86 F.3d 1423 (7th Cir. 1996), 95-2323, E.E.O.C. v. Chicago Club

Docket Nº:95-2323.
Citation:86 F.3d 1423
Party Name:EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. The CHICAGO CLUB, Defendant-Appellee.
Case Date:June 06, 1996
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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86 F.3d 1423 (7th Cir. 1996)

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant,

v.

The CHICAGO CLUB, Defendant-Appellee.

No. 95-2323.

United States Court of Appeals, Seventh Circuit

June 6, 1996

Argued Jan. 3, 1996.

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Paula R. Bruner (argued), Equal Employment Opportunity Commission, Washington, DC, Pamela S. Moore-Gibbs, Equal Employment Opportunity Commission, Chicago, IL, for Plaintiff-Appellant.

Jeffrey S. Fowler, Laner, Muchin, Dombrow, Becker, Levin & Tominberg, Chicago, IL, Michael F. Rosenblum (argued), Jeri A. Lindahl-Garcia, Mayer, Brown & Platt, Chicago, IL, for Defendant-Appellee.

Before COFFEY, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

The Equal Employment Opportunity Commission ("EEOC") is apparently dissatisfied with the provision of federal law that places truly private clubs outside its regulatory reach. EEOC seeks to remove this congressionally enacted impediment by interpreting the bona fide private club exemption of 42 U.S.C. § 2000e(b) out of existence. Toward that end, EEOC asks us to declare that one of Chicago's well-known private clubs--the Chicago Club--is not really private. The Chicago Club is not sufficiently selective in its membership to qualify as private, asserts EEOC, because some of its newly admitted members are merely "commodity brokers, lawyers and younger mid-level corporate executives." Moreover, claims EEOC, the Chicago Club permits its members excessively

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free rein in entertaining guests. The Chicago Club, not surprisingly, maintains that it is indeed a bona fide private membership club and is thus excluded from the coverage of Title VII.

The simple fact is that if we were to endorse EEOC's eviscerating interpretation of § 2000e(b), no organization in the United States could meet the statutory definition of bona fide private membership club. For the reasons discussed below, we confirm what everyone familiar with this litigation already knows--or should know: the Chicago Club does indeed qualify as a bona fide private membership club under § 2000e(b). We accordingly affirm the judgment of the district court.

I. BACKGROUND

  1. Undisputed facts regarding the Chicago Club

    The Chicago Club ("the Club") came to life in early 1869. The clubhouse is presently located on the corner of Michigan Avenue and East Van Buren Street in downtown Chicago.

    Ownership of the Club is vested in the membership, and the members elect eleven of their own to a board of governors for a nominal term of four years. The board of governors oversees all facets of the Club's operations and appoints a general manager who reports directly to the board. The Club's bylaws authorize a total of 1,450 resident and nonresident members, excluding seniors. At the time EEOC filed this lawsuit, the Club had 1,247 members. There are twelve classes of Club membership, which include several subclasses of resident and nonresident memberships and special classifications for federal or foreign government employees and for surviving spouses of deceased members. The Club annually bestows one membership for distinguished service upon a person who has attained unique recognition for public service or for other accomplishments.

    The board of directors extends invitations to membership under one of two provisions in the Club's bylaws. Under one provision, one member proposes a candidate and two members second the proposal. Two directors must be acquainted with candidates for resident membership, and one director must be acquainted with nonresident candidates. The names of the candidates are published to the Club, and members may comment upon the candidates. The Club's secret membership commission reviews the proposed candidates and the membership's comments and makes recommendations to the board. The board may then extend invitations to membership. Another provision of the bylaws allows the board of governors, upon its own motion and without any formal procedure, to elect a person to any class of membership in which there is a vacancy. In no case under either procedure may an invitation to membership issue if two or more directors present for the vote are opposed.

