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Without proof that EEOC investigation was nationwide, pattern-and-practice sex discrimination claim to be dismissed

By Joy P. Waltemath, J.D.

Finding no evidence that the EEOC had conducted a nationwide investigation before filing a nationwide pattern-and-practice sex discrimination class action, a federal magistrate in New York recommended granting Sterling Jewelers’ motion for partial summary judgment on the EEOC’s claim of nationwide discrimination (EEOC v Sterling Jewelers Inc, January 2, 2014, McCarthy, J).

Nineteen female employees from eight states filed charges with the EEOC against Sterling on behalf of themselves and similarly situated employees, alleging sex discrimination in pay and/or promotions. These charges were investigated by five separate EEOC investigators, and the charges then were transferred to a single investigator. During mediation, the parties signed a mediation and confidentiality agreement that limited the further use in court or arbitration of information disclosed during mediation by the parties, their experts, or the mediator. One document submitted during mediation was a statistical analysis of Sterling’s pay and promotion practices from the charging parties’ expert. Although the confidentiality agreement was later modified so that the analysis (and explanatory notes) could be included in the EEOC’s investigatory file, the agreement specifically provided that the analysis would not lose its mediation privilege.

The EEOC investigator subsequently sent to counsel for both parties a request for information and the charging parties’ counsel replied and furnished a “letter and accompanying exhibits set forth the factual, legal and statistical support of the Charging Parties’ claims,” but during his deposition, the investigator neither recalled having seen this nor having reviewed it as a part of his investigation. The company argued that, accordingly, there was no evidence that the EEOC conducted a nationwide investigation of its employment practices prior to filing suit and its claims of nationwide discrimination should be dismissed.

Scope of EEOC’s pre-suit investigation. Sterling asserted as an affirmative defense that the EEOC’s nationwide pattern-and-practice claims were beyond the scope of any administrative charge or the EEOC’s own investigation. Noting initially that because a pre-suit investigation is a condition precedent to filing suit, the magistrate said it remained the EEOC’s burden to prove it had conducted a nationwide investigation. The judge also reasoned that even though a court may not examine the adequacy of an EEOC investigation, that didn’t mean a court could not examine whether the investigation occurred at all. Further, the relationship between the complaint and the scope of the investigation was critical and therefore reviewable by the court.

EEOC’s proof of nationwide investigation. Here, the EEOC admitted it had “little investigative material in the files beyond the charges, Sterling’s responses, and other correspondence” and that its sole investigator had “very little memory of what actions he undertook in this investigation conducted over seven years ago.” To the company, that suggested there was no evidence produced by EEOC that any of its investigators conducted any sort of nationwide investigation of Sterling. Although the EEOC countered that Sterling had no evidence that EEOC investigators had not conducted a nationwide investigation, the fact was that the EEOC had no evidence (other than the fact that charges were asserted) to prove that they were investigated or to prove the scope of any investigation which may have occurred.

Rather, the EEOC’s own investigator did not recall investigating any stores except in Massena, New York and Tampa, Florida. The EEOC claimed that regardless of what he remembered, he did conduct a nationwide investigation of the charges against Sterling, and he received information from the charging parties’ attorneys to support the nationwide scope of the allegations. But the magistrate remained unconvinced, noting that although the investigator said he “investigated all of these charges as class charges,” that alone did not specify which type of class he investigated, whether local, regional, or nationwide. Further, the letter from counsel for the charging parties did not help because the investigator testified he couldn’t remember whether he reviewed its contents. Accordingly, the magistrate agreed there was no evidence that the EEOC investigators conducted a nationwide investigation.

EEOC’s assertion of deliberative privilege. In response to the summary judgment motion, the EEOC relied specifically on the charging parties’ expert’s statistical analysis to prove that it had conducted a nationwide investigation. However, when Sterling had attempted to inquire into these same areas during discovery, the EEOC asserted the deliberative privilege, which according to the agency, is designed “to protect the confidentiality of internal, deliberative material, such as documents containing the analyses, opinions, or recommendations of enforcement unit staff, and attorney memoranda containing analysis or recommendations.” But the magistrate pointed out that a party who asserts the privilege must bear the consequence of lack of evidence.

“None of this should come as a surprise to the EEOC,” said the magistrate, noting that he had cautioned the EEOC repeatedly that it could not assert the privilege and then waive the privilege when its charges were attacked or use it as “both a sword and a shield.” Thus the magistrate found that the EEOC could not oppose Sterling’s motion by relying upon the information which it withheld from Sterling during discovery. Further, the magistrate found that the information that had not been withheld from the company during discovery was insufficient to prove a nationwide investigation had been conducted.

In a footnote, the judge rebuffed the agency’s attempts to argue EEOC v Mach Mining’s rationale that whether it conducted a nationwide investigation was not reviewable. He noted that the issue here was failure to investigate, not failure to conciliate and further that, unlike the Seventh Circuit, “the Second Circuit does recognize the defense of failure to conciliate.” Further the judge construed investigation to mean a thorough or searching inquiry and suggested that neither the mere gathering of information from others or the parroting of that information without independent analysis would be sufficient to qualify as an investigation.

Nationwide investigation required. The only nationwide data specifically identified by the EEOC was the statistical analysis provided by the charging parties’ expert. Having invoked privilege in response to Sterling’s inquiries in discovery, the EEOC cannot now be allowed to rely on this analysis or argue that it took any steps to verify the reliability of that analysis. Thus, there is no evidence that its investigation was nationwide. Further, even if the EEOC had not invoked the privilege, the magistrate questioned whether it could have relied on it given the confidentiality agreement. While the parties agreed the analysis could be placed in the EEOC’s investigative file, they also agreed that it would not lose its mediation privilege, which suggested to the magistrate that it could not be relied upon in litigation. Either way, the absence of a nationwide pre-suit investigation was a defense to the EEOC’s nationwide pattern-or-practice claim, said the magistrate, recommending that the EEOC’s claim of a nationwide pattern or practice of employment discrimination by Sterling be dismissed with prejudice.