Sunday, September 30, 2012
Sanction cases of 2009
The Sanctions Cases of 2009: Preserving the Integrity of the EEO Process
By Edmund Chiang, Tiane Doman, Megumi Fujita, and Davis Kim
The Commission has continually worked to ensure that the federal sector complaint process is administered fairly and efficiently. As part of this continuing effort, the Commission empowered its Administrative Judges (AJs) to impose sanctions, in appropriate circumstances, against parties who fail to fully and timely respond to AJ orders or requests for information without showing good cause. But beginning with the Commission’s 2007 decision in Gray v. Department of Defense,1 the circumstances under which AJs could appropriately impose the ultimate sanction, a default judgment, became more limited. This eventually raised not only practical concerns about timeliness and efficiency, but also fundamental concerns about fairness and the integrity of the EEO process itself. A trilogy of cases in 2009, addressed these concerns by affirming the AJ’s use of default judgments in cases that reemphasize the Commission’s commitment to preserving the integrity of the EEO process.
Authority for AJs to Issue Default Judgments as Sanctions
The statutory authority for AJs to issue default judgments as sanctions resides in section 717 of Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination by federal agencies.2 This statute allows the Commission to issue “rules, regulations, orders, and instructions” that are deemed by the Commission “necessary and appropriate to carry out its responsibilities” in enforcing the prohibitions on unlawful employment discrimination.3 Federal agencies must follow these rules, regulations, orders, and instructions.4 The provision also delegates to the Commission the authority to enforce the statute “through appropriate remedies . . . as will effectuate the policies of this section.”5
Pursuant to this statutory authority, the Commission promulgated the most recently applicable regulations in 29 C.F.R. Part 1614.6 Specifically, 29 C.F.R. § 1614.109(f)(3) provides:
When the complainant, or the agency against which a complaint is filed, or its employees fail without good cause shown to respond fully and in timely fashion to an order of an administrative judge, or requests for the investigative file, for documents, records, comparative data, statistics, affidavits, or the attendance of witness(es), the administrative judge shall, in appropriate circumstances:
(iv) Issue a decision fully or partially in favor of the opposing party . . . .
The Commission’s authority to issue sanctions under 29 C.F.R. § 1614.109(f)(3) was directly challenged in Matheny v. Department of Justice.7 In that case, the agency argued that the imposition of sanctions by the AJ which entered a default judgment for the complainant violated the principle of sovereign immunity. In the underlying decision, the Commission upheld an AJ’s issuance of a default judgment as a sanction against the agency for failing to comply with numerous orders and requests from the AJ.8 The Commission explained that the agency’s failure to complete an EEO investigation 15 months after the end of the 180-day time frame was egregious enough to warrant a default judgment as a sanction. In addition, the Commission concluded that the statutory language set forth in 29 C.F.R. § 1614.109(f)(3) authorizes AJs to impose sanctions on federal agencies. The Commission reasoned that the authority to impose sanctions is necessary for the Commission to effectively enforce the prohibition on employment discrimination in the federal workplace because the Commission cannot subpoena other agencies, and sanctions ensure that federal agencies will comply with the administrative process.
The Factors for Issuing Default Judgments as Sanctions and the Narrowing of Matheny
In Gray v. Department of Defense,9 the Commission moved away from the open-ended inquiry of Matheny by requiring AJs to formally consider five factors when determining whether a party’s non-compliance warranted a sanction and also what sanction is appropriate: (1) the extent and nature of the non-compliance; (2) the justification presented by the non-complying party; (3) the prejudicial effect of the non-compliance on the opposing party; (4) the consequences resulting from the delay in justice; and (5) the effect on the integrity of the EEO process. In evaluating these factors, the Commission counseled that sanctions are designed to serve the purpose of “deterring the [offending party] from engaging in similar conduct in the future, without being overly harsh in light of the nature of the offense.”10
The Commission in Gray determined that the AJ abused her discretion in issuing a default judgment as a sanction against the agency for failing to timely complete the EEO investigation three months beyond the 180-day regulatory time frame.11 The Commission distinguished Gray from Matheny by reasoning that the agency’s non-compliance in Matheny was far more egregious and deserving of a default judgment. First, the agency in Matheny delayed completing the investigation for 15 months beyond the 180-day time frame while the delay in Gray was only three months. Second, the agency in Matheny responded only sporadically to the AJ over the 15-month period. Third, the AJ in Matheny specifically found that the limited evidence before her supported the complainant’s claims of discrimination.