    This procedural gauntlet incorporates a screening process that emphasizes personal interaction between members and candidates for membership. This interaction, in turn, furthers the continuity of membership qualifications by ensuring that proposers, seconders, and directors possess a degree of familiarity with candidates. In addition to the screening incident to the admission procedures, the bylaws require that candidates be "of good standing" and at least twenty-five years of age. While the Club disclaims any rigid indicia by which it selects members, "good standing" seems to require sound moral character in the eyes of the Club and personal or professional distinction. Qualified candidates are admitted to membership without regard to race, sex, national origin, or religious affiliation.

    The Club's membership is populated by a narrow band of the sociological spectrum. The Club provided the following breakdown of 481 members admitted in the ten years preceding December 31, 1992: 65 chairmen of corporations; 62 chief executive officers, chief financial officers, or chief operating officers; 101 corporate presidents; 101 corporate vice-presidents; 96 partners or principals in major accounting, investment, or law firms; 31 corporate directors; 5 college deans; 3 attorneys; and 2 local branch managers of national financial institutions. The remaining fifteen members identified themselves

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    as engaged in a variety of professional and philanthropic endeavors. There is evidence that since 1993 the Club has made a conscious effort to increase its membership roll, in part to boost revenue.

    The Club maintains athletic, dining, and lodging facilities in addition to a barbershop, lounge, library, and executive suites. Members avail themselves of these facilities and may host events such as meetings, banquets, or receptions in any of the Club's several private function rooms. The Club allows nonmember guests the use of its facilities under certain conditions and under the sponsorship of a member. Members may arrange for guests to be issued a guest card that affords them the use of Club facilities for as many as fourteen days. Card-carrying guests may use the Club under this arrangement without the presence of the sponsoring member, but guest-card privileges are not coextensive with membership privileges. Guest card holders may bring other nonmembers to the Club with them, but they are not permitted to request guest cards or the attendant privileges for nonmembers. Spouses of members may bring nonmember guests to the Club and may exercise signing privileges, but they, too, are not permitted to request guest cards for nonmembers.

    The Club allows its members to host functions for organizations or individual nonmembers provided the hosting member is present at the function. The record details several occasions at which members hosted private and civic functions at the Club. Members are financially responsible for these functions, but third-party nonmembers sometimes remit payment directly to the Club or reimburse the hosting member. There is evidence of two instances in which nonmembers hosted functions at the Club: Frank Stover, the Club's resident general manager, hosted a gathering of Roosevelt University students in September 1992; and the Club allowed a Swedish culinary team to use its kitchens in preparation for the May 1991 National Restaurant Association competition.

  2. Procedural history

    EEOC filed this lawsuit in the Northern District of Illinois pursuant to 42 U.S.C. § 2000e-5(f)(3) on October 15, 1992. It alleged that the Club was required to comply with the Title VII reporting requirements codified at 42 U.S.C. § 2000e-8(c) and sought declaratory and injunctive relief. The Club answered that it was not an "employer" under the definition provided at 42 U.S.C. § 2000e(b), and this issue became the focal point of the controversy. EEOC filed a motion for summary judgment, and the Club responded with a cross-motion for summary judgment.

    The district court referred both parties' motions to a magistrate judge for the preparation of proposed findings of fact and a recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). The magistrate judge issued a report and recommendation, in which she found that there existed no genuine issue of material fact and that the Club qualified as a bona fide private membership club under § 2000e(b). Both parties filed objections to the report and recommendation. The parties agreed that there was no issue of material fact but took predictable exceptions to certain of the magistrate judge's legal conclusions. EEOC objected to her finding that the Club was not covered by the § 2000e(b) definition of employer, and the Club disagreed with her holding that it bore the burden of proving that it qualified under the private club exemption.

    The district court reviewed the disputed portions of the magistrate judge's report and recommendation de novo under 28 U.S.C. § 636(b)(1) and FED.R.CIV.P. 72(b). It issued a decision on March 31, 1995, in which it discussed and overruled both parties' objections and granted summary judgment in favor of the Club. The court entered final judgment on April 5, and EEOC appealed.

  3. Our standard of review

    The parties agree that the material facts are not in dispute, but their opinions diverge on the inferences and conclusions the district court drew from those facts. Their disagreement focuses upon the district court's application of its interpretation of the private club exemption of § 2000e(b) in ruling on the cross-motions...

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