Equal Employment Opportunity Commission v. Luihn Food Systems, Inc.
ORDER: 33 Luihn's motion for summary judgment is DENIED. The parties shall complete mediation not later than 11/30/2011. Signed by US District Judge James C. Dever III on 9/20/2011. (Sawyer, D.)
IN THE UNITED STATES DISTRlCT COURT
FOR THE EASTERN DISTRlCT OF NORTH CAROLINA
TINA UNDERWOOD, SABIH SHERIDAN, )
and SHEILA MUNGIN,
LUlliN FOOD SYSTEMS, INC.,
On August 28, 2009, the Equal Employment Opportunity Commission ("EEOC" or
"plaintiff") filed suit on behalf of a group of aggrieved employees alleging sexual harassment in
violation of Title Vll of the Civil Rights Act of 1964 ("Title Vll"). On September 30, 2010, Luihn
Food Systems, Inc. ("Luihn" or "defendant") filed a motion for summary judgment [D.E. 33]. On
October 12,2010, the EEOC responded in opposition [D.E. 37], and on November 4,2010, Luihn
replied [D.E. 40]. As explained below, Luihn's motion for summary judgment is denied.
Luihn is a franchisee of Kentucky Fried Chicken restaurants operating in the Morrisville,
North Carolina area. See Am. Compl. [D.E. 4]
4. One of Luihn's restaurants is located on
Duraleigh Road in Raleigh, North Carolina. Id. On August 28,2009, the EEOC filed suit alleging
that Luihn had engaged in sexual harassment against four named female employees and a class of
"similarly situated female employees" in violation of section 703(a)(l) of Title VII, 42 U.S.C. §
2000e-2(a)(1). See Compl. [D.E. 1] ~~ 6-8; Am. Compl. ~~ 6-8. The EEOC alleged that the class
of female employees had been subjected to a sexually hostile work environment at the Duraleigh
Road restaurant through the actions ofa male co-worker, Shibao Zhang. Am. Compl. ~ 6-11. The
amended complaint states that all four of the named employees filed charges with the EEOC
describing Zhang's alleged conduct in the workplace. Id. ~ 6. According to the amended complaint,
each employee notified her supervisor ofZhang's behavior between 2007 and 2008, but Luihn took
no action to address Zhang's behavior. Id.
8. Therefore, the EEOC asserts that Luihn knew or
should have known about the harassing actions of Zhang, failed to take corrective action, and is
liable for sexual harassment. Id. ~~ 8-11.
The EEOC filed its complaint and amended complaint pursuant to section 706(f)(1) and (3)
ofTitle Vll, 42 U.S.C. § 2000e-5(f)(I) and (3). See Compl. ~ 1; Am. Compl. ~ 1. This provision
enables the EEOC to bring a civil action against a private employer for actionable discrimination
against an employee or a group ofemployees. See 42 U.S.C. § 2000e-5(f)(1); see also EEOC v. Gen.
Elec. Co., 532 F.2d 359,366-73 (4th Cir. 1976).
The amended complaint states that the EEOC is suing on behalf ofthe four named plaintiffs
and a class of"other similarly situated female employees." Am. Compl. ~~ 6, 8. During discovery,
the EEOC identified the "class" to include one additional employee, Pamela Johnson, who worked
at Luihn's Duraleigh Road store from September 2006 through March 2008. According to the
EEOC, Zhang sexually harassed Johnson in much the same way that he harassed the other four
plaintiffs, Luihn was aware ofhis behavior, and Luihn did not take corrective action. The amended
complaint does not include facts pertaining to Johnson's claim. Cf. Am. Compl. ~~ 7-10.
The EEOC admits that Johnson did not file a charge of discrimination with the EEOC, that
it did not specifically investigate Zhang's conduct towards Johnson before filing suit, that it did not
determine that there was reasonable cause to believe Johnson's allegations are true, and that it did
not attempt to conciliate Johnson's claim. Def.'s Mem. Supp. Mot. Sum. J., Ex. H ("Plaintiff's
Response to Request for Admissions") W8, 10, 13-14. The EEOC states that it failed to follow
these administrative procedures for Johnson's claim because "there was insufficient evidence to
include her as a class member" during the administrative phase of the dispute. Id.
However, the EEOC notes that its allegations pertaining to Johnson were adequately investigated
during the course of its investigation ofthe four filed charges. Id. ~ 14.
