District of Nevada Seal.jpgBy Courtney Bohl and Laura J. Maechtlen

Recently, in EEOC v. Wedco, Inc., No. 3:12-CV-00523 (D. Nev. March 12, 1013), the U.S. District Court for the District of Nevada considered whether the EEOC met is Title VII conciliation obligations when it ended conciliation negotiations after an employer, Wedco, Inc., refused to make a counter-offer to the EEOC’s settlement demand. The Court held that the EEOC was not required to continue conciliation negotiations once Wedco refused to make a counter-offer. 

This ruling is somewhat troubling for employers, as the Court made this finding despite an express acknowledgement that Wedco did not make a counter-offer because the EEOC refused to provide Wedco with information to support the agency’s high monetary demand. The Court reasoned that — because Wedco refused to make a counter-offer — the employer was the one responsible for conciliation negotiations failing, and not the EEOC.

This case is unfortunate for employers faced with the EEOC’s “hide the ball” strategies during conciliation, and suggests that employers must make a counter-offer during negotiations despite the EEOC’s unreasonable or unsupported demands to succeed on a failure-to-conciliate defense in subsequent litigation.    

Background Of The Case

In EEOC v. Wedco, the EEOC initiated suit against Wedco based on a charge of discrimination filed by Larry Mitchell, a warehouse delivery driver, alleging racial harassment, discrimination and constructive discharge. Id. at 1. In his charge, Mitchell claimed  that he was subjected to racial comments and name-calling and was exposed to a noose hanging in a high traffic area of the company’s warehouse. Id. Mitchell also alleged he was required to ask for permission to use the restroom, which non-black employees were not required to do, and was denied breaks that non-black employees received. Id. Finally, Mitchell alleged he was forced to quit because of the harassment he endured at Wedco.

The Nevada Equal Rights Commission (“NERC”) investigated Mitchell’s charge, finding probable cause to believe Wedco subjected Mitchell to a racially hostile work environment and constructive discharge. Id. at 2. The NERC then issued a determination letter to Wedco outlining its factual findings and offering to begin conciliation, initially demanding $161,000. Id. at 2, 6. Although over a four month period Wedco repeatedly asked for additional information that supported the NERC’s high demand, the NERC refused. Id. Accordingly, Wedco declined to make a counter-offer, and, shortly thereafter, the NERC notified Wedco that conciliation had failed. Id. at 2.

The NERC then forwarded the charge to the EEOC. Id. at 2. The EEOC issued its own letter of determination and a conciliation letter, in which it solicited Wedco’s counter-offer. Id. at 2, 8. Wedco requested additional information from the EEOC on the charge, and the EEOC refused to respond. Id. at 8. Wedco, again, declined to make a counter-offer. Id.  

The EEOC subsequently filed a complaint against Wedco alleging harassment, constructive discharge, and disparate treatment. Id. at 2. Wedco moved to dismiss the EEOC’s complaint for lack of subject matter jurisdiction based on the EEOC’s failure to conciliate, or, in the alternative, for a stay to complete the conciliation process. Id. at 2.

The Court’s Ruling

The Court denied Wedco’s motion in its entirety. The Court held that Title VII’s conciliation requirement is not jurisdictional. Id. at 3. The Court reasoned that statutory prerequisites are only jurisdictional if Congress’ intent is clear, and Title VII is not “clothed in unmistakably jurisdictional language.” Id. at 4. 

Turning to whether the EEOC conciliated in good faith, the Court applied a deferential test, looking only to see if the EEOC made a “colorable attempt” at conciliation. Id. at 4. The Court found the EEOC did – both the NERC and the EEOC invited Wedco to negotiate and provided an initial offer. Id. at 6-7. The Court reasoned that it was Wedco’s  refusal to make a counter-offer that caused the EEOC to end conciliation negotiations. Id. at 7. The Court noted if “Wedco was unsatisfied with the EEOC’s offer based upon the evidence, it could have made a counter-offer of a token sum.” Id. If the EEOC had refused this counter-offer, then perhaps the Court would have grounds to find the EEOC failed to conciliate. Id. The Court also made clear that the EEOC is like any other civil litigant, and is able to begin with a settlement proposal that seems extreme to its adversary. Id. at 8. Thus, because of Wedco’s “continued refusal to make any counter-offer when repeatedly solicited for one,” the Court found it impossible to determine that the EEOC was not prepared to conciliate in good faith. Id.

Implications Of The Ruling

This ruling is disappointing in that it encourages the EEOC to make an initial opening settlement proposal that is untethered to the facts of the dispute. The ruling warns employers that they must make some offer during conciliation negotiations to preserve their ability to challenge the EEOC’s conciliation tactics in defending a subsequent lawsuit. Accordingly, to preserve their defenses, employers should, even when faced with an unreasonable and unsupported monetary demand, make a counter-offer, even if it is only for a “token” sum.