Second Circuit Reinstates Sex Bias Case Against Country’s Largest Jeweler

Diana Uhimov, September 10, 2015

On Wednesday, September 9, 2015 the Second Circuit reinstated a sex discrimination case brought by the U.S. Equal Employment Opportunity Commission against Sterling Jewelers Inc. under Title VII of the Civil Rights Act of 1964.  The suit, initiated in 2008, arose from charges from women who worked for Sterling in nine different states.  The women accused Sterling, the largest fine-jewelry company in the U.S., of paying retail saleswomen less than their male counterparts and failing to give promotions to women for which they were qualified.  Sterling argued in the district court that the EEOC hadn’t fulfilled its statutory obligation to conduct a prelitigation inquiry.  The district court initially ruled that the agency’s investigation regarding the claims against the company prior to bringing the action was inadequate. Following oral argument in May 2015, a three judge panel sided with the EEOC in ruling that under Title VII, courts may review whether the EEOC conducted an investigation, but not the sufficiency of an investigation.

Title VII is a federal law that prohibits employers from discriminating against employees on the basis of sex, race, color, national origin, and religion. The law generally applies to employers with 15 or more employees, including federal, state, and local governments.  Before the EEOC can bring a Title VII enforcement suit, it has to conduct an investigation of the employers’ employment practices.  This review involves: (1) the EEOC receiving a formal charge of discrimination against an employer; (2) giving the employer notice of a formal discrimination charge; (3) investigating the charge; (4) making a determination on whether or not there is reasonable cause to believe the law was violated; and (5) making a good-faith effort to reconcile the charge.  Congress empowered federal courts to review whether the agency has satisfied these pre-suit obligations. This was the first instance that the issue of the proper scope of that review has come before the Second Circuit. Other circuits have ruled on whether the EEOC conducted any presuit investigation.

A trial court granted Sterling summary judgment and dismissed the case in March 2014, adopting a report and recommendation from a magistrate judge who said there was no evidence that the EEOC investigated a nationwide class. On appeal, the EEOC argued that the magistrate judge had conducted an improper review into the adequacy of the agency’s pre-litigation investigation. The Second Circuit’s opinion stated that since the EEOC alleged nationwide discrimination, it has to show that it researched whether a basis existed for claiming such widespread bias, but it doesn’t have to go into detail about its actions or its findings with respect to its review. According to the decision, an EEOC affidavit saying that it performed its investigative obligations and laying out the steps it took to investigate “will usually suffice”.  The 20-page opinion relied on the U.S. Supreme Court’s April 29 ruling in a closely watched EEOC case against Mach Mining LLC, which addressed the scope of judicial review of the EEOC’s obligation to attempt conciliation before bringing an action against an employer.  In Mach Mining the high court said courts could engage only in “relatively bare-bones review” of whether the EEOC had satisfied its presuit conciliation obligation. Although Mach Mining didn’t address EEOC investigations, the Second Circuit extrapolated that judicial review of such investigations are “similarly limited.” “The sole question for judicial review is whether the EEOC conducted an investigation,” U.S. Circuit Judge John M. Walker Jr. wrote for the court.

As a result of this decision, employers facing investigations by the EEOC may not be able to assert the defense that the EEOC’s investigation into the employee’s claims was inadequate. The decision asserted that extensive judicial review would “expend scarce resources and would delay and divert EEOC enforcement actions from furthering the purpose behind Title VII—eliminating discrimination in the workplace.” Going forward, it appears that courts will afford the EEOC great autonomy in its methods of investigation of discrimination. If the EEOC is not required to do a thorough investigation before bringing the litigation, many employers would lose the opportunity to resolve complaints in the investigatory stage.