On September 30,2010, Luihn moved for summary judgment. In support of its motion,
Luihn argues, in part, that this court lacks subject-matter jurisdiction over Johnson's claim because
the EEOC failed to comply with the statutorily-required pre-suit procedures of a reasonable cause
determination and conciliation. See Def.' s Mem. SUpp. Mot. Sum. J. l1-12. On October 12, 2010,
the EEOC responded in opposition to Luihn's motion, arguing that the EEOC's failure to investigate
and attempt to conciliate the claims of all members of a class of aggrieved employees is not a
jurisdictional bar to its bringing suit on behalfofa class, when the EEOC had adequately conducted
the administrative proceeding concerning similarly situated employees. See PI.' s Mem. Opp'n Mot.
Sum. J. 26-30. The EEOC also contends that genuine issues ofmaterial fact exist as to the merits
of each woman's sexual harassment claim and that the court should deny Luihn's motion for
Summary judgment is proper when "the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter oflaw." Fed. R. Civ. P. S6(a);
Celotex Corp. v. Catrett, 477 U.S. 317,322 (1986); Anderson v. Liberty Lobby. Inc., 477 U.S. 242,
247 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine
issue ofmaterial fact. Celotex Corp., 477 U.S. at 325. After the moving party has met this burden,
the nonmoving party "must come forward with specific facts showing that there is a genuine issue
for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,587 (1986) (emphasis
and quotation omitted). A genuine dispute about a material fact exists "ifthe evidence is such that
a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The
court views the evidence and the inferences drawn therefrom in the light most favorable to the
nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
Section 706 ofTitle vn provides the EEOC with an independent basis to bring suit on behalf
ofa class ofaggrieved employees without meeting the requirements in Rule 23 ofthe Federal Rules
See,~, Gen. Tel.
Co. v. EEOC, 446 U.S. 318, 323-32 (1980). However, Title
vn includes its own prerequisites to an EEOC section 706 action, including that:
(1) a harmed
employee file a charge ofdiscrimination with the EEOC; (2) the EEOC notify the employer ofthe
charge; (3) the EEOC investigate the charge; (4) the EEOC determine whether there is reasonable
cause to believe that the charge is true; and (5) that the EEOC make an effort at conciliation. See,
Gen. Tel. Co., 446 U.S. at 323-32; Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 358-60
(1977); 42 U.S.C. § 2000e-5(b) and (t)(I). Failure to complete these pre-trial, administrative
requirements is ajurisdictional bar to the EEOC's section 706 action.
See,~, EEOC v.
652 F.2d 1176, 1185 (4th Cir. 1981).
Although an employee must file a charge for the EEOC to investigate, the EEOC's complaint
in the section 706 action that results from the EEOC's investigation is not limited to the conduct
stated in the charge.
Gen. Tel. Co., 446 U.S. at 331; Gen. Elec., 532 F.2d at 365. Instead,
the EEOC may file a section 706 action concerning "new discrimination" not stated in a charge, so
long as such discrimination "arises out of the reasonable investigation of the charge filed."
Gen.Elec, 532 F.2d at 366. However, in 1976, the Fourth Circuit appeared to hold that the EEOC
still must make a cause determination and attempt conciliation regarding any claim for which no
charge is filed. Id.; accord EEOC v. Delight Wholesale Co., 973 F.2d 664, 668-69 (8th Cir. 1992).
Despite this apparent cause"and--conciliation requirement, the Fourth Circuit held in 1981
that the failure to identify all class members as part of a cause determination or the failure to
conciliate every class member's claim does not divest the district court's jurisdiction over a section
706 action involving such a claim. See Am. Nat'l Bank, 652 F.2d at 1185-86. In American
National Bm1k, the EEOC issued a cause determination in support ofa charge that the employer"bank
engaged in a pattern or practice of racially discriminatory hiring at its branch in Suffolk, Virginia.
Id. at 1181. The EEOC's cause determination specifically limited its scope to hiring practices at the
Suffolk branch, and included a footnote stating that information regarding hiring at another branch
in Portsmouth, Virginia was "irrelevant."
The EEOC attempted conciliation, but was
unsuccessfuL Id. The EEOC then brought suit under section 706, alleging a pattern or practice of
discrimination at the defendant's Suffolk and Portsmouth branches. Id. After a bench trial, the
district court determined that it lacked jurisdiction over the claims pertaining to the Portsmouth
branch, because those claims had not been the subject of a cause determination or a conciliation
attempt. Id. at 1183; see EEOC v. Am. Nat'l B~ No. 76"26 N, 1979 WL 25, *10-12 (E.D. Va.
