E.E.O.C. v. Liberty Loan Corp.

• Decision Date: 06 October 1978
• Docket Number: No. 78-1263,78-1263
• Citation: 584 F.2d 853
• Parties: 18 Fair Empl.Prac.Cas. 303, 18 Empl. Prac. Dec. P 8658 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Appellant, v. LIBERTY LOAN CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 853

584 F.2d 853

18 Fair Empl.Prac.Cas. 303, 18 Empl. Prac.

Dec. P 8658

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Appellant, v. LIBERTY LOAN CORPORATION, Appellee.

No. 78-1263.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 15, 1978.

Decided Oct. 6, 1978.

Neil A. G. McPhie, Atty., E.E.O.C., Washington, D. C., for appellant; Abner W. Sibal, Gen. Counsel, Joseph T. Eddins, Associate Gen. Counsel, Beatrice Rosenberg, Asst. Gen. Counsel, E.E.O.C., Washington, D. C., on the brief.

Michael J. Bobroff, Husch, Eppenberger, Donohue, Elson & Cornfeld, St. Louis, Mo., for appellee; Carroll J. Donohue and Sally E. Barker, St. Louis, Mo., on the brief.

Before GIBSON, Chief Judge, and ROSS and HENLEY, Circuit Judges.

HENLEY, Circuit Judge.

This is an appeal from an order of the district court ¹ granting summary judgment to appellee, Liberty Loan Corporation. Appellant, Equal Employment Opportunity Commission (EEOC), filed suit against Liberty Loan on August 1, 1977 pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e Et seq. (Supp. V 1975), alleging discrimination against females at the company's St. Louis consumer loan branches. Without reaching the merits of this allegation, the district court dismissed the suit under section 706(1) of the Administrative Procedure Act (A.P.A.), 5 U.S.C. § 706(1) (1970), finding as a matter of law that the EEOC had been dilatory in filing suit against Liberty Loan and that the agency's unreasonable delay had prejudiced the company's ability to defend. We affirm the decision of the district court in dismissing this suit but do so without relying on section 706(1).

I

On April 20, 1973 Ms. Donna Anderson filed a charge of sex discrimination ² against Liberty Loan at the EEOC district office in St. Louis. The charge was deferred to state officials until May of 1973 when the EEOC assumed jurisdiction of the case and notified Liberty Loan of the charge.

A year later Ms. Anderson's employment was terminated while this administrative action was still pending. Liberty Loan alleged the termination was simply a part of the company's over-all reduction in force in the St. Louis area which was implemented as a result of severe economic reverses suffered by the company in 1973 and 1974. Ms. Anderson, however, filed an amended charge with the EEOC on October 16, 1974 which included new allegations of sex discrimination based on her termination.

Shortly after the October filing, the EEOC's formal investigation began. Liberty Loan was given a second notice document which included the amended charges in November of 1974. The investigation lasted approximately nine months, and the agency issued a determination on August 21, 1975 that there was cause to believe Liberty Loan had engaged in discriminatory practices. The EEOC soon discovered that its investigators had inadvertently failed to address the termination allegations in Ms. Anderson's amended charge. Thus, in October of 1975 the agency reopened its investigation; and a revised determination was not issued until six months later.

At this point the EEOC and Liberty Loan began conciliation efforts. Upon failure to reach an agreement, the EEOC brought suit in August of 1977, four years and four months after Ms. Anderson filed her initial charge.

The uncontroverted affidavits of Liberty Loan's top executive officers establish that during the course of the above administrative process the company suffered serious financial setbacks which forced a drastic, company-wide reorganization. All but one of Liberty Loan's nine St. Louis branch offices were closed during 1974 and 1975. Operational control of the company was transferred to new management which accelerated employee layoffs and branch office closings and instituted a new centralized personnel system.

In 1976 the one remaining St. Louis branch office ceased normal consumer operations which were not restored until 1977. Indeed, this single St. Louis office now employs only four persons. And, as the district court noted, of the one hundred and forty-five persons employed in the St. Louis area by Liberty Loan at the time of the initial charge, only five are still with the company. Ms. Anderson's immediate supervisors are no longer employed by the company, nor are any of the persons responsible for the company's personnel policies and practices in 1973. In effect, Liberty Loan is now an essentially different company from that which allegedly discriminated against her.

