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Seventh Circuit Rejects Employer’s Ability to Assert “Failure to Conciliate” Defense Against EEOC

Employers sued by the EEOC in Illinois, Wisconsin or Indiana may no longer rely on the EEOC’s failure to conciliate as a defense.  Recently, the Seventh Circuit Court of Appeals became the first federal appellate circuit to explicitly reject an employer’s implied affirmative defense of “failure to conciliate” when defending against the EEOC.  In EEOC v. Mach Mining, LLC, No. 13-2456, 738 F.3d 171 (Dec. 20, 2013), Mach Mining became the target of an EEOC investigation and lawsuit for sex discrimination in hiring.  After a failed conciliation attempt, the EEOC filed suit in the United States District Court for the Southern District of Illinois.  Mach Mining sought dismissal on the ground that the EEOC failed to engage in good-faith conciliation prior to filing suit.

The basis for the defense comes from a provision in Title VII, which states: “If the Commission determines after such investigation that there is reasonable cause to believe that the charge is true, the Commission shall endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” 42 U.S.C. § 2000e-5(b).  The statute further states that the EEOC may sue only after it “has been unable to secure from the respondent a conciliation agreement acceptable to the Commission.” 42 U.S. C. § 2000e-5(f)(1).

The EEOC moved for summary judgment after two years of discovery on the issue. The EEOC argued that the sufficiency of the its conciliation efforts were not subject to judicial review, and could not form the basis of an employer’s defense to an EEOC-filed lawsuit. The district court rejected the EEOC’s position; however, it also certified the issue for immediate appeal.

The Seventh Circuit reversed the decision of the district court, holding that a “failure to conciliate” defense is not available to employers under Title VII. The court pointed to the applicable statutory language, which instructs the EEOC to “endeavor to eliminate” discrimination “by informal methods.” The court found that such discretionary language signals intent to leave the methods and timing up to the agency: “It would be difficult for Congress to have packed more deference to agency decision-making into so few lines of text.”

This decision by the Seventh Circuit creates a split in the federal appellate courts, which could result in the Supreme Court weighing in on this issue.  Importantly, employers defending a lawsuit by the EEOC may still assert this defense everywhere but the Seventh Circuit.