Equal Employment Opportunity Commission v. Kmart Corporation et al

Filing 56

MEMORANDUM OPINION AND ORDER GRANTING 29 Defendants' Motion for Leave to File Second Amended Answer and 43 the EEOC's Motion to Strike Defendants' Reply in Further Support of Defendants' Motion for Leave to File Second Amended Answer. Signed by Judge George Jarrod Hazel on 10/15/2014. (kns, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Divisioll

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EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION

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Plaintiff,

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Case No.: GJH-13-CV-2576

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v.
KMART CORPORATION,

et aI.

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Defendants.

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MEMORANDUM

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OPINION AND ORDER

This Memorandum Opinion and Order disposes of Defendants' Motion for Leave to File
Second Amended Answer, ECF No. 29, and Plaintiffs

Motion to Strike Defendants' Reply to

Response to Motion for Leave to File Second Amended Answer, ECF No. 43. The Court finds a
hearing is unnecessary. See Local Rule 105.6. For the reasons articulated below, both motions
are GRANTED.
I.

BACKGROUND
Lorenzo Cook applied to work for Defendant Kmart Corporation

("Kmart")

at its

Hyattsville, Maryland store as a customer service associate. ECF NO.1 at ~ 29. Kmart selected
him for employment conditioned on passing a urinalysis. Id. at
Employment

Opportunity

Commission

("EEOC"),

36. According to Plaintiff Equal

Mr. Cook suffers from End Stage Renal

Disease, and dialysis treatment left him unable to produce urine. Id. at ~37. The EEOC states that
Mr. Cook informed the human resources representative

at Kmart of his condition, and the

---......-------------------------------------

representative

told Mr. Cook there was no alternative to the urinalysis. ECF No. 1 at ~ 40.

According to the EEOC, Kmart revoked its offer of employment due to Mr. Cook's failure to
submit to the urinalysis. ld. at ~~ 40-41.
Mr. Cook filed a Charge of Discrimination with the EOOC, alleging violation of the
Americans with Disabilities Act. ld. at ~ 21. The EEOC performed an investigation and informed
Defendants that there was reasonable cause for the EEOC to believe that the Defendants had
violated the ADA in the failure to accommodate or hire Mr. Cook. ld. Conciliation efforts took
place, but the process did not resolve the issues. ld. The EEOC filed this action on September 5,
2013.ld.

The EEOC alleges that Defendants violated the ADA by failing to provide Mr. Cook

with an accommodation for its mandatory urinalysis, such as blood or hair testing. ld.
Defendants'

original Answer, filed October 30, 2013, included "failure to conciliate" as

an affirmative defense. ECF NO.8.

Although Defendants removed that defense from their

Answer on December 2,2013, ECF No. 16, they now wish to reinstate it. ECF No. 29 at 3.
II.

DISCUSSION
a. Motion to Strike Defendants' Reply
Plaintiff filed an opposition to Defendants' request to reinstate the failure to conciliate

defense and Defendants filed a Reply in Further Support of Defendants' Motion for Leave to File
Second Amended Answer ("Reply"). ECF Nos. 33 & 42. Defendants attached conciliation email

communication

communications

as evidence

to their

Reply and discussed

the contents

of those

in the body of the Reply.1 Plaintiff has moved to strike Defendants'

Reply,

I The Court notes that Plaintiff also revealed specifics of communications made during the
conciliation process in its Exhibit A to its Opposition to Defendants' Motion to Amend their
Answer. ECF No. 33-4 (Exhibit A).

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contending that the emails and conversations during conciliation may not be used as evidence in
this case.
Under 42 U.S.C.

S

2000e-5(b),

" ...

[n]othing said or done during and as a part of

[conciliation] may be made public by the Commission, its officers or employees, or used as
evidence in a subsequent proceeding without the written consent of the persons concerned ....
Defendants

contend

that they are permitted

to reveal the communications

because

"
the

conciliation process is subject to judicial review and because the above provision only prohibits
the EEOC from disclosing the communications.

