E.E.O.C. v. CNA Ins. Companies

• Decision Date: 27 September 1996
• Docket Number: No. 96-1304,96-1304
• Citation: 96 F.3d 1039
• Parties: , 20 Employee Benefits Cas. 1949, 5 A.D. Cases 1769, 8 NDLR P 353 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. CNA INSURANCE COMPANIES, Continental Casualty Company, and Continental Assurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1039

96 F.3d 1039

65 USLW 2220, 20 Employee Benefits Cas.

1949, 5 A.D. Cases 1769,

8 NDLR P 353

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. CNA INSURANCE COMPANIES, Continental Casualty Company, and Continental Assurance Company, Defendants-Appellees.

No. 96-1304.

United States Court of Appeals, Seventh Circuit.

Argued May 28, 1996.

Decided Sept. 27, 1996.

Samuel A. Marcosson, argued, E.E.O.C., Office of General Counsel, Washington, DC, Jean P. Kamp, John C. Hendrickson, E.E.O.C., Chicago, IL, for E.E.O.C.

Jeffrey S. Goldman, Allison Blakley, argued, Michael A. Paull, Fox & Grove, Chicago, IL, for CNA Ins. Companies, Continental Casualty Co., Continental Assur. Co.

Sally Dunaway, American Association of Retired Persons, Washington, DC, for American Association of Retired Persons.

Shelly R. Jackson, Leonard S. Rubenstein, Judge David L. Bazelon Center for Mental Health Law, Washington, DC, for Amicus Curiae Judge David L. Bazelon Center for Mental Health Law.

Arlene Mayerson Berkeley, CA, for Amicus Curiae Disability Rights Education and Defense Fund, Inc.

Vicki Laden, Claudia Center, Jennifer Middleton, Employment Law Center, San Francisco, CA, for Amicus Curiae Employment Law Center.

Catherine A. Hanssens, Lambda Legal Defense and Education Fund, New York City, for Amicus Curiae Lambda Legal Defense & Education Fund, Inc.

Ronald S. Honberg, National Alliance for the Mentally Ill, Arlington VA, for Amicus Curiae National Alliance for the Mentally Ill Edward Copeland, Cary LaCheen, New York Lawyers for the Public Interest, Inc., New York City, for Amicus Curiae New York Lawyers for the Public Interest, Inc.

Douglas S. McDowell, Ann Elizabeth Reesman, Ellen Duffy McKay, McGuiness & Williams, Washington, DC, for Amicus Curiae Equal Employment Advisory Council.

Before CUMMINGS, ESCHBACH, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

In this case, we are asked to decide to what extent, if at all, the Americans with Disabilities Act of 1991 (ADA), 42 U.S.C. §§ 12101 et seq., requires equality of treatment among disabilities in benefit plans. Specifically, the Equal Employment Opportunity Commission (EEOC) is attempting to bring an action on behalf of Cynthia Valladares-Toledo, who suffers from a long-term mental disability, to require the defendant companies to treat mental illness the same as physical illness under their long-term disability policies. Two hurdles lie between us and the central issue: possible mootness, and the EEOC's right to bring such an action on behalf of a former employee. We conclude that the action is not moot, but this is something of a Pyrrhic victory for the EEOC, for we also conclude that the district court correctly refused to enjoin the defendant companies from ceasing to pay benefits to Valladares-Toledo pending the EEOC's investigation of the matter.

I

Valladares-Toledo worked for Continental Casualty Co. (a company within a group collectively known as "CNA Insurance Companies" and hereafter referred to as "CNA") for twenty-five years, from 1968 to 1993. When she started working there, she opted to participate in the disability policy CNA offered to its employees. The policy is funded exclusively through employee contributions, which Valladares-Toledo paid from every paycheck she received. In 1985, CNA modified the benefits payable under the policy in one important respect: whereas previously benefits could be received for all long-term disabilities until the employee reached age 65, after the amendment only physical disabilities continued to receive that treatment. Payments for mental and nervous disorders could thenceforth be made for only a two-year period.

In October 1992, Valladares-Toledo was diagnosed with severe depression and bipolar illness. For the next year, she received short-term disability payments from CNA, but when those payments ran out and she could not return to work, she was discharged, in keeping with CNA policy. Following her termination, she made a claim for benefits under CNA's long-term disability plan. Initially, she received a letter from the company dated November 16, 1993, indicating that she would begin receiving benefits under the plan, retroactive to October 7, 1993. That letter explained that her disability benefits were limited to a maximum period of 24 months, because her disability was the result of a mental or emotional disorder. About a month later, confusingly, Valladares-Toledo received a second letter, dated December 17, 1993, which purported to provide an overview of the benefits to which she was entitled under the long-term disability plan. It stated that her "LTD" income would continue until January 1, 2014, unless one of the events justifying termination under the plan occurred sooner. Ten months later, Valladares-Toledo's lawyer wrote to CNA asking the company to confirm the duration of his client's entitlement to long-term benefits. Retrenching, the company responded in a letter of October 24, 1994, that its advice in the December 17, 1993, letter had been in error, and that her benefits were limited to the 24 months originally mentioned.

