Conciliation in the Bewitching Season
September ushers in the most bewitching season at the EEOC, when EEOC Field personnel scurry to settle long-dormant charges, issue cause determinations, and breeze through the “conciliation” process to file lawsuits before the federal fiscal year ends on September 30. See Figure 1. For EEOC Field personnel, equal employment opportunity (EEO) enforcement is a “numbers game,” and September marks a final push to satisfy predetermined “productivity” quotas—e.g., dollars collected from employers, number of cause determinations, inventory reduction, and prosecutions filed. Fellow EEOC watchdogs have long noted, and bemoaned, the EEOC’s “red zone rush.” This annual administrative enforcement blitz deeply impacts employers, but takes place under a carefully guarded iron veil of “confidentiality” and “government deliberative process” privilege.
Figure 1, EEOC Prosecutions Filed in 2013, by month. Compiled/created by Seyfarth Shaw.
Fortunately, the EEOC’s conciliation conduct has recently come under fire just in time for this year’s September “red zone rush.” In May, 2014, a congressional appropriations committee chastised the EEOC for pursuing litigation absent good faith conciliation efforts, and demanded a report by August 9, 2014 that the EEOC has not publicly disclosed. Likewise, the U.S. Supreme Court (SCOTUS) granted certiorari in EEOC v. Mach Mining on the questions whether, and to what extent, courts can enforce the EEOC’s statutory duty to engage in good faith conciliation efforts before initiating litigation. On September 4, 2014, Mach Mining’s attorneys filed their opening brief, affording us a rare glimpse under the EEOC’s iron curtain of confidentiality and deliberative process privilege. The conciliation process described in Mach Mining’s brief mirrors the experiences of defense attorneys who regularly battle the EEOC, and underscores the concerns we raised in Under the Surface of EEOC Enforcement: instead of a meaningful opportunity to discuss compliance issues and “make whole” relief, the EEOC’s conciliation process has degenerated into a perfunctory street mugging in which EEOC field personnel bluff, bluster and bully to maximize cost-of-defense payouts . . . especially at this bewitching and spooky time of year. After all, for the past several years, MONEY has become the metric-that-matters at the EEOC—to wit, the measurement the EEOC characterizes as evidence of “enforcing the law more effectively.”
The Mach Mining Conciliation Experience: Bluffing and Bullying
In early 2008, Mach Mining became the respondent of a single EEOC charge alleging that it failed to hire the Charging Party because of her gender. Thereafter, the EEOC issued a Determination that Mach Mining had discriminated against the Charging Party, and a class of female applicants, because of their gender, in violation of Title VII; otherwise, the determination contained no information about the factual basis allegedly supporting this finding, nor any information whatsoever about the size, character, and temporal scope of this class of female applicants. The EEOC then made a verbal conciliation demand . . . And then, the EEOC lowered its iron curtain of confidentiality around the conciliation process, even threatening to seek sanctions against defense counsel personally if they discussed the conciliation process in the public record. p. 5, fn 3, Mach Mining SCOTUS Brief, here. Just a few days after issuing a conciliation failure notice, the EEOC initiated a civil prosecution and a press release with inflammatory quotes from EEOC attorneys, “Mach Mining needs to realize that this is 2011, not 1911.”
In my Biglaw gigs, I naturally became the repository of “EEOC Parade of Horrors” stories from colleagues across the country, likely because of my own EEOC service (1997-2000), experience, and practice expertise. Thus, experience, observation, and war-story saturation allow me to fill in some blanks about the Mach Mining conciliation:
Mach Mining’s attorneys likely requested the EEOC to furnish some information about the character, size, and temporal scope of the putative class, the identity of class members, and the basis of the determination. And of course, these are absolutely reasonable questions. On whose behalf, or on behalf of how many class members, is the EEOC seeking relief? What if the employer has defenses available regarding specifically identified class members? Did the EEOC rely on the employee’s attorney to “estimate” damages or did the EEOC conduct any independent investigation into the alleged damages supporting its demand? If the EEOC is really concerned about eliminating discriminatory practices, why will not the investigators and Trial Attorneys actually discuss in conciliation the specific practices that were, allegedly, discriminatory?
Still even bigger questions remain: what if EEOC personnel are bluffing about the actual scope of the EEOC’s investigation and putative class to maximize the conciliation payout? After all, as we’ve previously and publicly pointed out, what the EEOC counts as an “investigation” and as evidence to support a reasonable cause determination is often alarmingly thin. And, as our EEOC mediation survey revealed, EEOC personnel routinely brandish EEOC enforcement weaponry (e.g., cause determinations, systemic investigations, prosecutions) to boost cost-of-defense payouts, even though they certainly know how unlikely those enforcement outcomes are under the EEOC’s own Priority Charge Handling Procedures. Learn more here. Further, the EEOC’s policy of suppressing losses, sanctions, censures, and other unflattering (but real) information about its enforcement programs has only further squandered employers’ trust.
