Second Circuit: EEOC Retains Authority After Charging Party Files Suit

The Equal Employment Opportunity Commission (EEOC) retains its statutory authority to investigate charges and enforce subpoenas even after the charging party files suit, according to a new decision from the Second U.S. Circuit Court of Appeals.

Eunice Raquel Flores Thomas, a former dancer at two adult clubs in New York City, filed a class charge with the EEOC alleging widespread sexual harassment and a hostile work environment at both clubs, which she claimed was “perpetuated through the policies and practices” of the clubs.

After notifying the clubs of Thomas’s charge, the EEOC formally requested information, including policies on relationships between customers and employees, records of sexual harassment complaints, and pedigree information for their employees such as employee’s name, age, sex, race, position, employment start date and contact information.

When the clubs objected to the request, the EEOC issued a deficiency letter. The clubs again objected, and the agency issued two subpoenas demanding employee pedigree information.

The EEOC eventually petitioned the district court to enforce the subpoenas, which the court did. The clubs appealed to the Second Circuit.

While the appeal was pending, the EEOC issued Thomas a right-to-sue letter and she filed a putative class action complaint.

The clubs then argued that the EEOC had been divested of its investigative authority—including its authority to issue administrative subpoenas—as soon as Thomas received her right-to-sue letter and sued. In addition, they contended that the subpoenas were overbroad and unduly burdensome.

But the federal appellate panel disagreed, affirming enforcement of the subpoenas.

“Title VII broadly provides that the EEOC ‘shall at all reasonable times have access to … evidence … that relates to unlawful employment practices … and is relevant to the charge under investigation,’” the court said. “The Supreme Court tells us that this subsection ‘enable[s] the [EEOC] to make informed decisions at each stage of the enforcement process,’ which strongly suggests that the EEOC’s authority to issue and enforce administrative subpoenas and obtain evidence persists through the enforcement process at least for a reasonable time.”

In addition, after Title VII vests the EEOC with the authority to investigate upon the filing of a charge, it does not then place any strict temporal limit on that authority, the court pointed out.

While the statute provides that the agency must make its determination on reasonable cause “as promptly as possible and, so far as practicable, not later than 120 days from the filing of the charge,” this language does not indicate a hard stop, the court added—the 120-day period applies “so far as practicable.”

“The EEOC’s broad public interest and role in combating employment discrimination supports our view that its authority to investigate a charge extends beyond the issuance of a right-to-sue letter,” the court wrote. “A central component of the EEOC’s role is to pursue the public’s interest in enforcing employment discrimination laws even where that interest is distinct from, and may exceed, the private interest of the aggrieved charging party.”

Were the EEOC to issue a right-to-sue letter to the charging party, only to have that party decline to sue (or sue and then settle for nominal damages), the agency would be free to continue investigating any ongoing unlawful discrimination that could be remedied by conciliation or public litigation, the Second Circuit added.

The court acknowledged a split of authority, with the Fifth Circuit reaching the opposite conclusion, and similar decisions from the Seventh and Ninth Circuits.

Finally, the court rejected the clubs’ position that the subpoenas were overly broad or unduly burdensome.

“In light of the broad allegations of a widespread pattern or practice of sexual harassment, the District Court sensibly concluded that employees who worked at the clubs at or around the time Thomas worked there are reasonably likely to have information about the alleged discriminatory practices,” the court said.

Despite the clubs’ argument that as small businesses with limited personnel, compliance was burdensome, their counsel acknowledged at oral argument that the clubs have largely responded to the subpoenas and produced documents without serious disruption to their business.

To read the opinion in Equal Employment Opportunity Commission v. AAM Holding Corp., click .

Why it matters: The Second Circuit decision recognized that the EEOC retains its full authority to investigate after it issues a right-to-sue letter to the charging party and the charging party files a civil lawsuit based on the same underlying claim, leaving employers open to liability on multiple fronts.