Why it matters

Applying the "narrow" judicial review established by the U.S. Supreme Court in EEOC v. Mach Mining, a three-judge panel of the Second Circuit Court of Appeals reversed summary judgment in favor of an employer and remanded the case for additional proceedings. The Equal Employment Opportunity Commission (EEOC) filed suit against Sterling Jewelers after the agency received 19 charges of sex discrimination from female employees in nine states over the course of two years. Sterling moved to dismiss the pattern or practice allegations, arguing that the agency did not conduct a nationwide investigation to substantiate the charges. A federal district court agreed, but the panel reversed. Although Mach Mining did not directly address the obligation of the EEOC to investigate charges, the Second Circuit said similar boundaries of judicial review existed. Therefore, the sole question for the court was whether an investigation occurred and an evaluation of the sufficiency of the investigation was inappropriate, the panel said. Because the EEOC did conduct an investigation—documented by testimony from agency investigators and the investigative file—and the court had no desire to "second-guess" the agency's choices, the court said the suit could move forward.

Detailed discussion

Between 2005 and 2007, the EEOC received 19 individual charges of discrimination from women employed by Sterling Jewelers. The largest fine jewelry company in the United States, with operations nationwide, Sterling faced complaints from nine states: California, Colorado, Florida, Indiana, Massachusetts, Missouri, Nevada, New York, and Texas.

Initially, five investigators began looking into the charges, 16 of which alleged that the employer engaged in a continuing policy or pattern and practice of discrimination. Later, the EEOC transferred all of the charges to one investigator. The agency also requested copies of Sterling's companywide policies and protocols, personnel files, and pay and promotion histories.

Sterling and the charging parties entered mediation and invited the EEOC to participate. The agency agreed to suspend its investigation during the process and both sides provided it with all the documents relied upon by their experts. The charging parties hired a labor economist to conduct a statistical analysis of Sterling's pay and promotion practices, and he testified that the employer paid female employees less and promoted them at slower rates than similarly situated male employees.

The EEOC also agreed not to use any of the documents or information gleaned during the mediation in legal proceedings against Sterling. However, the parties subsequently signed an addendum to the confidentiality agreement permitting certain documents to be placed in the EEOC's investigative file if the mediation were unsuccessful, including the statistical analysis.

In 2007 the mediation failed, and the EEOC filed suit in 2008 alleging that Sterling engaged in a nationwide pattern or practice of sex-based pay and promotion discrimination in violation of Title VII. One of the agency's key pieces of evidence: the labor economist's statistical analysis.

During discovery, Sterling deposed two EEOC investigators, both of whom invoked the deliberative privilege. One testified that he didn't "really recall" much about the investigation.

Sterling then moved for summary judgment, arguing that the EEOC had not satisfied its statutory obligation to conduct a pre-suit investigation. Holding that no evidence existed that the agency investigated a nationwide class to support the pattern or practice allegations, a New York federal court judge granted the motion. The EEOC appealed.

On appeal, the Second Circuit Court of Appeals explained the EEOC must meet five requirements before it can bring an enforcement action under Title VII: (1) it must receive a formal charge of discrimination against the employer, (2) provide notice of the charge to the employer, (3) investigate the charge, (4) make and give notice of its determination that there was a reasonable cause to believe that a violation of Title VII occurred, and (5) make a good faith effort to conciliate the charges.

The statute does not define "investigation" or prescribe the steps that the EEOC must take in conducting an investigation, the three-judge panel noted, and the proper scope of judicial review is an issue of first impression in the circuit.

Looking for guidance, the court turned to the U.S. Supreme Court's April decision in EEOC v. Mach Mining, a case about the scope of judicial review of the agency's obligation to conciliate. The Court held that the review should be "narrow" and serve to "enforce[] the statute's requirements … that the EEOC afford the employer a chance to discuss and rectify a specified discriminatory practice—but goes no further." A sworn affidavit from the EEOC stating that it satisfied its conciliation efforts but failed to reach an agreement "will usually suffice to show that it has met the conciliation requirement," the justices added.

"Mach Mining did not address the EEOC's obligation to investigate, but we conclude that judicial review of an EEOC investigation is similarly limited: The sole question for judicial review is whether the EEOC conducted an investigation," the Second Circuit wrote. "[C]ourts may not review thesufficiency of an investigation—only whether an investigation occurred."

As with the sworn affidavit satisfying the court's review with regard to conciliation, the EEOC need not "describe in detail every step it took or the evidence it uncovered," the panel said. Instead, "an affidavit from the EEOC, stating that it performed its investigative obligations and outlining the steps taken to investigate the charges, will usually suffice."

This limited review respects the discretion given to the EEOC by Title VII, the Second Circuit said, and avoids turning the litigation into a two-step action where parties litigate the pre-suit issues before ever reaching the merits of the case.

Applying this standard to Sterling, the court said the deposition testimony from the investigators as well as the 2,600-page investigative file show that the EEOC took multiple steps to investigate the claims against Sterling, including obtaining Sterling's company policies, the personnel documents of the charging parties, interview notes, and the statistical analysis.

"[I]t cannot be said here that the EEOC failed to conduct any pre-suit investigation at all," the panel wrote. Although one of the investigators acknowledged that he didn't remember very much about the investigation, his testimony was not tantamount to an admission that he failed to conduct an investigation, particularly since he was deposed seven years after the conclusion of the review, the court said.

Sterling's "laundry list" of steps the EEOC failed to take during the investigation did not persuade the court. "For a court to second-guess the choices made by the EEOC in conducting an investigation 'is not to enforce the law Congress wrote, but to impose extra procedural requirements. Such judicial review extends too far,'" the court said.

The EEOC investigation was nationwide, the panel added, as the charges were filed in states across the country, from California to Texas to New York. While the court recognized some tension in the various provisions and changes to the parties' confidentiality agreement, it allowed the EEOC's use of the statistical analysis based on companywide data.

"[W]hat other purpose could the parties have for allowing the EEOC to include [the expert's] analysis in its investigative file if the EEOC could not review the analysis as part of its investigation?" the court asked. "Because the EEOC was permitted to rely on [the expert's] analysis in making its reasonable-cause determination, the EEOC properly referenced that analysis as part of the proof that its investigation was nationwide."

Reversing summary judgment in the employer's favor, the Second Circuit remanded the case for further proceedings.

To read the decision in EEOC v. Sterling Jewelers, click here.