January 24, 2013 Articles

Bad-Faith Conciliation and Dilatory Tactics in Agency Settlement Negotiations

Courts are no longer willing to afford absolute deference to the government's position.

By Cynthia Ozger-Pascu – January 24, 2013

Although many attorneys and litigants view the Equal Employment Opportunity Commission (EEOC) as invincible, a series of recent cases in the district and appellate courts throughout the United States have scrutinized the EEOC’s conciliation efforts and, in many cases, ruled those efforts deficient. These decisions, along with Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012), reveal an unwillingness to continue the decades-long practice of courts affording deference to the government’s position. Instead, as discussed herein, the deference afforded to the commission is withdrawn where it fails to play by its own rules, especially in the conciliation process.

Requirements for the EEOC’s Conciliation Processes
The EEOC is required both by statute and regulations to attempt to conciliate its cases prior to filing suit. Conciliation is the pre-suit requirement whereby the EEOC attempts to negotiate with the employer. The conciliation requirement is ingrained in the statutory and regulatory scheme to induce the parties to attempt to settle before they incur litigation costs. The commission’s ultimate goal is to affect a change in the employer’s practices and policies, which provides a solid ground for the long-term eradication of employment-discrimination practices.

42 U.S.C. § 2000e-5(f)(1) requires the commission to “endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” The commission’s regulations similarly mandate the EEOC to “endeavor to eliminate unlawful employment practices by informal methods of conference, conciliation, and persuasion.” 29 C.F.R. § 1601.24 (b). The commission must engage in conciliation efforts for at least 30 days. 42 U.S.C. § 2000e-5(f)(1). Thus, the EEOC may file suit only if “the Commission has been unable to secure from the respondent a conciliation agreement.” Id.

Most importantly, the commission is required to conciliate in good faith. 42 U.S.C. § 2000e-5(f)(1). Courts have interpreted “good faith” to mean that the EEOC must at a minimum, “outline to the employer the reasonable cause for its belief that Title VII has been violated, offer an opportunity for voluntary compliance and respond in a reasonable and flexible manner to the reasonable attitudes of the employer.” E.E.O.C. v. Agro Distribution, LLC, 555 F.3d 462, 468 (5th Cir. 2009).

Agency Deference and the Significance of Christopher
Although not addressing the EEOC’s conciliation process, the Christopher decision provided updated insight into how the Supreme Court views the level of deference it must afford government agencies. In Christopher, the Court reviewed the issue of whether pharmaceutical detailers were exempt from overtime requirements of the Fair Labor Standards Act. The Court ruled that the Department of Labor’s (DOL) interpretation of its own regulations, as presented in its amicus brief to the Court, was not due deference. The Court reasoned that the DOL changed its position from its prior interpretation, and it did so retroactively and without the required opportunity for notice and comment. Further, the Court noted that deference is inappropriate when the agency's interpretation is “‘plainly erroneous or inconsistent with the regulation’” or when there is reason to suspect that the interpretation “does not reflect the agency’s fair and considered judgment on the matter.” 132 S. Ct. at 2159. This decision clearly forewarns government agencies, including the EEOC, that the Court will not blindly afford deference to an agency’s interpretation of regulations.

EEOC Conduct That Courts Have Ruled Constitutes Bad Faith
EEOC v. Occidental, 432 U.S. 355, (1977) is paramount for having ruled that the EEOC is bound by the same rules as private litigants. In Occidental, the Supreme Court established the benchmarks for challenges to the EEOC’s enforcement actions: procedural fair play and undue delay. The “court may restrict or even deny back pay relief” when the government fails to play by the same procedural rules required of attorneys in private practice or when a private plaintiff is prejudiced by the government’s unexcused conduct.

Consistent with Occidental, and more recently Christopher, courts have ruled against the commission where it attempted to circumvent procedural rules, delayed its investigation, or was inflexible in its negotiations with the employer. One court was even sensitive to the fact that the EEOC hurried the case into the courtroom to garner media attention without winning on the merits. EEOC v. Asplundh Tree Expert Co., 340 F.3d 1256, 1261 (11th Cir. 2003) (noting that the EEOC Miami office made inaccurate comments to the New York Times that the case involved a “noose”).

A few examples of the EEOC’s most egregious practices are:

  • adopting an inflexible attitude in dealing with the employer, especially refusing to meet face-to-face after the employer made such a request;
  • failure to disclose information to the employer that would allow it to put on a credible defense;
  • failure to investigate the charge or attempting to do so at the discovery stage;
  • attempting to add charging parties after the close of the deadline to identify charging parties;
  • attempting to widen the scope of the class or the scope of litigation from investigation of one location to a nationwide lawsuit;
  • filing the claim without adequate facts; or
  • undue delay.

The cases considered below illustrate how courts have addressed the EEOC’s lack of good faith in conciliation and delay, respectively.

Recent Decisions
In EEOC v. CRST Van Expedited, Inc., 07-CV-95-LRR, 2009 WL 2524402 (N.D. Iowa Aug. 13, 2009), the EEOC alleged that the employer engaged in a pattern or practice of sexual harassment. In reviewing the EEOC’s conciliation efforts, the court found that the EEOC failed to provide notice to the employer as to the size of the class of aggrieved persons and to investigate the allegations of 67 class members until after it had filed the complaint. The court thus admonished the EEOC:

The government, like its citizens, must follow the law. The EEOC must respect Title VII's administrative scheme and follow the “clearly delineated paths to justice” that Congress has created. “Seeking shortcuts to these paths does nothing more than undermine their valuable function and erode the meaning of the rights they are designed to protect. . . . It is no less good morals and good law that the Government should turn square corners in dealing with the people than that the people should turn square corners in dealing with their government.”