June 25, 1979) (unpublished). On appeal, the Fourth Circuit reversed. 652 F.2d at 1185. The
Fourth Circuit held that the EEOC's investigation and attempted conciliation of the race
discrimination claims regarding hiring at the Suffolk branch had been adequate to put the bank on
notice of the "practices under investigation and [provided] ample opportunity for conciliation
concerning those practices," thereby satisfying the statutory requirements. Id. In reachlng this
conclusion, the Fourth Circuit found it significant that the claims pertaining to the Portsmouth and
Suffolk branches were against the same defendant, which had common ownership and control over
both branches, and that all charges were based on the same alleged discriminatory hiring practice.
Id. at 1185-86 ("There is but a single charge ofrace discrimination .... [and defendant] is a single
employer with operations at multiple locations, all subject to unified supervision and control and
using similar hiring practices.,,).l These factors all indicated that "[t]here was ... no possibility for
prejudicial surprise of the sort that has properly been held to preclude proof of later added charges
in other situations." Id. at 1186. Additionally, the Fourth Circuit suggested that considering the
Portsmouth claims during conciliation would likely have made no difference in the failure of
conciliation because ''whatever changes were to be instituted at the Suffolk branches would no doubt
logically and necessarily have been made at the Portsmouth branches as well." Id. at 1185.
Judge Russell dissented and contended that the court's opinion conflicted with the Fourth
Circuit's decision in EEOC v. General Electric. See id. at 1207-08 (Russell, J., dissenting); cf. Gen.
Elec., 532 F.2d at 372-73. Judge Russell noted General Electric's statement that a determination
of cause and attempt at conciliation were jurisdictional prerequisites to a section 706 action,
prerequisites which were not fulfilled as to the Portsmouth branch claims. Am. Nat'I B~ 652 F .2d
at 1207. Judge Russell highlighted the EEOC's statement during its investigation that hiring data
regarding the Portsmouth branch was "irrelevant," as well as the six-year delay between the EEOC
lThe Fourth Circuit noted to two additional facts to suggest that relevant employees at both
branches were on notice of the scope of the claims before the EEOC filed suit. First, the notice of
the charge was received by company officers at both Portsmouth and Suffolk. Id. Second, the notice
of the failure of conciliation was sent to the bank's attorney, who "presumably represented" all
branches, including Portsmouth. Id.
investigation and suit, and opined that these facts belied the majority's view that the bank was on
notice ofpotential claims relating to the Portsmouth branch. [d. at 1208. Judge Russell went on to
characterize the majority opinion as endorsing an expansive and incorrect rule that allowed the
EEOC to conduct administrative proceedings regarding a finite sector of a large business and then,
at any future time, use those administrative proceedings as grounds to file a much broader section
706 action against the same business. [d. at 1208-09.
In Lucky Stores. Inc. v. EEOC, the Ninth Circuit characterized American National Bank as
articulating a broad rule that ''unified operation and control of separate [offices] is itself sufficient
to permit their inclusion" in a single section 706 action. 714 F.2d 911, 913 (9th Cir. 1983). The
court declined to endorse such an expansive rule, but held that administrative proceedings
concerning two plants provided sufficient notice to the employer to support a claim for
discrimination at an additional plant, when the additional plant was very closely related to the other
two plants in tenns ofoperations and employees. [d. ("The facilities share far more similarities and
are far more related than the branches in American National Bank.'l District courts from other
circuits have similarly declined to adopt American National Bank's expansive rule.
v. Dillard's. Inc., No. 08-CV-1780-IEG(pCL), 2011 WL 2784516, at *6-7 (S.D. Cal. Jul. 4, 2011)
(unpublished) (concluding that the EEOC's investigation and conciliation efforts regarding a charge
of disability discrimination by one employee at one of the defendant's stores was insufficient to
support a nationwide class-claim); EEOC v. Outback Steak House. Inc., 520 F. Supp. 2d 1250,
1265-66 (D. Colo. 2007) (holding that pre-filing procedures related to charges of sexual
discrimination filed by two Colorado employees could not support a section 706 action alleging
nationwide gender-based discrimination in hiring, promotion, and training); EEOC v. Jillian's of
Indianapolis, IN. Inc., 279 F. Supp. 2d 974,982-83 (S.D. Ind. 2003) (concluding that an EEOC
investigation offour charges ofgender-based discrimination at one ofdefendant's restaurants could
not support a nationwide class-claim but could support a local class-claim).
As for conciliation, the Fourth Circuit held in American National Bank that Title VII did not
require conciliation of the Portsmouth branch claims. See 652 F.2d at 1185-86; accord EEOC v.