That was the wrong answer, from Valladares-Toledo's perspective. On January 18, 1995, she filed a charge of discrimination with the EEOC alleging that CNA's long-term disability plan discriminated against employees with mental or nervous disorders, in violation of the ADA. The EEOC undertook an investigation of her case, and on October 11, 1995 (four days after the expiration of the 24-month period) it filed a complaint seeking a preliminary injunction that would require CNA to continue paying benefits to Valladares-Toledo pending the outcome of the EEOC's investigation.

The district court denied the requested injunction on the ground that Valladares-Toledo, and hence the EEOC, had no standing to bring a claim under Title I of the ADA because Valladares-Toledo did not meet the statutory definition of a "qualified individual with a disability." See EEOC v. CNA Insurance Companies, et al., 1996 WL 26879 (N.D.Ill.1996). The court noted for the record that it was satisfied that Valladares-Toledo had filed her EEOC charge within the 300-day limitations period that applies in Illinois. See 42 U.S.C. § 12117(a); Lever v. Northwestern University, 979 F.2d 552, 553 (7th Cir.1992), cert. denied, 508 U.S. 951, 113 S.Ct. 2443, 124 L.Ed.2d 661 (1993). CNA claimed that the allegedly discriminatory act occurred with the November 16, 1993, letter, while Valladares-Toledo argued that the discrimination was not clear until the October 24, 1994, letter. At least for summary judgment purposes, the court agreed that the later date was the time when CNA finally established its official position, and thus that the charge was timely. CNA did not challenge this part of the district court's decision on appeal.

The EEOC filed its Notice of Appeal with this Court on February 8, 1996. On March 1, 1996, the District Director of the Chicago EEOC Office issued a determination that there is "reasonable cause to believe" that CNA's policy with respect to Valladares-Toledo's long-term disability benefits violated the ADA. On March 19, 1996, the District Director advised CNA's counsel, by letter, that the EEOC was terminating conciliation efforts. CNA promptly moved on March 22, 1996, to dismiss the appeal on grounds of mootness. We therefore have before us both the EEOC's appeal from the denial of the preliminary injunction and CNA's motion to dismiss.

II

Because the question of mootness goes to our jurisdiction to entertain this appeal, we consider it first. In its moving papers, CNA claims that the EEOC's administrative process ended no later than March 19, 1996, which was the date when the District Director informed CNA that further conciliation efforts would be futile or nonproductive. It notes that § 706(f)(2) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(f)(2), applies in ADA cases by virtue of § 107(a) of that Act, 42 U.S.C. § 12117(a), and that § 706(f)(2) gives the EEOC the power to obtain a preliminary injunction while it is considering a filed charge only "pending final disposition of such charge." The EEOC's papers in the district court, as well as its brief in this Court, request relief "during the pendency of the EEOC's administrative processing of the charge." Since the District Director has concluded there is nothing left to do, CNA reasons, there is no longer an administrative process to protect by means of an injunction, and this appeal is moot. It acknowledges that this approach leaves a gap of indeterminate length between the end of the administrative phase of a case and the beginning of the court phase (either in the EEOC's own action or by a complainant after receipt of a right to sue letter), during which no one would have the right to seek preliminary injunctive relief, but it dismisses this problem as a consequence of the statutory scheme.

The EEOC agrees that § 706(f)(2) permits it to seek interim relief pending the Commission's final disposition of a charge, but it takes issue with CNA's theory that the District Director's letter constitutes the necessary final act. Even though the investigation and conciliation phases have closed, the administrative process does not end until the Commission officially decides whether to file a suit or to issue a right to sue letter. See § 706(f)(1), 42 U.S.C. § 2000e-5(f)(1). The EEOC also points to a number of judicial decisions that have held that the issuance of a right to sue notice is the final administrative step. See, e.g., McGuire v. Aluminum Co. of America, 542 F.2d 43, 45 (7th Cir.1976); Lacy v. Chrysler Corp., 533 F.2d 353, 356 (8th Cir.) (en banc), cert. denied, 429 U.S. 959, 97 S.Ct. 381, 50 L.Ed.2d 325 (1976).

Nothing in CNA's arguments detracts from the fact that the EEOC has power to take administrative actions in a case until the matter is formally closed or...