In May 2012, the Eighth Circuit upheld the district court’s dismissal of the case. Remarkably, the EEOC announced that it would not appeal the case to the Supreme Court.

Similarly, in EEOC v. Evans Fruit Co., Inc., CV-10-3033-LRS, 2012 WL 1899194 (E.D. Wash. May 24, 2012), the EEOC alleged sexual harassment by one of the employer’s foremen against a “class of similarly situated female employees.” The EEOC demanded $1.9 million in damages, however, without even providing the employer with critical information, including who the female class members were or which employees had allegedly sexually harassed them. Upon the Court’s intervention, the EEOC identified the crew members who allegedly harassed the class members but only by first name, thereby preventing the employer from identifying them and from conducting its own investigation of the case. Six days after identifying the harassing parties by first name only, the EEOC declared the conciliation process unsuccessful.

Reviewing this process, the court held that the EEOC had not conciliated its claims with the employer in good faith because it failed to provide the employer with sufficient evidence regarding the case. Good-faith conciliation requires the EEOC to be more “forthcoming” regarding the type of damages sought, justification for the amount of damages, the potential size of the class, the temporal scope of the allegations, and the number of individuals alleged to have been involved in the harassment. The court granted the employer partial summary judgment as to the EEOC’s lack of good-faith conciliation effort and stayed the case so that the parties could participate in court-directed mediation.

Additionally, in EEOC v. La Rana Hawaii, LLC, CIV. 11-00799 LEK, 2012 WL 3638512 (D. Haw. Aug. 22, 2012), the EEOC alleged sexual harassment and retaliation against a class of female employees. The court similarly ruled that the EEOC had failed to conciliate in good faith because of its “take-it-or-leave-it” offer and its failure to provide enough information to the employer to allow it to understand or evaluate the claims. The court stayed the case pending good-faith conciliation efforts.

Laches and Prejudice to the Employer
By contrast, in E.E.O.C. v. Propak Logistics, Inc., 1:09CV311, 2012 WL 3238262 (W.D.N.C. Aug. 7, 2012), the court dismissed the EEOC’s case under the doctrine of laches because it took the EEOC seven years to investigate the case. The EEOC had alleged that Propak refused to hire non-Hispanic persons for non-management positions. EEOC’s downfall came from its lengthy “periods of inactivity” in addition to its failure to interview the relevant parties. For instance, between August 2005 and May 2006 and again between September and December 2006, the EEOC “did nothing” in connection with the investigation. Also, after the first interview that the EEOC conducted with the employer's managers, EEOC failed to interview them again until over four and a half years after the charge was filed. Most remarkably, the EEOC designated the investigation as a class action of pattern or practice one and a half years after the charge was filed but failed to provide any notification of that designation to the employer.

The court dismissed the case with prejudice because of the delay between the filing of the charge and the initiation of the litigation and the prejudice this caused Propak. The court found that Propak had been prejudiced by the EEOC’s delay because since the charge had been filed, Propak had closed down its facility in North Carolina and also, as part of its usual practice, it had destroyed applicant information. The court explained that “even ‘fairly consistent’ activity by the EEOC during a lengthy investigation is not sufficient to avoid laches ‘if the nature and quality of the EEOC’s investigative activity are such as to not justify the delay.’”

Lessons for Employers
As the cases discussed above indicate, courts are no longer willing to afford absolute deference to the government’s position. Regarding the EEOC’s conciliation process, these decisions signal that the government must make reasonable efforts to conciliate in good faith with employers, by providing notice of the underlying challenged practice and responding in a “reasonable and flexible manner” to the employer. Also, the government may not protract the investigative process for years.

In dealing with government agencies, employers are advised to:

  • Keep open the lines of communications and not walk away from the negotiating table even when the agency’s demands seem extreme. That way, a reviewing court cannot reasonably conclude that the employer was unwilling to negotiate settlement;
  • Request face-to-face meetings with the agency and agency counsel and keep track of the agency’s response to such requests;
  • Keep up-to-date records of interactions with the agency and agency counsel—keep voice mail messages, letters, and notes of in-person communications so that in case the agency declares conciliation unsuccessful, the employer can show it engaged in settlement efforts in good faith;
  • Request more information if the facts the agency supplied about its case are insufficient to allow the employer to put on a credible defense; and
  • Keep track of every change the company undergoes, from the employees, managers, and executives who leave or are hired, to the ways in which various systems change. This will help the employer affirm the myriad ways in which the agency’s potential delay in bringing suit will prejudice the company.

Courts are likely to continue in this vein, holding the government to the same standard outlined in Occidental and demanded of private litigants. Therefore, employers must be prepared to challenge all aspects of the government’s enforcement actions, from the first interaction to the filing of suit.


Keywords: litigation, employment and labor relations law, EEOC, Christopher v. SmithKline, doctrine of laches


Cynthia Ozger-Pascu is an associate with Fortney and Scott, LLC in Washington, D.C.


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