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Seventh Circuit Holds Failure by EEOC to Conciliate Is Not a Good Legal Defense for Employers

January 2014

By: Nancy E. Joerg, Esq.

The Equal Employment Opportunity Commission (EEOC) recently achieved a newsworthy victory in the Seventh Circuit Court of Appeals [in EEOC v. Mach Mining, LLC, No 13-2456 (7 th Cir. Dec. 20, 2013]. Sadly for employers, the Seventh Circuit decided that the EEOC's failure to reasonably conciliate a claim with an employer does not grant the employer a "win."

The Seventh Circuit (which covers Illinois, Wisconsin, and Indiana) thereby created a deep split with six other federal circuits around the United States that have permitted employers to argue such a defense. The Seventh Circuit stands alone on this key issue and it is bad news for employers involved in a lawsuit with the EEOC. Below are some of the details.

EEOC FAILED TO CONCILIATE: In EEOC v. Mach Mining, the Seventh Circuit became the first federal circuit to take away an employer's ability to use the affirmative defense that the EEOC failed to conciliate (prior to bringing a lawsuit against the employer).

The Seventh Circuit Court of Appeals held that, based on the conciliation language in Title VII and Seventh Circuit precedent, the EEOC's flawed approach to conciliation during the administrative charge process is not judicially reviewable and not an affirmative defense to be used against the EEOC. The Seventh Circuit's very surprising holding is contrary to every other federal circuit across the U.S. that has evaluated this issue.

EEOC FILED LAWSUIT AGAINST MACH MINING: By way of background, in 2011, the EEOC filed a lawsuit against Mach Mining. The EEOC charged that Mach Mining had discriminated against women since 2006, specifically in relation to hiring practices.

In response, Mach Mining denied the allegations of discrimination by the EEOC and asserted the affirmative defense that the EEOC did not conciliate in good faith (prior to bringing suit against Mach Mining). The federal district court denied the EEOC's motion for summary judgment.

EEOC APPEALED TO THE SEVENTH CIRCUIT AND WON: The EEOC appealed to the Seventh Circuit and (to the disappointment of the employer) won. The Seventh Circuit held that the "language of the statute, the lack of a meaningful standard for courts to apply, and the overall statutory scheme convince us that an alleged failure to conciliate is not an affirmative defense to the merits of a discrimination suit." Convincing the three judge panel on the Seventh Circuit, the EEOC won a very significant legal victory.

The Seventh Circuit noted that conciliation efforts are left solely to the EEOC's discretion.

SEVENTH CIRCUIT FEELS THAT DISMISSAL BASED ON FAILURE TO CONCILIATE COULD EXCUSE EMPLOYER'S UNLAWFUL DISCRIMINATION: The Seventh Circuit noted that dismissal based on a procedural issue such as failure to conciliate is a dramatic remedy that could "excuse the employer's (assumed) unlawful discrimination" and is contrary to the intent of Title VII.

The Seventh Circuit seems to particularly rely on the concept that letting employers defend by showing inadequate conciliation efforts by the EEOC would unwisely allow employers to refute the purpose of the conciliation process (as a means to settle and instead attempt to use it to escape liability).

EEOC FEELS THIS IS A LANDMARK DECISION WHICH COMPELS PARTIES TO FOCUS ON WHETHER THERE WAS DISCRIMINATION: The EEOC has celebrated the Mach Mining ruling as a "landmark decision." The EEOC now takes the view that at least in the Seventh Circuit (i.e., Illinois, Indiana and Wisconsin), this decision will eliminate the failure-to-conciliate defense. All parties will now focus on the issue of whether or not there actually was employment discrimination. In other words, the EEOC will now take comfort that its conciliation efforts, at least in the Seventh Circuit, cannot be second-guessed.

Now we will see whether other Circuit Courts of Appeal around the United States will follow the reasoning of Mach Mining, or if the U.S. Supreme Court will ultimately resolve this severe split among the federal Courts of Appeal.

Employers in Illinois, Wisconsin and Indiana who are sued by the EEOC may not consider the EEOC's failure to conciliate (even in bad faith) as a potential defense.

Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com