10th Circuit: Failure to File EEOC Claim No Bar to Lawsuit

Employers keen on managing litigation costs by relying on the requirement that an employee first file a claim with the Equal Employment Opportunity Commission (EEOC) before filing a lawsuit will be discouraged by the landmark decision in Lincoln v. BNSF Ry. Co. (10th Cir. 2018). Published August 17, 2018, Lincoln significantly changes the way in which EEOC claims relate to lawsuits under several anti-discrimination laws.

In Lincoln, two Maintenance of Way (MOW) workers, Larry Lincoln and Brad Mosbrucker (the Plaintiffs), sued their employer, BNSF Railway Company (the Defendant), under the Americans with Disabilities Act (ADA). The Plaintiffs alleged that the Defendant failed to reassign them to positions for which they were qualified under the ADA, pursuant to that law’s requirement for an employer to provide reasonable accommodation. The Plaintiffs were injured and developed severe medical conditions after they were exposed to a chemical spill. Lincoln applied for and was denied instatement to 21 positions, whereas Mosbrucker applied for and was denied instatement to 22 positions. Lincoln and Mosbrucker filed several charges with the EEOC that covered the majority, but not all, of these denied positions.

However, before the trial court for the federal District of Kansas, the Defendant argued that, pursuant to long-standing precedent issued by the 10th Circuit Court of Appeals (i.e., the federal appeals court with jurisdiction over Colorado, Utah, New Mexico, Kansas, Wyoming, and Oklahoma), the trial court lacked jurisdiction over several of the claims. The basis of the argument was the ADA itself, which requires that discrimination charges are filed with the EEOC within 300 days of the discriminatory occurrence. 42 U.S.C. 2000e-5(e)(1).

As cited by the appeals court in Lincoln, “For nearly forty years, this court has steadfastly held that exhaustion of administrative remedies is a ‘jurisdictional prerequisite to suit.'” Sampson v. Civiletti (10th Cir. 1980). “Exhaustion of administrative remedies” or “relief” is a legal concept in administrative law that requires a plaintiff to work through and “exhaust” an agency’s process before filing a lawsuit with a court. It applies to many different types of claims, and until Lincoln, it applied to claims filed under the ADA, Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), and other discrimination laws. The idea behind the “exhaustion” requirement is, in the words of an earlier decision by the 10th Circuit court, that the “individual filing requirement is intended to protect employers by giving them notice of the discrimination claims being brought against them, in addition to providing the EEOC with an opportunity to conciliate the claims.” Foster v. Ruhrpumpen, Inc. (10th Cir. 2004). The Foster court succinctly summed up the practical effect of the exhaustion requirement, i.e., “A plaintiff normally may not bring a Title VII action based upon claims that were not part of a timely-filed EEOC charge for which the plaintiff has received a right-to-sue-letter.” The same rationale applied to the other anti-discrimination laws cited above.

Based on this 10th Circuit precedent, which has been repeatedly and consistently reinforced on many occasions over several decades, employers and their attorneys expected that plaintiffs must first proceed with an EEOC claim before the employer would be required to incur the expense of obtaining litigation counsel. In turn, plaintiffs who failed to file timely claims, or claims at all, with the EEOC, saw their lawsuits dismissed by federal courts acting under the color of appellate precedent that indicated that they had no discretion to hear such matters, i.e., they lacked jurisdiction over the matter altogether. Under the Federal Rules of Civil Procedure, when a court lacks jurisdiction over a claim, it does not have any discretion over whether to hear the claim, and it must dismiss it.

Applying this long-standing and precedential “administrative exhaustion” rationale, the trial court dismissed two of Lincoln’s and four of Mosbrucker’s claims, citing that the denial of the positions pertaining to those claims was not the subject of any EEOC charges filed within the 300-day statutory timeline. The trial court then dismissed the remaining claims (pertaining to 19 denied positions for Lincoln and 18 for Mosbrucker), citing that they were without merit. The Plaintiffs appealed.

