Following a similar decision from the U.S. District Court for the Southern District of New York this past September, Judge Richard J. Arcara of the U.S. District Court for the Western District of New York last week adopted the Report and Recommendation of Magistrate Judge Jeremiah J. McCarthy and granted summary judgment in favor of Sterling Jewelers, Inc. on the EEOC’s lawsuit alleging a nationwide pattern and practice of employment discrimination.

From May 2005 to November 2006, 19 female employees of Sterling filed charges with the EEOC alleging sex discrimination in pay and/or promotions.  These allegations arose from Sterling locations in New York, Florida, California, Massachusetts, Missouri, Nevada, Indiana, and Texas.  During the mediation process, the EEOC heavily relied upon a statistical analysis of Sterling’s pay and promotion data by a designated expert, Dr. Louis Lanier.  However, this analysis was subject to a “Mediation and Confidentiality Agreement.”

On September 23, 2008, the EEOC commenced a civil action pursuant to Title VII alleging that “[s]ince at least January 1, 2003, Sterling has engaged in unlawful employment practices throughout its stores nationwide” by discriminating against female employees in promotion and compensation.  Following discovery, Sterling moved for partial summary judgment, arguing that there was no evidence that the EEOC conducted a nationwide investigation of its employment practices before initiating the lawsuit, as required by Title VII.

Before pursuing a federal action in court, the EEOC must satisfy four conditions precedent: (i) a timely charge of discrimination; (ii) an actual investigation; (iii) a reasonable cause determination; and (iv) an attempt at conciliation.  Over the EEOC’s objection that the court may not examine the adequacy of its investigation, Magistrate Judge McCarthy found that “while courts will not review the sufficiency of the EEOC’s pre-suit investigation . . . courts will review whether an investigation occurred.”  Thus, it was appropriate for the court to determine whether in this action the EEOC conducted a nationwide investigation of Sterling’s employment practices prior to the lawsuit, with the EEOC bearing the burden to show that it satisfied all of the pre-suit prerequisites.

Given the EEOC’s admissions that there was “little investigative material in the files beyond the charges, Sterling’s responses, and other correspondence” and that its sole investigator “has very little memory of what actions he undertook in this investigation conducted over seven years ago,” the court found that the EEOC could not meet its burden to show that it conducted a nationwide investigation.  During the course of discovery, the EEOC repeatedly invoked the deliberative privilege with respect to Dr. Lanier’s statistical analysis and any deposition testimony related thereto.  Thus, when the EEOC attempted to rely upon this expert analysis in support of its “investigation,” the court ruled that the EEOC “can’t use a privilege as both a sword and a shield.”  Prior to summary judgment, the court had warned the EEOC that “if they’re saying they’re not going to disclose this information to [Sterling], then they’re also not going to be allowed to disclose it to the Court to argue that the scope was broader than what [Sterling] is saying it is.”

Thus, the court dismissed the EEOC’s claim of a nationwide pattern or practice of employment discrimination, writing that “[t]he EEOC has already had one opportunity to conduct a pre-suit investigation and to provide discovery as to the scope of that investigation.  Once is enough.”

Given the implication of these recent decisions, we believe the EEOC likely will appeal both of these matters to the Second Circuit Court of Appeals. We will continue to report on developments related to these issues here.