I am going to apologize in advance for this “Employee with the Dragon Tattoo Employment Law Blog” posting, because I suspect it will likely contain more than your daily suggested requirement of “legal-ese”. However, the issue of the Equal Employment Opportunity Commission’s (“EEOC”) duty to engage in conciliation before suing an employer seems to be developing into another ongoing showdown between the agency and the federal courts. It is also an important issue for employers.
What prompted this posting was an editorial in the Wall Street Journal entitled "Is the EEOC Above the Law?" It addressed the EEOC’s recently stated position that the EEOC’s conciliation efforts with employers, or lack thereof, were not subject to review by the courts. As detailed in the editorial, the EEOC subsequently received a severe slap-down by a U.S. District Judge in Texas. It also got me thinking about a case I had a number of years ago where the question of “good faith conciliation” became a significant issue.
For non-lawyers (and other well-adjusted folks) “conciliation” is just a fancy word for trying to reach a settlement before an EEOC Investigation and determination evolves into an actual lawsuit brought by the agency. It's an option many employers want to at least explore before having to engage in the costly defense of a discrimination suit brought by a government agency.
When the EEOC makes a “reasonable cause” determination in the course of investigating a charge of discrimination, it triggers a mandatory responsibility under 42 U.S.C. § 2000e-5(f)(1) to engage in good faith conciliation efforts before filing a lawsuit. This responsibility is not supposed to be a mere formality that is satisfied by merely making a few telephone calls and then checking a box on an agency form. Conciliation, after all, serves important public interests by, among other things, guaranteeing administrative due process to the accused, protecting the public from unwarranted litigation expense, and conserving scarce administrative and judicial resources. It is for these reasons that federal courts uniformly recognize that the responsibility of good faith conciliation is so important that honoring it is a condition precedent to the EEOC filing a lawsuit.
Good faith conciliation efforts depend on the honest and straightforward communication of basic factual information. Common sense dictates that good faith conciliation efforts do not include “hiding the ball” by failing to communicate, or worse, withholding, basic factual information, since such tactics obviously deprive the accused of both the opportunity to respond to claims against it and the ability to understand the basis of any damages sought in settlement of those claims. Rather, good faith conciliation efforts can only occur when the EEOC “lays the cards on the table” by disclosing factual information sufficient to afford the accused with a reasonable opportunity to respond to the claims and damages at issue before the EEOC commits itself to litigation.
To satisfy the statutory requirement of good faith conciliation, the EEOC must: (1) outline to the employer the reasonable cause for its belief that the law has been violated; (2) offer an opportunity for voluntary compliance; and (3) respond in a reasonable and flexible manner to the reasonable attitudes of the employer. If a court finds that the EEOC terminated conciliation prematurely or failed to conciliate in good faith, it may stay the action and compel the EEOC to conciliate or dismiss the lawsuit. 42 U.S.C. § 2000e-5(f)(1) (1976) (the court may “in its discretion stay further proceedings for not more than sixty days pending further efforts of the Commission to obtain voluntary compliance”); see also EEOC v. Agro Dist., LLC, 555 F.3d 462, 469 (5th Cir. 2009) (“Courts remain free to impose a stay for the EEOC to continue prematurely terminated negotiations, and where the EEOC fails to act in good faith, dismissal remains an appropriate sanction.”).
So what are some hallmarks of “bad faith” conciliation? Denying an employer’s reasonable request for a face-to-face meeting is a common and compelling factor in finding that the EEOC has failed to conciliate in good faith. See, e.g., EEOC v. Agro Dist., LLC, 555 F.3d 462, 469 (5th Cir. 2009); EEOC v. Pacific Maritime Assoc., 188 F.R.D. 379, 380-381 (D. Or. 1999).
Another tactic found by the courts to be unreasonable and in bad faith is if the EEOC takes an “all-or-nothing” approach to settlement. See, e.g., Agro, 555 F.3d at 468 (“The EEOC's take-it-or-leave-it demand for more than $150,000 represents the coercive, ‘all-or-nothing approach’ previously condemned by this court…”); EEOC v. Asplundh Tree Expert Co., 340 F.3d 1256, 1259 (11th Cir. 2003) (“As we have said before, such an ‘all or nothing’ approach on the part of a government agency, one of whose most essential functions is to attempt conciliation with the private party, will not do”).
Lastly, federal courts have held that the EEOC’s failure to explain its monetary demands is not reasonable and does not allow a defendant to properly respond. See, e.g., EEOC v. Golden Lender Fin. Group, No. 99 CIV. 8591 (JGK), 2000 WL 381426, at *5 (S.D. N.Y. Apr. 13, 2000) (holding that the EEOC did not meet its statutory obligation to conciliate when it ended conciliation after the charged party sought additional information regarding the requested damages of certain alleged victims); EEOC v. Pac. Mar. Ass’n, 188 F.R.D. 379, 381 (D. Or. 1999) (ordering a stay for further conciliation where “meaningful conciliation efforts were thwarted” during conciliation after “[c]ounsel for [defendant] reasonably requested that the EEOC investigator explain his calculation of the monetary settlement offered”).
In the case I was involved in, my co-counsel and I were faced with all three of the tactics described above. We were representing an out-of-state company in a sexual harassment claim brought by a number of employees, and the particular out-of-state EEOC office had filed suit after very perfunctory and unproductive conciliation. The client had responded promptly and correctly when it discovered the actions of a rogue supervisory employee, yet the EEOC was demanding an excessive "take-it-or-leave-it" monetary settlement, wildly disproportionate to actual damages in the case.
We responded by filing a motion with the court to stay litigation and compel good faith conciliation. In a well-reasoned opinion, the U.S. Magistrate assigned to the case ruled in our favor and ordered the EEOC back to the table. While the case was not resolved at the "re-conciliation", it laid the groundwork for a later settlement of the case for a reasonable amount.
I think the ability of the federal courts to review the EEOC’s conciliation efforts is a valuable protection for employers, and without it, the statutory requirement of conciliation would become meaningless. In fairness and full disclosure, my overwhelming experience with the EEOC in this regard, especially the local office here in Jackson, Mississippi, has been positive and the people professional and upfront in conciliation negotiations. However, as shown by the many court opinions on the subject, bad faith conciliation occurs and the judiciary is a vital check to such abuse.
Mark Fijman is a labor and employment attorney with Phelps Dunbar, LLP, which has offices in Louisiana, Mississippi, Florida, Texas, Alabama, North Carolina and London. To view his firm bio, click here. He can be reached at (601) 360-9716 and by e-mail at fijmanm@phelps.com
