United States: Mach Mining Continuing To Make Its Mark: Second Circuit Holds That Review Of EEOC Pre-Suit Investigation Extremely Limited

Last Updated: October 26 2015
Article by Michael S. Arnold and Robert Sheridan

An appeals court just made it harder for employers to challenge lawsuits against them by the Equal Employment Opportunity Commission on the basis that the EEOC failed to properly investigate the alleged wrongdoing before suing.

The EEOC is Required to Investigate a Charge of Discrimination Before Suing an Employer

Before the EEOC can sue an employer on behalf of an individual or class for unlawful employment discrimination, it must discharge five particular administrative obligations: (1) receive a formal charge of discrimination; (2) provide notice of the charge to the employer; (3) investigate the charge; (4) make a determination as to whether or not there is reasonable cause to believe a violation occurred; and (5) make a good-faith effort to conciliate the charge. In EEOC v. Sterling Jewelers, Inc. – the third requirement – the EEOC's duty to investigate – was at issue.

The Lower Court Tosses EEOC's Lawsuit Because it Did Not Investigate Sufficiently Before Suing

In Sterling Jewelers, the EEOC sued a nationwide chain of jewelry stores alleging discriminatory pay and promotion practices. During the lawsuit, EEOC investigators testified that they could not "recall much about" their investigation, but refused to discuss any specifics, except to say that (i) several investigators looked into the charges, (ii) the charges were eventually consolidated for investigation to one investigator who reviewed all of the investigative files (which comprised over 2,600 pages), and (iii) the charges were investigated as class charges. Based on the EEOC's response – or non-response – the company asked the lower court to throw out the case arguing that the EEOC did not adequately investigate the charge before suing. The lower court obliged them, but the Second Circuit Court of Appeals reversed on appeal.

The Second Circuit Reverses Saying EEOC Just Needed to Show That it Conducted an Investigation; Not a Good One

The Second Circuit said that judicial review was limited solely to whether the EEOC undertook any pre-suit investigation, not the adequacy of the investigation. In reaching its decision, the Court noted that the Supreme Court had recently examined the appropriate scope of judicial review of the EEOC's pre-suit activities in Mach Mining (which we wrote about here). While noting that Mach Mining assessed the pre-suit conciliation requirement only, the Second Circuit considered the Supreme Court's pronouncements instructive: review should be narrow and limited to whether the EEOC discharged its administrative duties, not how well it discharged them.

To show that an investigation occurred, the Second Circuit said, the EEOC need only "show that it took steps to determine whether there was reasonable cause to believe that the allegations in the charge are true." It making this showing, the EEOC may offer an affidavit stating "that it performed its investigative obligations and outlining the steps taken to investigate the charge. While the Court politely criticized the EEOC for failing to submit an affidavit here, it still concluded that the EEOC's deposition testimony about the investigation combined with the existence of the voluminous investigative file showed that it had satisfied its investigation obligation.

Key Takeaways

The Sterling Jewelers decision, like the Mach Mining decision, makes it harder for employers to escape an employment discrimination lawsuit on technical grounds. Even if the EEOC barely investigates or does so poorly, it may be enough to move forward with a lawsuit against the employer – which, one can argue, sets the bar too low and in effect allows the EEOC to sue without first truly getting to the bottom of things.

At the same time, at least a modicum of good news did emanate from the decision: scope of the investigation does matter. The EEOC cannot just say we performed an investigation and move on; it has to go one step further and show that the scope of its investigation covered the facts the EEOC alleges in the complaint against the employer.

But let's say the EEOC doesn't satisfy its investigation obligation here — what is the result? Does it stay the case like it would in Mach Mining to provide the EEOC with an opportunity to cure or does the case actually go away? It's a valid question, but not one we think will ever really arise (at least regularly) since we would expect the EEOC to study the decision closely and tailor its investigative procedures and resulting affidavits to satisfy the scoping requirement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael S. Arnold
Robert Sheridan
 
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