This morning the U.S. Supreme Court heard oral arguments in Mach Mining v. EEOC.

Mach Mining v. EEOC may be one of the most important cases on EEOC litigation issues in years. The stakes are high for employers and workers alike (see pre-argument media reports here).

The precise issue the case presents is whether federal courts can review and enforce the EEOC’s statutory obligation to try to negotiate an end to an employer’s alleged unlawful employment practices before suing for a judicial remedy; in this context, it concerns the parameters of the Commission’s obligation to engage in good faith conciliation as required by Title VII.

We were there at the SCOTUS today (as Seyfarth filed an amicus brief on behalf of the employer – a copy is here), and witnessed the lively questioning by the Justices. Here is our analysis of the course of the arguments (a copy of the hearing transcript is here).

A Thumbnail Sketch Of The Key Facts Of The Case

Title VII requires that before filing suit, the EEOC to “endeavor to eliminate” alleged unlawful employment practices by “informal methods of conference, conciliation, and persuasion.” It may only file suit if it “has been unable to secure . . . a conciliation agreement acceptable to the Commission.”

In this case, Mach Mining and the Commission spent nearly two years litigating whether the EEOC’s alleged failure to conciliate in good faith was a sufficient ground for dismissing the case. Following discovery and disputes over the scope and significance of the EEOC’s investigation and conciliation efforts, the EEOC moved for summary judgment on the issue of whether the alleged failure to conciliate was an affirmative defense to its suit. The District Court denied the motion, but certified the question for interlocutory review. The U.S. Court of Appeals for the Seventh Circuit reversed. It rejected the company’s defense notwithstanding its recognition that its decision made it the first federal circuit to do so. Other federal circuits have adopted differing approaches to reviewing the sufficiency of conciliation efforts, with some circuits (the Second, Fifth, and Eleventh) undertaking a multi-part inquiry into the sufficiency of the process, and others (the Fourth, Sixth, and Tenth) requiring instead that the Commission’s efforts meet a minimal level of good faith. The SCOTUS accepted the case to determine this circuit split.

The Employer’s Position

Mach Mining’s briefing pointed to Title VII’s statutory language, its legislative history and statutory scheme, as well as public policy, to support its arguments that the EEOC’s obligation to conciliate should be subject to judicial review. In the defense’s view, the statutory language creates a mandatory condition precedent to litigation. Title VII’s legislative history reflects that originally, the EEOC’s only enforcement authority was the ability to engage in conciliation; cooperation and voluntary compliance remained the preferred means for achieving the goal of equal employment opportunity even after the statute was amended in 1972 to authorize the EEOC to bring suit. Mach Mining’s briefing further argued that pre-conditions to suit such as the conciliation requirement are presumptively enforceable absent clear congressional intent to the contrary, and that no such congressional intent is evident here.

Mach Mining also attacked the Seventh Circuit’s opinion below that Title VII’s confidentiality provision – which prohibits anything said or done during conciliation to be made public or used as evidence in a subsequent proceeding absent written consent – precludes review. In Mach Mining’s view, disputes over the sufficiency of the conciliation process can be resolved while preserving confidentiality (for example, by placing the relevant evidence under seal). Mach Mining cited to other contexts in which federal courts and other adjudicative bodies have reviewed conciliation obligations, including the National Labor Relations Act’s requirements that employers bargain in good faith.  Mach Mining also offered out a number of principles that, it suggested, could provide a basis for objective review of the sufficiency of the EEOC’s conciliation efforts.

The Government’s Position

The EEOC’s briefing asserted opposite conclusions from the same statutory language, history, and context cited by the defense. In the government’s view, the statute’s plain language does not specify any particular process for agency conciliation and leaves the adequacy of the conciliation process to the Commission’s sole discretion. Moreover, the EEOC contended that Title VII’s confidentiality provision precludes judicial review of what transpired during the conciliation negotiations. In the EEOC’s view, analogous statutory schemes also preclude review. For example, the EEOC’s informal conciliation process would not be reviewable under principles established under the Administrative Procedure Act. Moreover, it argued that judicial review of the adequacy of conciliation efforts would undermine effective enforcement efforts because, if employers believe that litigation is likely, they would have an incentive to treat every communication during conciliation as a potential exhibit in a dispute over the adequacy of conciliation. Judicial review also would chill full and frank settlement discussions. The EEOC posited that if the SCOTUS were to endorse judicial review of conciliation, employers would have incentives to raise inadequate conciliation argument defenses as a matter of course. Those arguments would burden the federal courts with mini-trials on this collateral issue, and would delay, and sometimes avoid, adjudications on the merits.

Today’s SCOTUS Oral Argument

Both sides encountered lively questioning from the Justices at this morning’s hearing.

If a questioning scorecard is indicative of the issues, it broke out this way by our rough tally:

Questions To Mach Mining – 31 in the opening argument and 7 questions in the rebuttal argument [questions by Justice - Ginsburg (10), Kagan (8), Scalia (6), Sotomayor (6), Kennedy (4), Breyer (3), and Roberts (1)]

Questions To The EEOC – 40 in the opposition argument [questions by Justice - Scalia (13), Roberts (12), Breyer (5), Kennedy (4), Sotomayor (3), Kagan (2), and Ginsburg (1)]

The most pressing questions fell on the Government and its position that the EEOC’s actions are not judicially reviewable. As Chief Justice Roberts asked, “Can the employer get judicial review if the EEOC lies about conducting conciliation”? When counsel for the EEOC assured the SCOTUS that such would never happen, the Chief Justice retorted, “well, that assumes the EEOC is always right…’ and that he “was very troubled by the EEOC’s position” in saying “just trust us….”  Justice Breyer also cast criticism on the Government’s position, remarking that “I thought it was hornbook law that agency conduct was judicially reviewable.” And Justice Scalia was even more direct, insofar as he asserted that the EEOC’s argument – that “you want to be exempt from judicial review” – “is extraordinary.”

The Justices also pressed both sides to explain the indicia or rudiments of the review a federal judge might conduct of the conciliation process. Justices Kagan, Ginsberg, and Sotomayer were particularly troubled by the confidentiality concerns attendant review of settlement negotiations. Justices Breyer and Kennedy also questioned how searching any review might be given the broad discretion afforded the EEOC under the statute.

Employers have criticized the Commission’s position in systemic litigation of conciliation by “take-it-or-leave-it” demands (i.e., “we are suing on behalf of a group of workers, and give us millions of dollars and we will distribute it as we deem appropriate…”). This issue also came up in the SCOTUS argument. In this context, Justice Roberts asked “how can the EEOC conduct conciliation without providing the names and damages” of allegedly injured workers? The Government argued that the Letter of Determination typically gives that information, and that any review of the conciliation process would prompt mini-trials that detract from the “main event” of the case – i.e., to try the issue of discrimination. With respect to that suggestion, Justice Roberts remarked that the EEOC’s position failed to take account of Title VII”s preference for conciliation before litigation, and settlement as a priority over litigation.

What’s Next

A future SCOTUS ruling should resolve a split in the lower federal courts about whether an employer can secure the dismissal of a suit on the basis that the EEOC failed to engage in good-faith conciliation before filing suit and what the parameters of that duty may look like in terms of the rudiments of the conciliation process.

Reading the tea leaves at the Supreme Court is fraught with hazard. The themes of the Justices’ questioning, however,  left no doubt but that most of the Justices seem to ascribe to the notion that the Commission’s conduct ought to be reviewable.