Employment Claims, Nursing Home Payments

, New York Law Journal

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Sharon M. Porcellio
Sharon M. Porcellio

This quarter the Western District of New York decided two cases dealing with novel legal issues. It dismissed claims of nationwide discrimination because it found that the Equal Employment Opportunity Commission failed to conduct a nationwide investigation prior to commencing a nationwide class action. In the second, the court found that the plaintiffs' obligation to pay nursing home bills was not a "debt" for purposes of the Fair Debt Collection Practices Act.

EEOC'S Failure

U.S. Magistrate Judge Jeremiah J. McCarthy issued a somewhat complex report, Recommendation and Order in Equal Employment Opportunity Commission (EEOC) v. Sterling Jewelers, No. 08-CV-00706, 2014 U.S. Dist. Lexis 304 (Jan. 2, 2014), dismissing the EEOC's nationwide class action discrimination claims where it failed to conduct the required nationwide investigation of the defendant's employment practices prior to commencing this suit. The EEOC brought a civil lawsuit against Sterling on behalf of 19 female employees and similarly situated employees, specifically alleging that Sterling engaged in a nationwide pattern or practice of discrimination. Sterling moved for summary judgment as to the claims of nationwide discrimination arguing that the EEOC did not conduct an investigation that was nationwide in scope.

As discussed in more detail below, the court first found that it had the authority to review the EEOC's investigation, at least with regard to the scope of the investigation. More specifically, the court looked at whether the EEOC conducted a nationwide investigation prior to bringing a lawsuit claiming the employer engaged in a pattern or practice of nationwide discriminatory conduct. Based on the admissible evidence presented by the EEOC, the court found that the EEOC's investigation was not nationwide in scope, and therefore, dismissed that portion of the lawsuit alleging nationwide discriminatory practices. The EEOC may still pursue those claims which related to the 19 individuals.

The EEOC's Authority to Bring a Civil Action. Generally, the EEOC has the authority to bring litigation to obtain relief for victims of employment discrimination and to ensure compliance with the statutes it is charged with enforcing. However, prior to commencing any action, the EEOC is obligated to carry out certain administrative duties, and the burden is on the EEOC to show that it has done so. In particular, the EEOC has the burden to establish the following four conditions have been met: (1) the existence of a timely complaint of discrimination, (2) the completion of an investigation conducted by the EEOC, (3) the issuance of a reasonable cause determination, and (4) attempted conciliation prior to suit.1

Specifically with regard to the investigation element, the EEOC may bring suit only concerning issues or conduct discovered during the course of its investigation. Accordingly, the scope of a lawsuit brought by the EEOC is limited to the scope of its investigation. The EEOC is prohibited from using the discovery process to uncover additional violations or discriminatory conduct. Therefore, in reaching his decision, Judge McCarthy noted that the court's role is limited to determining whether an investigation occurred as well as the scope of that investigation but that it is not within the court's power to review the sufficiency of the EEOC's pre-suit investigation.

In this case, then, the court could consider whether the EEOC investigated claims of discrimination on a nationwide basis, but could not look at whether the steps taken to investigate were sufficient (e.g., did the EEOC interview an appropriate number of witnesses, or properly review the employer's employment data).

The EEOC's Pre-Suit Investigation. Here, 19 female employees, on behalf of themselves and similarly situated employees, filed charges with the EEOC alleging sex discrimination in pay and/or promotions. The employees worked at Sterling's stores in New York, Florida, California, Massachusetts, Missouri, Nevada, Indiana and Texas. The charges were all transferred and consolidated with a single investigator in the EEOC's Buffalo office.

Assumably in furtherance of the EEOC's conciliation obligations, the parties engaged in mediation. As a part of that process, Sterling and the EEOC entered into an agreement which stated that no information disclosed during the course of the mediation was to be used in, among other things, a court proceeding.

Accordingly, during the parties' mediation, the plaintiffs disclosed a statistical analysis of Sterling's pay and promotion data which had been prepared by an expert retained by the plaintiff's counsel. The parties thereafter modified the mediation agreement to allow the expert's statistical analysis to be included in the EEOC's investigative file. However, the parties agreed that the analysis did not lose its mediation privilege.

As the mediation was unsuccessful, the EEOC investigator thereafter sent a letter to the parties asking for any additional information they wished to provide before the EEOC made its final determination. Plaintiffs provided a letter with various exhibits, including statistical information; at his deposition, the EEOC investigator, however, did not recall receiving the letter and was not sure that he ever reviewed it as a part of his investigation.

Then, in January 2008, the EEOC issued its determination finding that Sterling had subjected the plaintiffs and similarly situated employees to a pattern or practice of sex discrimination in regard to pay and promotion. The letter indicated that the EEOC had relied on a statistical analysis of pay and promotion data that had been provided by Sterling—although it did not provide any detail as to what that analysis was. The EEOC then commenced a class action suit, alleging that Sterling engaged in unlawful employment practices in its stores nationwide.

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