Rhone-Poulenc, 876 F.2d 16, 17 (3d Cir. 1989) (per curiam) (not requiring individual attempts to
conciliate on behalf ofeach similarly situated class member under the ADEA). Similarly, a number
of district courts have held that the EEOC's failure during conciliation to identify every employee
for whom it will seek relief in court is not a jurisdictional bar to a claim on behalf of those
unidentified persons, provided that they are similarly situated to the named employees and the
employer was on notice during conciliation ofthe potential ofa class-based claim.
v. Cal. Psychiatric Transitions, Inc., 644 F. Supp. 2d 1249,1273 (E.D. Cal. 2009); EEOC v. Thomas
Dodge Com., 524 F. Supp. 2d 227, 233 (E.D.N.Y. 2007); EEOC v. Dial Com., 156 F. Supp. 2d 926,
938-39 (N.D. Ill. 2001).
Here, the EEOC complied with the statutory prerequisites to filing a 706 action as to the four
plaintiffs named in its amended complaint. In the cause determination letters issued on behalf of
each complaining employee, the EEOC stated that it had determined that the "Charging Party and
a class offemale employees .... were subjected to a sexually hostile work environment in violation
of Title VII." See Def.'s Mem. Supp. Mot. Sum. J., Ex. J ("EEOC Determination Letters").
Additionally, the EEOC's proposed conciliation agreement indicates that the EEOC sought to
conciliate on behalf ofthe four charging parties as well as at least one additional class member (not
Johnson) who did not file a charge. See id., Ex. I, EEOC Draft Proposal. The presence of this
additional employee indicates that the EEOC maintained throughout conciliation that its claims
related to the four charging parties and a class of similarly situated female employees.
As for Johnson, in light of American National
the EEOC may bring a sexual
harassment claim on her behalf, even though the EEOC did not make a cause determination
concerning her claim or conciliate her claim. See Am. Nat'l Bank, 652 F.2d at 1185-86. Notably,
Johnson's allegations are based upon the same actions of the same defendant at the same store,
during the same relevant time period as the claims ofthe four charging parties, and involve the same
co-worker. Moreover, as in American National Bank, it appears unlikely that including Johnson's
claim in conciliation would have altered the outcome of that process, given the similarity between
her claim and the claims that the parties were unable to settle. See id.
In opposition to this conclusion concerning Johnson's claim, Luihn cites three district court
opinions from outside the Fourth Circuit.
EEOC v. Cintas Corp., Nos. 04-40132, 06
12311,2010 WL 3733978, at·3 (E.D. Mich. Sept. 20, 2010) (unpublished); EEOC v. CRST Van
Expedited. Inc., No. 07-CV -95-LRR, 2009 WL 2524402, at ·9 (N.D. Iowa Aug. 13, 2009)
(unpublished); EEOC v. Target Corp., No. 02-C-146, 2007 WL 1461298, at ·2-3 (E.D. Wis. May
16,2007) (unpublished). Luihn then argues that the EEOC's failure to make a cause determination
and attempt conciliation concerning Johnson's claim divests the court ofsubject-matter jurisdiction
over her claim.
The court has reviewed the three cases, and they appear factually distinguishable. More
importantly, to the extent that the three cases are not factually distinguishable, they conflict with
binding Fourth Circuit precedent. See Am. Nat'l Bank, 652 F.2d at 1185-86. This court, ofcourse,
must follow such precedent. Thus, the court concludes that it has subject-mater jurisdiction over the
EEOC's claim concerning Johnson and over this action.
As for Luihn's motion for summary judgment on the merits, this court is very familiar with
the governing standard under Rule 56 and Title VTI.
See,~, EEOC v. Xerxes Corp.,
639 F.3d 658,
668-71 (4th Cir. 2011); Hoyle v. Freightliner. LLC, No. 09-2024, 2011 WI.. 1206658, at *6-11 (4th
Cir. Apr. 1,2011); Mosby-Grant v. City of Hagerstown, 630 F.3d 326, 333-36 (4th Cir. 2010);
EEOC v. Sunbelt Rentals. Inc., 521 F.3d 306, 313-20 (4th Cir. 2008). In light ofthe record, genuine
issues of material fact exist with respect to all five women. Thus, Luihn's motion for summary
judgment is denied.
As explained above, this court has subject-matter jurisdiction over this case, including the
EEOC's claim on behalfofPamela Johnson. Moreover, genuine issues of material fact exist on the
merits. Accordingly, Luihn's motion for summary judgment [D.E. 33] is DENIED. The parties
SHALL complete mediation not later than November 30,2011.
SO ORDERED. This
day of September 2011.
Umted States District Judge
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