Why it matters

The ramifications of the U.S. Supreme Court's decision in Mach Mining v. EEOC are now being felt in the federal district courts, with a judge tossing out an Equal Employment Opportunity Commission (EEOC) suit last week for notice and conciliation failures. Last term, the justices ruled that courts may consider the sufficiency of the EEOC's conciliation efforts prior to bringing suit against an employer. The agency sued CollegeAmerica Denver Inc. last year, alleging that the employer violated the Age Discrimination in Employment Act (ADEA). Prior to Mach Mining, the court dismissed the lawsuit based on the EEOC's failure to satisfy the pre-suit requirements of notice and conciliation. After the Supreme Court issued its decision, the agency moved for reconsideration—and the court affirmed dismissal. Even under the "limited review" provided for in Mach Mining, the agency's efforts were insufficient, the court said, with no evidence from the EEOC that the employer was notified that its separation agreements were at issue or that they were part of the parties' discussions to give CollegeAmerica the chance to voluntarily revise them. While the justices in Mach Mining suggested that a stay of the proceedings was the typical route when a court found a failure to conciliate, the judge found dismissal the appropriate remedy.

Detailed discussion

In April, the U.S. Supreme Court ruled that courts may consider the sufficiency of the Equal Employment Opportunity Commission's (EEOC) conciliation efforts prior to bringing suit against an employer. The unanimous Court acknowledged that the federal agency has discretion on "how to conduct conciliation efforts and when to end them," but the justices in Mach Mining v. EEOC said courts could still review the process.

Although the Court rejected the agency's position that its conciliation efforts were not subject to judicial oversight, the justices emphasized that such review was "narrow" in order to respect the EEOC's discretion in enforcing the statute as well as the confidentiality imbued in the conciliation process, the Court said.

In what was believed to be the first decision interpreting Mach Mining, a federal court judge in Ohio sided with an employer and stayed a lawsuit because the EEOC failed in its effort to conciliate prior to filing suit. The employer argued that the agency presented it with a "take it or leave it" demand and then said conciliation had failed, without engaging in actual negotiations. Given the conflicting facts—including that the agency never presented the employer with a dollar amount for a settlement, despite promising to—the court stayed the case and ordered the EEOC to engage in the conciliation process.

Taking a different approach, a federal court judge in Colorado affirmed dismissal of an EEOC complaint after finding the agency failed in its conciliation efforts.

Debbi Potts filed a charge of discrimination against CollegeAmerica Denver with the agency, alleging that the employer violated the Age Discrimination in Employment Act (ADEA). The EEOC filed suit in 2014, asserting that Separation Agreements provided to the agency in the course of its investigation of Potts' charge denied other employees their rights under the statute.

In December 2014, U.S. District Court Judge Lewis T. Babcock dismissed the suit on CollegeAmerica's motion. He agreed with the employer that the EEOC failed to satisfy the ADEA requirements of notice and conciliation. Three months after the Mach Mining decision was issued—a total of eight months after the court initially dismissed the lawsuit—the EEOC filed a motion for reconsideration based on the U.S. Supreme Court opinion.

Judge Babcock first addressed the timeliness of the EEOC's motion—or the lack thereof. "Not only is the EEOC's wholly unexplained delay in filing its motion to reconsider unreasonable in and of itself, but it has also placed CollegeAmerica in the untenable position of potentially having to start the discovery process which is nearing completion all over again," he wrote, denying the agency's motion as untimely.

However, he continued with his analysis.

In its Letter of Determination to CollegeAmerica, the EEOC specifically referenced Potts as the charging party and her three charges of discrimination against the employer, advising it that the agency had determined that CollegeAmerica discriminated against Potts in violation of the ADEA. "Although the Letter of Determination goes on to request that CollegeAmerica, among other things, revise its form severance agreement to comply with the ADEA and make it clear that employees retain the right to file charges and cooperate with the EEOC, it does not reference the Separation Agreements in the section stating its findings of unlawful practices by CollegeAmerica," the court said.

CollegeAmerica responded to the letter with its own missive that explained the agreement Potts signed was different than its form Separation Agreements. "Thus, not only did the Letter of Determination fail, on its face, to provide CollegeAmerica with clear notice that the Separation Agreements were part of the EEOC's investigation, but it is apparent from CollegeAmerica's subsequent communications that it did not understand that to be the case," the judge added.

Even after receiving the employer's correspondence, no evidence existed that the agency revised or supplemented the Letter of Determination or otherwise notified CollegeAmerica that the scope of its investigation had expanded beyond Potts' charges of discrimination to include the Separation Agreements, the court said.

"[T]he EEOC's conciliation efforts with respect to the Separation Agreements remain inadequate under the standards set forth in Mach Mining," Judge Babcock wrote. "Specifically … the EEOC failed to provide adequate notice to CollegeAmerica that the Separation Agreements were part of the EEOC investigation and findings of unlawful practices by CollegeAmerica. There is likewise no evidence that the Separation Agreements were part of the parties' discussions so as to give CollegeAmerica an opportunity to voluntarily revise them."

The court recognized that Mach Mining included a dictum stating that when a court finds in favor of an employer on the issue of whether the requisite conciliation occurred, the appropriate remedy is to order the EEOC to undertake the mandated efforts to obtain voluntary compliance, but reached a different result.

"This course of action, however, is not mandated under the circumstances of this case," the judge said, as he concluded that the EEOC failed to satisfy both the notice and conciliation requirements of the ADEA, not simply the Title VII requirement of conciliation considered in Mach Mining.

"A stay pending further conciliation efforts is also ill-suited to this case because, as a result of the EEOC's protracted delay in filing the current motion, the parties have proceeded with discovery relating to the remaining claim of retaliation against Potts and set deadlines according," the court said. "Allowing the EEOC to pursue its Second Claim for Relief after fulfilling the requirements of notice and conciliation would require additional discovery and could significantly delay resolution of the pending retaliation claim. I therefore conclude that dismissal of the EEOC's Second Claim for Relief is the appropriate remedy for the EEOC's failure to satisfy the ADEA's requirements of notice and conciliation with respect to this claim."

To read the opinion in EEOC v. CollegeAmerica Denver, click here.