After Mach Mining’s attorneys likely posed these reasonable questions, I’m betting that the EEOC steadfastly refused to provide any information, maybe even blaming the EEOC’s confidentiality provisions for its intractability. At that point, the conciliation process probably broke down completely, resulting in the prosecution and press release filed just days later. We have previously challenged the EEOC’s policy of filing brand-bashing, snide press releases based on allegations in the Complaint as amounting to punishment before proof, given the very real possibility that the EEOC cannot adduce evidence in litigation to support those allegations, here. Mach Mining surely suffered brand damage, still while literally guessing about the basis of the EEOC’s determination and the number of women allegedly affected by its allegedly unlawful practice.
Congress surely envisioned more substance in the EEOC’s conciliation process. After all, the EEOC’s mandate requires it “eliminate unlawful employment practices through informal efforts of conference, conciliation and persuasion.” 42 U.S.C. §2000e-5(a). Now however, litigation (or more pointedly, the THREAT of litigation) has become the EEOC’s most powerful weapon to ratchet up the one measurement that it counts as successful performance of its mandate: employer settlement payouts. Threats of litigation begin in the mediation process, loom over charge “processing,” and take center stage in conciliation. During this bewitching time of year, EEOC personnel deliberately truncate conciliation with “take-it-or-leave-it” and/or unreasonable demands, hoping conciliation will fail so that they can file (and get credit for) the lawsuit by the end of the fiscal year. In fact, the EEOC credits the “close collaboration” between its Enforcement and Legal units for the record amount of employer settlement monies “obtained” in the conciliation process:
Of particular note was the increased number of charges resolved through successful conciliations, with 1,591 in FY 2012 compared with 1,351 in FY 2011, an 18 percent increase. The increase in conciliations reflects an emphasis on even closer consultation between the Commission’s investigators and attorneys.
FY2012 EEOC PAR, “Enforcing the Law More Effectively,” here. Indeed, last year, conciliation brought in far more employer booty than litigation for one simple reason: the threat of EEOC litigation generates more dollars than actual litigation in court, where the EEOC must actually PROVE its allegations and over-broad legal theories. See Figure 2.
Thus, especially during this bewitching time of year, EEOC conciliations resemble Mafioso shakedowns (i.e., “accede unquestioningly to our demands or we’ll sue AND punish you with bad press”) more than any meaningful effort to secure voluntary compliance and make whole relief. Instead of using conciliation to FIX whatever problem the EEOC allegedly detected, the EEOC enflames the FIGHT through litigation. And, unfortunately for stakeholders and employers alike, a recently released study by law professors at University of Michigan and Washington University in St. Louis raises seriously doubts about the efficacy of the EEOC’s litigation program toward eliminating discrimination and promoting EEO.
Conciliations: Confidentiality of Convenience
When Mach Mining challenged the EEOC’s compliance with its statutory requirement to engage in good faith conciliation efforts, the EEOC simply responded, “conciliation is not subject to judicial review.” The EEOC also relied heavily on the confidentiality provisions built into Title VII, which prohibit disclosure of any charge information unless and until a [public] lawsuit is filed in court. Indeed, Sections 706(b) and 709(e) of Title VII not only prohibit disclosure of any information about a charge unless/until a lawsuit is filed, these provisions also impose CRIMINAL PENALTIES on “any person” who discloses EEOC charge information; likewise, the EEOC’s own regulations echo this strict confidentiality requirement. 29 C.F.R. §1601.22, 29 C.F.R. §1601.26; see also 42 U.S.C. §§2000e-5(a), 8(e). Presumably, EEOC Trial Attorneys invoked these strict confidentiality standards when threatening Mach Mining’s attorneys with sanctions if they publicly disclosed what actually happened in their EEOC conciliation.
Paradoxically, however, the EEOC issues press releases announcing “successful” conciliations. During the pendency of the Mach Mining dispute, just two weeks earlier, the EEOC issued press release announcing the CONCILIATION of a single sexual harassment charge against a small employer, with this headline, “Sal’s Mexican Restaurant Settles EEOC Sexual Harassment Charge Involving a Teenager.” Sal’s denied all liability, but reportedly agreed to pay $15K to resolve these allegations in an ostensibly confidential conciliation. To seasoned defense attorneys, $15K represents a true nuisance settlement. Nevertheless, according to the EEOC’s press release, the EEOC had determined that a manager subjected a teenager to sexual propositions, advances, and groping, allegations that would naturally have an impact on Sal’s brand, goodwill, reputation and by extension, business.
