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The Impact of Mach Mining: Dismissal, Not a Stay, May be the Appropriate Remedy for Failure to Conciliate

By Elizabeth L. Phillips

Since the April 2015 decision in Mach Mining v. EEOC, 135 S.Ct. 1645 (2015), federal district courts have been tasked with determining whether the EEOC fulfilled its conciliation requirement prior to filing a discrimination lawsuit under Title VII.  

On October 23, 2015, the U.S. District Court for the District of Colorado applied Mach Mining to dismiss a claim based on the EEOC’s failure to satisfy its pre-suit notice and conciliation obligations under the Age Discrimination in Employment Act (“ADEA”).  EEOC v. CollegeAmerica Denver, Inc., 2015 WL 6437863 (D. Colo. Oct. 23, 2015), reconsidering 75 F.Supp.3d 1294 (D. Colo. Dec. 2, 2014) (granting motion to dismiss).  The CollegeAmerica decision is noteworthy because the court found that the EEOC’s conciliation efforts were inadequate under the “barebones review” announced in Mach Mining, and dismissed, rather than stayed, the claim until the EEOC attempted conciliation.  This decision underscores that the EEOC’s conciliation obligation is not negligible and may be a viable defense to employment claims brought by the EEOC.

Discrimination Charge

Debbi Potts, a former CollegeAmerica Denver (CollegeAmerica) employee, filed a charge of discrimination with the EEOC after CollegeAmerica accused her of violating the non-disparagement provision in her severance agreement and demanded repayment of severance.  In connection with the charge, CollegeAmerica provided the EEOC with several Separation and Release Agreements (Separation Agreements) that it routinely used with other employees.

Proceedings

In December 2013, the EEOC issued a Letter of Determination finding reasonable cause to believe that CollegeAmerica discriminated against Potts in violation of the ADEA and attempted to use an unlawful waiver to interfere with Potts’ rights under the ADEA.  The Letter asked CollegeAmerica to revise its “form severance agreement” to comply with the ADEA and clarify that employees retain the right to file charges and cooperate with the EEOC, but did not identify the Separation Agreements as an unlawful employment practice.  In response, CollegeAmerica informed the EEOC that it made the requested change to its “form severance agreement” and clarified that the terms in its agreement with Potts were different than the form Separation Agreements.  In April 2014, after holding an unsuccessful conciliation meeting with CollegeAmerica, the EEOC filed suit.  The EEOC alleged that CollegeAmerica, through its separation agreement with Potts and its form Separation Agreements, violated the ADEA by denying employees the full exercise of their rights and by interfering with the agency’s ability to investigate charges of discrimination under the ADEA.  The EEOC also alleged that CollegeAmerica retaliated against Potts by suing her for breach of contract after she filed the charge of discrimination.    

On December 2, 2014, the district court granted CollegeAmerica’s motion to dismiss the EEOC’s claims that CollegeAmerica violated the ADEA through its separation agreement with Potts and its form Separation Agreements, but declined to dismiss the EEOC’s retaliation claim.  With respect to the EEOC’s claim involving the Separation Agreements, the court found that the EEOC failed to satisfy its pre-suit notice and conciliation requirements and dismissed the claim. 

Eight months later, the EEOC moved for reconsideration of the court’s dismissal of the claim involving the Separation Agreements based on the U.S. Supreme Court’s decision in Mach Mining.  The court denied the EEOC’s motion as untimely (the EEOC waited eight months after the dismissal and more than three months after the U.S. Supreme Court issued its decision in Mach Mining).  Nevertheless, the court addressed the EEOC’s substantive arguments.

The court found that the EEOC’s conciliation efforts with respect to the Separation Agreements were insufficient even under the “narrow” review set forth in Mach Mining.  Specifically, the court found that the EEOC failed to adequately notify CollegeAmerica that the Separation Agreements were the subject of its investigation and findings of unlawful practices.  Further, there was no evidence that the parties addressed the Separation Agreements at their conciliation meeting.  Accordingly, the court found that the EEOC failed to satisfy its pre-suit notice and conciliation requirements and affirmed its dismissal of the EEOC’s claim. 

Impact for Employers

The district court’s decision to dismiss the claim is significant because the court declined to follow, as dicta, the Supreme Court’s view in Mach Mining that the appropriate remedy for failure to conciliate is to stay the litigation and order the EEOC to attempt conciliation. The court also reasoned that it was not required to stay the proceedings because Mach Mining is limited to Title VII’s conciliation requirement, whereas the present case involved the EEOC’s failure to satisfy the notice and conciliation requirements of the ADEA. Further, the court found a stay pending future conciliation efforts was inappropriate because it would delay resolution of the EEOC’s pending retaliation claim against CollegeAmerica.  

The CollegeAmerica decision demonstrates that employers may successfully challenge the EEOC’s conciliation efforts under the narrow review announced in Mach Mining.  Further, the decision reveals that when the EEOC has failed to meet its pre-suit obligations, the court may stay the proceedings until the EEOC attempts conciliation, or in certain circumstances, dismiss the claim outright.