Last Friday, the Second Circuit issued a decision which makes it easier for Title VII plaintiffs to circumvent the requirement that they exhaust their administrative remedies prior to filing suit in federal court. In Fowlkes v. Ironworkers Local 40, the Second Circuit held that exhaustion of administrative remedies is not a jurisdictional prerequisite to suit for claims under Title VII, but is rather just a “necessary condition” to suit. What this means is that where an employer could previously get an employee’s case automatically kicked out of federal court (in the Second Circuit, at least) for failure to exhaust, an employee can now raise equitable defenses in an attempt to excuse non-compliance with the exhaustion requirement.
Fowlkes brought a claim against his union, arguing that the union had discriminated against him because of his transgender status and retaliated against him for filing an earlier action against the union. While Fowlkes had initiated proceedings before the EEOC in his earlier action, he failed to do so prior to commencing this second action. The District Court dismissed Fowlkes’s complaint in this second action, reasoning that because Fowlkes had not filed his claim with the EEOC prior to initiating the action, Fowlkes had failed to exhaust his administrative remedies and therefore the District Court was without jurisdiction to hear his case.
The Second Circuit disagreed. Concluding that failure to exhaust was not a jurisdictional bar to suit under Title VII, the Second Circuit remanded the case to the District Court to consider whether any equitable defenses excused the failure to exhaust. The court stated that it was not clear whether any equitable defense applied, but briefly discussed the two equitable defenses Fowlkes had raised in his appellate brief. First, the court stated that when an agency has “taken a firm stand,” against a plaintiff’s position, the plaintiff’s failure to exhaust may be excused on the ground that exhaustion would be futile. Because, at the time Fowlkes had filed his complaint, the EEOC had consistently stated that Title VII does not cover claims for discrimination based on transgender status, the court acknowledged that Fowlkes may have a colorable argument that his failure to exhaust should be excused because of futility. Second, the court discussed that Fowlkes may be able to show that his present action was “reasonably related” to the prior action in which he had exhausted his administrative remedies with the EEOC. Thus, the court noted that if the District Court determined that the union discriminated against Fowlkes “in precisely the same manner” in the years leading up to the current action as was alleged in the earlier EEOC charge, Fowlkes’s failure to exhaust in this action may be excused.
The purpose of the exhaustion requirement in Title VII is to give the administrative agency the opportunity to investigate, mediate, and take remedial action (if necessary). The exhaustion requirement also gives employers an opportunity to conduct an early investigation of an employee’s claim, develop defenses, and potentially enter into an early settlement before the employee files suit in federal court. Although it is unlikely that the Second Circuit’s decision will have a significant impact on Title VII litigation, it does give employees an opening to file suit without first engaging in the administrative process. Additionally, it creates the possibility that litigation will be further complicated by employees’ attempts to raise equitable defenses when they fail to exhaust their administrative remedies.