s Aurora, Illinois plant. Caterpillar moved for summary judgment on the ground that the allegation of plant-wide discrimination was unrelated to the original charge. 409 F.3d at 832. The district court denied the motion but certified the ruling for interlocutory appeal to answer the question of whether the court must simply accept the EEOC’s administrative determination, or if it may review the scope of the investigation. Id.

The Seventh Circuit distinguished several cases that held that the EEOC’s reasonable-cause determination is judicially reviewable. Those cases were either filed by private individuals or based their reasoning on such cases. Id. The Seventh Circuit reasoned that such cases were inapplicable because the exhaustion of administrative remedies is a concern when private plaintiffs bring suit, but not when the EEOC brings suit. Id. at 832-33. If a private plaintiff were allowed to add claims that had not been part of the initial charge, then the exhaustion requirement would be by-passed in derogation of the statutory scheme. Id. at 833.

When the EEOC brings suit, it is not constrained by the exhaustion requirement and is not confined to the claims in the administrative charge: “The charge incites the investigation, but if the investigation turns up additional violations the Commission can add them to its suit.” Id. The Seventh Circuit concluded that if the EEOC is not limited to the claims made in the charge, then it is likewise not limited to claims that a court might find was supported by the evidence obtained during the EEOC’s investigation. Id. Hence, the existence of probable cause to sue is not judicially reviewable.  Id.

In so holding, the Seventh Circuit cited a string of decisions holding that non-final agency actions are not judicially reviewable pursuant to the administrative Procedures Act (“APA”).  This is the point that the EEOC latched onto in its Mach Mining and St. Alexius briefs. But the cases cited by the Seventh Circuit did not involve the EEOC’s conciliation process.

In F.T.C. v. Standard Oil Co. of California, 449 U.S. 232, 243 (1980), the Supreme Court held that the issuance of a complaint under section 5 of the Federal Trade Commission Act was not a final agency action under the APA.  In Stewart v. EEOC, 611 F.2d 679, 683 (7th Cir. 1979), the Seventh Circuit held that the EEOC’s failure to investigate and make a timely reasonable cause determination did not constitute a final agency action, and it was not rendered so solely because of the hardship imposed on plaintiffs because of the delay. Finally, in Borg-Warner Protective Services Corp. v. EEOC, 245 F.3d 831, 836 (D.C. Cir. 2001), the D.C. Circuit held the reasonable cause determination is not a final agency action because, standing alone, it has no power to fix obligations or impose any liability on the plaintiff.

The difference between conciliation and a reasonable cause determination is that the conciliation process is the last statutorily-mandated protection afforded employers before the matter is pursued in the courts. This is different even than the FTC complaint at issue in Standard Oil, which is nothing more than a determination that further administrative review proceedings should begin before an administrative law judge. If that process results in the Commission issuing a cease and desist order, then that action is fully reviewable by the courts. Here, if the EEOC has its way, the only opportunity to review the EEOC’s conciliation efforts could only occur after a court had already ruled against the company. In that event, any appeal of the EEOC’s conciliation efforts would be moot.

Thus, arguably, the EEOC’s position effectively ignores Title VII’s requirement that the EEOC engage in conciliation efforts as a prerequisite to filing suit. The judicially created “reasonable investigation rule” allows the EEOC to only pursue in litigation allegations that are included in the reasonable cause determination and that were subject to conciliation.

In Mach Mining and St. Alexius, the courts were ultimately unmoved by the EEOC’s arguments.  While noting that the circuits were split on exactly what level of review was appropriate, the weight of circuit authority holds that the conciliation process is subject to at least some level of review. St. Alexius, 2012 WL 6590625, at *2 (“This court will not read Caterpillar as having implicitly disagreed with the consensus, adopted by all circuits to have addressed the issue, that the EEOC’s pre-suit conciliation efforts are subject to at least some level of judicial review; when the Seventh Circuit departs from such a consensus, it does so explicitly.”); Mach Mining, 2013 WL 319337, at *3 (“[D]istrict courts within the Seventh Circuit, like all other courts to have considered the issue, have concluded that the EEOC’s conciliation process is subject to at least some level of review.”).

Both courts also later denied the EEOC’s motion for reconsideration. However, while doing so, the court in Mach Mining granted the EEOC’s motion to certify the court’s order to the Seventh Circuit pursuant to section 1292(b). EEOC v. Mach Mining, LLC, No. 11-CV-879-JPG-PMF, 2013 WL 2177770 (S.D. Ill. May 20, 2013). The court certified two questions: (1) whether courts may review the EEOC’s informal efforts to secure a conciliation agreement acceptable to the EEOC before filing suit?; and (2) if courts may review the EEOC conciliation efforts, should the reviewing court apply a deferential or heightened scrutiny standard of review? Id. at *6. The court thought that these questions met all of the standards for immediate appeal.  In particular, it noted that the EEOC’s position has merit and that it “advances significant arguments that Caterpillar should be extended to prohibit judicial review of conciliation.”  Id.

Implications For Employers

These are important questions that could dramatically alter the balance of power for employers entering the conciliation process with the EEOC. Employers suffer specific and often dramatic reputational harm the instant the EEOC files suit. If the EEOC’s position wins the day, then it will be able to use this as a cudgel to force its will on employers. And employers will be left without any recourse to judicial oversight to determine whether the EEOC’s conciliation efforts were made in good faith. This case is one to watch. Stay tuned!