ECF No. 46 at 2-6. The cases Defendants cite

address whether the EEOC conciliated in good faith. Id. at 2-4. However, those cases do not
reference, and presumably the courts did not review, specific communications

that occurred

during the conciliation process nor do those opinions state whether the parties consented to
review of specific communication that occurred during conciliation. See id. (collecting cases that
find the EEOC must conciliate in good faith). It is true that this Court can review whether the

S

EEOC engaged in good faith conciliation, however, Section 706(b) of Title VII, 42 U.S.c.
2000e-5(b),

on its face, prohibits the EEOC from making the communications public and also

prohibits all parties from using the communication

as evidence in a subsequent proceeding

without the written consent of the persons concerned. See OlifSky v. Spencer Gifls, Inc., 842 F.2d
123, 126 (5th Cir. 1988) ("Section 706(b) clearly prohibits any use of EEOC conciliation
materials in subsequent litigation, even by the parties to the agency proceeding."). Defendants
have attempted

to use, as evidence,

and without consent of the EEOC, an exchange

of

correspondence

between Defendants and the EEOC that took place during the conciliation

process. The plain language of the statute prohibits use of these documents as evidence without
written consent. These documents and Defendants' Reply are therefore stricken from the record.

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b. Amendment to Answer
As the Court has struck Defendants' Reply in further support of its motion for leave to
file a second amended answer, the Court does not consider the Reply in deciding whether to
grant Defendants'

request for leave to amend. Defendants request permission to amend their

Answer to add "failure to conciliate" as a defense. Title VII requires the EEOC to engage in
conciliation with the defendant before filing a lawsuit. See 42 U.S.C. ~ 2000e-5(b)
Commission

("[T]he

shall endeavor to eliminate any such alleged unlawful employment practice by

informal methods of conference, conciliation, and persuasion."); 42 U.S.c. ~ 2000e-5(t)(1)

("If.

. . the Commission has been unable to secure from the respondent a conciliation agreement
acceptable to the Commission, the Commission may bring a civil action against any respondent
not a government,

governmental

agency, or political subdivision

named in the charge.").

Conciliation is one of the EEOC's most essential functions. EEOC v. Rayman Metal Prods. Co.,
530 F.2d 590, 596 (4th Cir. 1976). Conciliation is essential because it fully notifies the employer
of the violations alleged, allows the EEOC to consider all the charges, and possibly leads to a
resolution and voluntary compliance. EEOC v. Am. Nat 'I Bank, 652 F.2d 1176, 1185 (4th Cir.
1981).
In this case, according to Defendants, evidence suggests that the EEOC did. not conciliate
in good faith. Defendants believe the EEOC was aware but did not inform Defendants that Mr.
Cook alleged that he provided

Kmart's

representative

with a hand written doctor's

note

explaining his condition. ECF No. 29 at 3. Defendants also believe the EEOC was aware but did
not inform Defendants that a social worker corroborated Mr. Cook's recollection of this event.
Id. Finally, Defendants believe that the EEOC did not request Mr. Cook's medical records during

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the conciliation process, which contained a typed note from Mr. Cook's doctor outlining his
medical condition and the need for accommodation. Id. at 2-3.
The EEOC argues that Defendants should not be permitted to amend their Answer
because the defense is futile, the amendment would not serve the interests of justice, and the
amendment would prolong and complicate the litigation. Specifically, the EEOC believes the
amendment would be futile because the Fourth Circuit only mandates that the EEOC conciliate
in good faith, which simply requires that the EEOC make an attempt at conciliation. ECF No. 33
at 10 (citing EEOC v. Radiator Specialty Co., 610 F.2d 178, 183 (4th Cir. 1979) (finding the
evidence did not support defendant's assertion that "the Commission made no attempts to engage
in conciliation")).

The EEOC argues that the Fourth Circuit does not require the EEOC to

disclose all underlying evidence or information during conciliation. Id. at 11-12. The EEOC also
argues that the amendment

would not serve the interests of justice because the defense is

meritless as no facts have changed since the beginning of the case and because the defense would
require pointless discovery. Id. at 12-13. Finally, the EEOC contends that the amendment would
cause undue delay because Defendants were aware of the facts relevant to this defense long ago.
Id. at 13-14.
Federal Rule of Civil Procedure 15(a) governs amendments to pleadings before trial. At
this stage of the litigation, the parties may amend their pleadings "only with the opposing party's
written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Courts are to "freely give leave
when justice so requires." Jd. Under this directive, a court should grant leave to amend unless a
justifying reason exists to deny leave, such as "undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of

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amendment ... " Foman v. Davis, 371 U.S. 178, 182 (1962). "Determining whether amendment
would be futile does not involve 'an evaluation of the underlying merits of the case. '" Wonasue
v. Univ. of Mmyland

Alumni Ass 'n, 295 F.R.D. 104, 107 (D. Md. 2013) (internal citation

omitted). Rather, "the merits of the litigation" are relevant to a court's ruling on a motion for
leave to amend only if "a proposed amendment may clearly be seen to be futile." Davis v. Piper
Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980). Thus, "[l]eave to amend ...