Because the non-compliance in Gray did not heavily weigh on the last three factors, parties began to interpret Gray as effectively narrowing Matheny, thereby limiting the circumstances in which AJs could appropriately issue default judgments as sanctions for failing to timely complete investigations or respond to AJs.
The Sanctions Cases of 2009: A New Emphasis on the Integrity of the EEO Process
In 2009, the Commission issued three decisions that considered how different agency infractions should be weighed under the Gray factors. In Royal v. Department of Veterans Affairs,12 the Commission upheld an AJ’s issuance of a default judgment in favor of complainant as a sanction because the agency did not initiate or complete an EEO investigation within the 180-day regulatory time frame. The Commission rejected the agency’s assertions that the delay had no adverse affect on complainant’s case and was partially caused by financial constraints.
In applying the Gray factors, the Commission held that “in the case where an agency has not initiated an investigation that could reasonably be completed within the 180-day time frame, the [fifth] factor, the effect on the integrity of the EEO process, is paramount.” The Commission held that the sanction of a default judgment was appropriate because the agency had not begun its investigation until 192 days after complainant had filed the formal complaint. The Commission distinguished Royal from Gray by noting that the agency in Gray had “engaged in actions showing intent to comply with the regulation specifying that an investigation should be completed in 180 days.”
The Commission then addressed the consequences of a default judgment in terms of crafting the appropriate remedy. The Commission noted that, following a decision to issue a default judgment, an AJ would need to decide if there was sufficient evidence to establish complainant’s right to relief. For example, the establishment of the elements of a prima facie case would be sufficient to show such a right. The Commission stated that, in the absence of a report of investigation, the complainant should be able to provide the request for counseling, the EEO Counselor’s report, the formal complaint, and the agency’s letter accepting the complaint. In addition, the AJ could ask for more information or take limited testimony from the complainant. In the remedy phase, the complainant would provide evidence regarding entitlement to such relief as back pay and compensatory damages.
In Cox v. Social Security Administration,13 the Commission again upheld the AJ’s decision to issue a default judgment in favor of complainant as a sanction. The Commission concurred with the AJ’s determination that the report of investigation was inadequate, given the lack of documentation in the record, and rejected the agency’s argument that an outside investigative contractor absolved the agency from being responsible for ensuring a complete and timely investigation. The Commission also concurred with the AJ’s determination that the agency failed to fully comply with the AJ’s orders or respond to discovery requests in a timely manner.14
Citing Royal, the Commission warned that the effect of the non-complying party’s actions on the integrity of the EEO process should not be underestimated when tailoring sanctions. The Commission determined that affirming the AJ’s issuance of a default judgment “will effectively emphasize to the agency the need to comply with the AJ Orders in a timely manner,” and ensure that any report of investigation that the agency produces “is adequately developed from which to make a decision on the merits of complainant’s complaint.” Citing Royal, the Commission found that complainant was entitled to the relief ordered by the AJ because she established a prima facie case.
