EEOC v. Federal Express, No. 06-16864 (9th Cir. Sept. 10, 2008)
There is now a split in the circuits about whether the EEOC can continue to pursue an administrative subpoena on a charge after the agency issues a right-to-sue letter to the employee, and the employee commences a private action. The Fifth Circuit said "no" in EEOC v. Hearst Corp., 103 F.3d 462 (5th Cir. 1997), but the Ninth Circuit -- applying a more deferential standard to the EEOC's enforcement authority -- disagrees.
EEOC v. Federal Express, No. 06-16864 (9th Cir. Sept. 10, 2008): "On November 27, 2004, Tyrone Merritt filed a charge of discrimination with the EEOC against FedEx on behalf of himself and similarly situated African American and Latino employees. Merritt alleged that FedEx's Basic Skills Test, a cognitive ability test which Merritt was required to pass to be eligible for a promotion, had a statistically significant adverse impact on African American and Latino employees." While Merritt requested and received a right-to-sue letter, "The EEOC, however, stated in that notice that it would continue to process Merritt's charge." Merritt then went on to join a pending class action challenging the same policy.
The EEOC thereafter subpoenaed FedEx's records "to identify basic information about the computer files that it maintains," as a precursor to a fuller investigation. "FedEx refused to comply, filing a Petition to Revoke the subpoena with the EEOC. The EEOC denied that petition. The EEOC then filed an action in district court to enforce its subpoena. FedEx argued that the EEOC is divested of investigatory authority once the party alleging the discriminatory practice initiates (or in this case joins) a private action."
The Ninth Circuit affirmed the district court. After turning back a mootness challenge, the court found post-charge enforcement grounded in the Title VII enforcement mechanism and the EEOC's administrative regulations. First, the panel found that authority to investigate did not terminate with the issuance of the right-to-sue letter, citing 29 C.F.R. § 1601.28(a)(3): "Issuance of a notice of right to sue shall terminate further proceeding of any charge that is not a Commissioner charge unless [an enumerated official of the Commision] determines at that time or at a later time that it would effectuate the purpose of title VII or the ADA to further process the charge."
Moreover, according to the EEOC's interpretation of its regulation, the agency may continue to pursue a charge that alleges systemic discrimination even after the rigth-to-sue issues (1 EEOC Compliance Manual § 6.4 (June 2006)). Granting deference to this regulation and the complaince manual, the panel finds that the EEOC could enforce the subpoena.
The panel noted the Fifth Circuit's Hearst Corp. decision but declined to follow it:
"As the Fifth Circuit saw it, 'once formal litigation is commenced,' the purposes of Title VII are no longer furthered by the EEOC's continued investigation of the charge and, for that reason, the investigatory authority ceases once the charging party files suit. Id. For a number of reasons, we cannot agree that the agency 'plainly lacks' the authority to issue an administrative subpoena after the charging party files suit."
It took issue with the Fifth Circuit's rigid sequencing of the process into distinct, consecutive phases of filing and notice of charge, investigation, conference and conciliation, and enforcement. "We also disagree with Hearst's notion that the charging party can, through his or her actions (that is, by filing suit), divest the EEOC of authority. As the Supreme Court recognized, the EEOC controls the charge regardless of what the charging party decides to do" (citing EEOC v. Waffle House, Inc., 534 U.S. 279, 291 (2002)). the panel further disagreed "with Hearst's conclusion that Title VII's purposes are no longer served by a continuing investigation after the charging party has filed suit. The EEOC's investigatory authority serves a greater purpose than just investigating a charge on behalf of an individual" (again, citing Waffle House).
Usually a split of authority concerning a federal agency's enforcement authority generates at least a petition for writ of cert in the U.S. Supreme Court. It would seem, at least where the investigation involves a national employer, that the EEOC can shift its enforcement efforts to a more friendly circuit to avoid a bad decision somewhere else. Obviously, the district office in California here did not acquiesce to the Fifth Circuit's decision. I do not know how widely this subpoena policy is perceived (among managment lawyers and their clients) to be a serious problem, but I doubt we've heard the last of this issue.