should only be

denied on the ground of futility when the proposed amendment is clearly insufficient or frivolous
on its face." Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986).
The Court will permit Defendants leave to amend their Answer as Defendants' failure to
conciliate defense is not clearly insufficient or frivolous on its face. Under the current Fourth
Circuit standard, Defendants can succeed on a failure to conciliate defense if they show that the
EEOC failed to conciliate in good faith. Radiator Specialty Co., 610 F.2d at 183. To conciliate in
good faith, the EEOC must attempt to conciliate. Id. (finding EEOC did act in good faith in
attempting to conciliate where the EEOC sent the defendant a determination letter informing
defendant that there had been a reasonable

cause determination

departments and facilities, and the EEOC toured defendant's

with regard to segregated

plant and discussed the charges

with defendant). At least one court has found that a good faith attempt to conciliate includes
providing information needed to evaluate the EEOC's demands, which would include identifying
the individuals for whom the EEOC seeks equitable relief and noting the basis for the EEOC's
demands. EEOC v. First Midwest Bank. N.A., 14 F. Supp. 2d 1028, 1031-33 (N.D. Ill. 1998).
Defendants allege, inter alia, that the EEOC did not inform Defendants of certain facts
during conciliation of which the EEOC was aware-specifically,

that Mr. Cook claims to have

provided Kmart's representative with a doctor's note explaining his condition and the need for

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accommodation.

The Defendants

claim that this evidence was critical to any thoughtful

evaluation of the case. ECF No. 29 at 6. Although the EEOC is not required to disclose all of its
underlying evidence and information to the Defendants, see EEOC v. Hibbing Taconite Co., 266
F.R.D. 260, 274 (D. Minn. 2009), Defendants' allegations are not completely frivolous because
the conciliation process is meant to fully notify the employer of the violations alleged. See Am.
Nat 'I Bank, 652 F.2d at 1185 (explaining that conciliation, in part, fully notifies the employer of
the violation alleged); Cf First Midwest Bank, N.A., 14 F. Supp. 2d at 1031-33 (finding the
EEOC did not act in good faith when it quadrupled its demand for money damages but would not
explain the basis for the increase or provide any information on the class of women against
whom the defendant allegedly discriminated).
Moreover, there is currently a Circuit split regarding the standard for evaluating the
conciliation process, which is likely to be resolved in the near future by the Supreme Court. At
least three circuits, including the Fourth Circuit, solely look at whether the Commission acted in
"good faith" or "reasonably." See, e.g., EEOC v. Radiator Specialty Co., 610 F.2d 178, 183 (4th
Cir. 1979); Serrano v. Cintas Corp., 699 F.3d 884, 904 (6th Cir. 2012); EEOC v. 2ia Co., 582
F.2d 527, 533 (10th Cir. 1978). Other circuits require that the EEOC (l) outline to the employer
the reasonable cause for its belief that Title VII has been violated; (2) offer an opportunity for
voluntary compliance;' and (3) respond in a reasonable and flexible manner to the reasonable
attitudes of the employer. See, e.g., EEOC v. Asplundh Tree Expert, 340 F.3d 1256, 1259 (11th
Cir. 2003); EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529, 1534 (2d. Cir. 1996); EEOC v.
Klingler Elec. Corp., 636 F.2d 104, 107 (5th Cir.1981).

Finally, the Seventh Circuit has

altogether rejected the failure to conciliate defense. EEOC v. Mach Mining, LLC, 738 F.3d 171,
175 (7th Cir. 2013). In light of the differing standards used among the Circuits, the Supreme

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Court has granted a petition for certiorari and is expected to address whether and to what extent
a court may review the EEOC's conciliation process. See Mach Mining. LLC v. EEOC, 134 S.Ct.
2872 (U.S. June 30, 2014). The Supreme Court's pending review of the appropriate standard for
evaluating

the EEOC's

permitting

Defendants

actions during the conciliation

process provides more support for

to amend their Answer in this case. The Court also finds that the

amendment would not cause undue delay and is in the interests of justice because the discovery
period is still open and discovery would be minimal considering that conciliation consists of
discussions among the parties, which Defendants would already have in their possession.
III.

CONCLUSION
For the reasons stated above, it is ORDERED that Defendants' Motion for Leave to File

Second Amended Answer (ECF No. 29) is GRANTED. Further, the EEOC's Motion to Strike
Defendants' Reply in Further Support of Defendants' Motion for Leave to File Second Amended
Answer (ECF No. 43) is GRANTED.

Dated: October 15,2014

GEORGE J. HAZEL
UNITED STATES DISTRICT JUDGE

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