On appeal, the Lincoln court found that many other appellate circuits had already shed themselves of the jurisdictional requirement that a plaintiff file an EEOC claim and exhaust administrative remedies before filing a lawsuit. Specifically cited were the First, Second, Third, Fifth, Sixth, Seventh, Eighth, Eleventh, and D.C. Circuit Courts of Appeal. In addition, the court analyzed the relevant provisions of the ADA, located at 42 U.S.C. 2000e-5. In line with the other appellate courts cited above, it found that while there is a requirement for a plaintiff to file a charge with the EEOC before bringing suit (at 2000e-5(e)(1)), failure to do so does not constitute a jurisdictional bar to the claim (at 2000e-5(f)(3)). Rather, failure to file a claim is an affirmative defense that can be raised by a defendant in court and on which the court has the discretion to decide.

In other words, the court found that instead of an automatic dismissal for lack of jurisdiction, the relevant provisions of the ADA allow a trial court discretion to decide whether the claim should be barred. By extension, this means that employers defending such claims must first argue, as an affirmative defense, that the plaintiff did not exhaust administrative relief before such a claim can be dismissed by the trial court.

But the Lincoln court found it difficult from a procedural point of view to overturn its decision. A federal circuit court may only overturn precedent if: (a) an inconsistent U.S. Supreme Court decision is issued, (b) the court rehears the issue en banc, i.e., a sufficient number of judges rehear the issue and publish a contrary decision, or (c) the appellate court circulates the proposed overruling decision to its active judges, of whom the majority concur with that new stance. The court, after thoroughly vetting out options (a) and (b), decided to proceed with (c). In the opinion, all but one of the active judges (who was recused) concurred with the new stance, i.e., the failure to file a timely charge with the EEOC is not a jurisdictional bar to a lawsuit under the various anti-discrimination laws, but merely an affirmative defense to be raised by the defendant and decided on by the trial court.

The Lincoln case then went forward to discuss other novel employment law related concepts that are beyond the scope of this article, but may be found in future publications.

The take-away for employers is that the cost of defending discrimination lawsuits, generally, just went up. Prior to Lincoln, the threat of a discrimination claim filed under the various federal statutes meant that litigation was still a distant proposition. First, plaintiffs would be required to proceed through the EEOC process, which would take, at minimum, months; and at maximum, years. Human resources professionals discussed the “300-day timer,” a tongue-in-cheek understanding that if an employer waited 300 days and did not receive an EEOC claim, the “all clear” could be sounded because no federal court would hear the claim pursuant to the “exhaustion” requirement. There was hardly any mention of situations for which the filing timeline might be “tolled” such that an employer’s failure to hang posters or efforts to coerce an employee into not filing a charge would extend or waive the filing timeline. And insofar as “tolling” or “coercion” was mentioned, it could be resolved and investigated through the EEOC process, rather than risky, unpredictable, and expensive litigation in federal district courts around the country.

For employers in the 10th Circuit, managing federal anti-discrimination claims through the EEOC process and according to the “300-day timer” is now a practice of the past. Although employers are certainly still able to present an affirmative defense to dismiss these claims for failure to exhaust administrative remedies, such dismissal is no longer more-or-less automatic. Issues concerning “tolling” may now be the subject of expensive and otherwise costly litigation themselves, rather than being resolved through the administrative process. Previous efforts by employers to use the EEOC process to defend themselves, without involvement of attorneys, will be hampered when ill-advised or ill-informed plaintiffs choose to circumvent the process and file directly in federal district court. And the potential exists for old claims, i.e., those beyond the 300 day filing timeline, to now appear as pending litigation when plaintiffs choose to argue before a court that such timeline should be waived. Furthermore, the courts, now no longer barred from exercising discretion over such claims, will hear these claims rather than dismissing them outright for “failure to exhaust administrative relief,” as was the case for nearly forty years.

To reduce the potential liabilities associated with litigation costs, in terms of both time and dollars, employers should proactively ensure that they do not engage in any actions, whether active conduct or acts of omission or noncompliance, that set them up for “tolling” arguments in federal district court. This means that employers should maintain carefully worded discrimination policies with accompanying grievance procedures, hang posters that are current and include all required information, and educate supervisors, managers, and human resources professionals about the correct responses to internal discrimination complaints, as well as proper documentation of those responses.

For posters, strategic advice, training needs, and other associated items, Employers Council is well situated to assist employers in managing the new risks associated with the Lincoln decision. Now more than ever, prevention efforts are critical to managing the costs associated with legal claims rooted in discrimination laws.