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EEOC Retains Subpoena Power Even After Right-to-Sue Notice Issues and Charging Party Initiates Litigation

September 22, 2008

In a case with important implications for employers responding to EEOC investigations, the U.S. Court of Appeals for the Ninth Circuit recently decided that the EEOC’s subpoena power may be exercised against an employer even after the charging party has been issued a right-to-sue notice and after the charging party has instituted litigation. EEOC v. Federal Express, No. 06-16864 (9th Cir. Sept. 10, 2008).

The case arose out of a charge of discrimination filed with the EEOC by a FedEx employee, Tyrone Merritt, on behalf of himself and similarly situated employees, alleging discrimination against African American and Latino employees.  In particular, Merritt alleged that FedEx's Basic Skills Test, a cognitive ability test which employees were required to pass to be eligible for a promotion, had a statistically significant adverse impact on African Americans and Latinos.  While Merritt requested and received a right-to-sue letter, the EEOC indicated that it would continue to process Merritt's charge.  Merritt then joined a separate already-pending class action lawsuit against FedEx.

Pursuant to its continuing investigation, the EEOC issued an administrative subpoena to FedEx, directing FedEx to provide basic information about its computer files to enable the EEOC to fashion a more detailed request if the need for more information should arise later in the investigation.

FedEx refused to comply with the subpoena and petitioned the EEOC to revoke it.  The EEOC denied the petition and filed an action with the district court to enforce the subpoena.  FedEx argued to the court that the EEOC is divested of investigatory authority once the charging party initiates (or in this case joins) a legal action seeking relief for alleged discriminatory practices.  The district court rejected FedEx’s argument and granted the EEOC’s application to enforce the subpoena, reasoning that the breadth of power granted the EEOC to investigate discrimination charges is such that a court will not quash an EEOC subpoena unless the EEOC plainly lacks jurisdiction.  FedEx appealed.

The Ninth Circuit affirmed the district court.  After turning back a mootness challenge, the appellate panel found that the EEOC’s investigative authority did not terminate with the issuance of the right-to-sue letter.  The court concluded that Title VII, the relevant regulations, and the EEOC’s interpretations of those regulations, combine to mean that:  (1) the EEOC’s investigative mandate is triggered by the filing of a valid charge; (2) the EEOC may bring its own action or may issue a right-to-sue notice to the charging party; and (3) even though the EEOC normally terminates the processing of the charge when it issues the right-to-sue notice, it can, under limited circumstances, continue to investigate the allegations in the charge, and that authority includes the power to subpoena relevant information. 

In the FedEx case, the EEOC decided to continue investigating the charge because it was not limited to alleged discrimination against Merritt, but involved a possible policy or pattern of discrimination affecting others.  The court found that the EEOC acted within its authority in doing so.

The court concluded that because Congress granted the EEOC (in Title VII) the authority to investigate, and because the evidence requested by the EEOC was relevant and material to the investigation, the EEOC’s subpoena was valid.  The nub of the holding is that nothing in Title VII divests the EEOC of investigative authority when a “right to sue” letter is issued or when a charging party files suit.

The FedEx case involved a question of first impression in the Ninth Circuit.  The Fifth Circuit is the only other federal appeals court to address the question of the EEOC’s authority to issue an administrative subpoena after the charging party files suit.  See EEOC v. Hearst Corp., 103 F.3d 462 (5th Cir. 1997)(EEOC’s investigative authority ends when right to sue letter is issued).  The Ninth Circuit, while acknowledging the Fifth Circuit's decision in Hearst Corp., took a different view.

The Ninth Circuit disagreed with the Fifth Circuit’s position that once formal litigation is commenced, the purposes of Title VII are no longer furthered by the EEOC's continued investigation of the charge and that the investigatory authority should cease when the charging party files suit.  The Ninth Circuit also took issue with the Fifth Circuit's rigid sequencing of the process into distinct, consecutive phases of filing and notice of charge, investigation, conference and conciliation, and enforcement.  The FedEx court further disagreed with the notion that a charging party could, through his or her actions (that is, by filing suit), divest the EEOC of authority.  Finally, the Ninth Circuit also disagreed with the Fifth Circuit’s conclusion that Title VII's purposes were no longer served by a continuing investigation after the charging party has filed suit.  Instead, the EEOC's investigatory authority serves a greater purpose than simply investigating a charge on behalf of an individual."  

Given the split between Circuits, this issue may be headed for the U.S. Supreme Court.  Until the conflict is resolved, employers may opt for different approaches to a post-right-to-sue EEOC subpoena, depending on where the employer is located.  The subpoena will likely be enforced in the Ninth Circuit (which covers California and a number of other western states), but perhaps not in the Fifth Circuit (which includes Texas and other southern states).