Based upon this evidence, the district court ruled that the lengthy administrative delay, caused in part by the EEOC's inadvertent failure to initially investigate all of Ms. Anderson's allegations, was unreasonable. It also found that Liberty Loan was prejudiced by this delay because all the persons even remotely connected with the original charge were no longer employees of the company. The St. Louis offices had been closed and their records consolidated and in some cases lost. The district court concluded that it would be "manifestly unfair to require Liberty Loan to defend this action after administrative delay has made such a defense difficult if not impossible" and found authority under section 706(1) of the A.P.A. to dismiss the suit on these grounds.

II

We first note that the issue of whether section 706(1) of the A.P.A. ³ can be invoked by a district court to dismiss federal agency action on the grounds of unreasonable delay and prejudice is a matter of first impression for this court. ⁴ The district court in a well reasoned and thoroughly documented opinion calls our attention to several district court decisions from other circuits which have applied section 706(1) to reach this result. See E.E.O.C. v. Moore Group, Inc., 416 F.Supp. 1002 (N.D.Ga.1976); E.E.O.C. v. Bell Helicopter Co., 426 F.Supp. 785 (N.D.Tex.1976); E.E.O.C. v. American Nat'l Bank, 420 F.Supp. 181 (E.D.Va.1976). The fifth circuit in E.E.O.C. v. Exchange Security Bank, 529 F.2d 1214 (5th Cir. 1976), has also adopted this position. In general, these decisions read section 706(1) together with other provisions ⁵ of the A.P.A. as conferring upon a reviewing court the power to dismiss agency action which has been unreasonably delayed to the prejudice of the defendant.

It is clear that section 706(1) applies to the situation where a federal agency refuses to act in disregard of its legal duty to act. The section specifically states that a "reviewing court shall (1) compel agency action unlawfully withheld or unreasonably delayed." In this regard the D.C. circuit has stated that "(u)nder the Administrative Procedure Act, administrative agencies have a duty to decide issues presented to them within a reasonable time, and reviewing courts have a duty to compel agency action 'unlawfully withheld or unreasonably delayed.' " Nader v. F.C.C., 172 U.S.App.D.C. 1, 25, 520 F.2d 182, 206 (1975) (citations omitted).

Yet as the opinions of the courts allowing section 706(1) to be used as a defense against dilatory agency action recognize, the section does not expressly address the situation dealt with in those cases and now before this court. That is, it does not contain specific language authorizing a district court to dismiss agency action which has been unreasonably delayed but only grants the reviewing court jurisdiction to compel an agency to act when it is under a duty to do so. At least one court has refused to construe the section as a basis for dismissing agency action. In E.E.O.C. v. Raymond Metals Prod. Co., the district court found that section 706(1) "was clearly intended for situations where an agency has failed to take appropriate action and not for situations . . . where the agency action has been taken in an allegedly unreasonable time." 385 F.Supp. 907, 914 (D.Md.1974). The fourth circuit affirmed this decision without reference to the section 706(1) problem. E.E.O.C. v. Raymond Metals Prod. Co., 530 F.2d 590 (4th Cir. 1976).

Mindful of the divergence of views with respect to the interpretation of section 706(1), we are presently unwilling to either adopt or reject the construction placed upon it by the district court. We are reluctant to place a broad and questionable interpretation on this section when we believe its application is unnecessary to the proper disposition of the matter before us.

This is not to say that the district court erred in dismissing this suit or that it applied the wrong standards in doing so. The Supreme Court in Occidental Life Ins. Co. v. E.E.O.C., 432 U.S. 355, 97 S.Ct. 2447, 53 L.Ed.2d 402 (1977), recognized that even though the EEOC is not bound by a specific statute of limitations in filing a Title VII lawsuit, district courts possess the discretionary power to provide appropriate equitable relief to a defendant who has been prejudiced by the EEOC's unreasonable conduct.

It is, of course, possible that despite these procedural protections (referring to various statutory safeguards in Title VII and the regulations of the EEOC) a defendant in a Title VII enforcement action might still be significantly handicapped in making his defense because of an inordinate EEOC delay in filing the action after exhausting its conciliation efforts. If such cases arise the federal courts do not lack the power to provide relief. This Court has said that when a Title VII defendant is in fact prejudiced by a private plaintiff's unexcused conduct of a particular case, the trial court may restrict or even deny backpay relief. Albemarle Paper Co. v. Moody, 422 U.S. 405, 424-25, 95 S.Ct. 2362, 2374-2375, 45 L.Ed.2d 280. The same discretionary power to "locate a just result in light of the circumstances peculiar to the case," Ibid., can also be exercised when the EEOC is the plaintiff.

Id. at 373, 97 S.Ct. at 2458.

We adopt the position taken by the Supreme Court in Occidental Life and hold only that in Title VII litigation a district court has discretionary equitable powers to...