In Gryder v. Department of Transportation,15 the AJ assigned to the case issued an Acknowledgment Order in November 2006 and a separate Scheduling Notice and Order that directed the parties to submit a pre-hearing report, and set a date for the pre-hearing conference. The agency failed to appear at the pre-hearing conference and did not submit a pre-hearing report. The agency also failed to respond to any of the numerous motions filed by the complainant with the AJ, including various discovery requests, although the agency received copies of these filings. Meanwhile, in December 2006, the agency filed a Motion to Stay Discovery and All Proceedings pending a ruling on complainant’s civil action in federal court. The AJ never ruled on the agency’s motion. The AJ subsequently issued an Order to Show Cause why the agency should not be subject to sanctions. In July 2007, the AJ imposed sanctions against the agency by issuing a default judgment in complainant’s favor.
On appeal, the Commission found disingenuous the agency’s assertion that it was merely awaiting the AJ’s ruling on its motion to stay, because it failed to take proactive measures to inquire whether the AJ had issued any additional orders or ensure receipt of AJ notifications. Nevertheless, the Commission determined that the AJ abused his discretion by issuing a default judgment as a sanction against the agency. The Commission held that the decision to impose the default judgment when the federal court had not yet decided whether the matter before it was settled “was premature and not in the interests of justice.” The Commission further held that the AJ should have first ruled on the agency’s motion to stay before imposing a sanction. In the interest of judicial economy, the Commission vacated the AJ’s decision for a determination on whether the matter that remained pending in federal court addressed the same matter raised in complainant’s complaint. In the event that the civil action did not involve the same matter, the Commission ordered the case to be returned for a hearing and imposed an alternative sanction limiting the agency’s ability to use documents in the record during adjudication of the complaint.
The Commission issued a trilogy of cases in 2009 to address concerns about the fairness and integrity of the EEO process. The cases reinterpreted how several types of non-compliance actions should be evaluated under the Gray factors, particularly the effects on the integrity of the EEO process, when determining the appropriateness of default judgment sanctions. The cases stressed that parties need to respect time frames, especially those relating to the investigative and discovery process, because non-compliance can negatively affect the quality of the reports of investigation and ultimately hamper the Commission’s ability to decide the merits of discrimination complaints. At the same time, parties should timely comply with AJ orders, and AJs, in turn, should timely respond to motions filed by the parties. Parties, especially federal agencies, should take proactive measures to inquire about whether the AJ has issued additional orders or to ensure receipt of AJ notifications. Finally, even if an AJ issues a default judgment in favor of a complainant as a sanction against an agency, the complainant must present evidence that satisfies the court to establish a right to relief.
1 EEOC Appeal No. 07A50030 (March 1, 2007).
2 42 U.S.C. § 2000e-16(a).
3 42 U.S.C. § 2000e-16(b).
6 64 Fed. Reg. 37657 (July 12, 1999). There are no proposed changes to the relevant regulations in the most recent Notice of Proposed Rulemaking. 74 Fed. Reg. 67843 (2009).
7 EEOC Request No. 05A30373 (April 21, 2005).
8 Matheny v. Department of Justice, EEOC Appeal No. 07A00045 (December 6, 2002).
9 EEOC Appeal No. 07A50030 (March 1, 2007).
10 Id; see also Hale v. Department of Justice, EEOC Appeal No. 01A03341 (December 8, 2000).
11 The Commission found that the AJ instead should have issued a more narrowly tailored sanction to deter the agency’s conduct without being overly harsh in light of the offense, such as prohibiting the agency from using ROI depositions to support motions to dismiss or for summary judgment, or by not allowing the agency to rely on ROI affidavits in lieu of witnesses who are not available to testify at a hearing.
12 EEOC Request No. 0520080052 (September 25, 2009).
13 EEOC Appeal No. 0720050055 (December 24, 2009).
14 Although the AJ imposed sanctions against the agency, in part, for filing an untimely response to her Show Cause Order, the Commission held that the agency filed a timely response to the Show Cause Order The Commission nonetheless concurred with the AJ’s findings with regard to compliance with discovery requests, noting that the agency failed to even partially comply.
15 EEOC Appeal No. 0720070078 (August 12, 2009).
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