No doubt, the EEOC’s position regarding the confidentiality of the conciliation process is difficult to reconcile. The EEOC can apparently ignore Title VII’s confidentiality provisions and its own regulations to publicize charge allegations and the substance of the conciliation agreement involving a small employer like Sal’s Mexican Restaurant (i.e., “brand bashing”). When called upon to explain the basis of its determination and astronomical conciliation demands, however, the EEOC takes cover behind these same confidentiality provisions. This obvious contradiction highlights just how the Obama EEOC has “interpretively” and selectively enforced its own statutes and regulations, acting more like schoolyard bullies than a neutral law enforcement agency worthy of employers’ trust.
The Stakes for the EEOC and Employers
Whenever employers attempt to peek behind the EEOC’s iron curtain of confidentiality and government deliberative process privilege, the EEOC becomes predictably prickly. But why? Perhaps the EEOC does not want employers and stakeholders to see what lies behind the curtain.
In EEOC v. Picture People, for example, we attempted to ascertain what evidence (if any) the EEOC possessed to determine that a profoundly deaf/mute woman was “qualified” to perform a retail sales position requiring “strong verbal communication skills.” The EEOC strenuously resisted our 30(b)(6) deposition notice, making nearly identical arguments to those in Mach Mining: (1) EEOC investigations are not subject to judicial review; and (2) statutory confidentiality prohibits disclosure. Ultimately, the court rewarded our tenacity by requiring the EEOC first to answer “contention interrogatories” regarding evidence in its possession that the Charging Party was “qualified” when the EEOC issued its determination, filed its Complaint, and disseminated its brand-bashing press release. The EEOC produced this document, which should embarrass the EEOC and alarm employers. But the point is, once we peeked behind the EEOC’s iron veil, we understood why the EEOC so strenuously resisted disclosure: it was attempting to conceal a shoddy investigation, a highly questionable determination, and a blatant disregard for the employer prerogatives deliberately built into the Americans with Disabilities Act (ADA).
Similar considerations could explain the EEOC’s position in Mach Mining. EEOC Trial Attorneys, after all, have come out swinging. In Mach Mining, EEOC Trial Attorneys threatened defense counsel with sanctions if he disclosed what actually happened in conciliation, supra. Another even claimed that Mach Mining’s challenge to its statutory conciliation requirement is just an excuse for defense attorneys to rack up billable hours, here. Of course, this allegation makes little sense: if Mach Mining’s defense attorneys were fundamentally focused on racking up billable hours, they would not strive to resolve the allegations in conciliation; obviously, from a “billable-hours perspective,” lengthy EEOC prosecutions, even frivolous ones, can cost employers several hundred thousands of dollars in non-recoverable defense fees.
For the EEOC, the Mach Mining matter is about avoiding judicial and legislative scrutiny–i.e., “it’s discrimination if we say so.” For employers, however, Mach Mining is about leaving open an avenue of redress (i.e., the courts) to challenge abusive administrative enforcement of the law. After all, more often than not, disputes about the adequacy of the EEOC’s conciliation efforts can be efficiently and effectively resolved at the pleading phase of litigation under Rule 12 of the Federal Rules of Civil Procedure. Upon a 12(b) Motion to Dismiss for, inter alia, lack of subject matter jurisdiction arising out of the EEOC’s failure to fulfill its administrative conditions precedent, a federal judge could simply stay the proceedings and REMAND for further (and perhaps supervised) conciliation efforts. If the EEOC is forced to conciliate in good faith (e.g., by substantiating its monetary demands, providing pertinent risk assessment information, participating in more than one round of negotiations), most employers will elect to settle, if for no other reason than to avoid the crushing expense of an EEOC prosecution. Under most circumstances, therefore, challenges to the EEOC’s fulfillment of its conditions precedent will ultimately spare limited judicial resources, while furthering the EEOC’s mandate to enforce Title VII through informal methods of conciliation, conference and persuasion.
As employers and small business owners, any governmental effort to resist transparency and scrutiny cannot go unchallenged, even if we agree with the EEOC’s underlying mission. In fact, the EEOC’s strenuous efforts to resist judicial review of its compliance with Title VII’s minimal procedural safeguards ought to INVITE SCRUTINY. As a federal law enforcement agency entrusted with investigative powers, public war-chests, and prosecutorial discretion, the EEOC owes concomitant duties of fairness, balance, and regard for the concerns of employers. Under this iron veil of confidentiality and government deliberative process privilege lurk some extremely disturbing and unbalanced civil enforcement practices. We can only hope that SCOTUS’ Mach Mining decision will stand for governmental transparency and accountability, and leave open an avenue to challenge EEOC bullying, especially at this most bewitching time of year.
Merrily S. Archer, Esq., M.S.W., September 10, 2014