Jottings By An Employer's Lawyer

Saturday, May 06, 2006

Disparate Impact Claim Fails In 5th Circuit For Failure to Exhaust Administrative Remedies

A failure to promote case which seemed simple enough on its face nevertheless gave the 5th Circuit the opportunity to discuss a number of substantive issues. Its major holding -- a disappointed air controller's claim that his disparate impact claim should have been considered was denied because his allegation that a "good old boy" had received a promotion to supervisor instead of him, was not sufficient to exhaust his administrative remedies. Deciding a case of first impression for it, the Court found it was not reasonable to assume that an investigation of such a charge would encompass disparate impact issues as well as disparate treatment.

Although noting the review of the scope of the charge was fact intensive and thus bright lines were hard to draw, the Court focused on the absence of the mention in the charge of a neutral business policy which is "the cornerstone of any EEO disparate-impact investigation, since the EEO must evaluate both the policy’s effects on protected classes and any business justifications for the policy." Pacheco v. Mineta (5th Cir. 5/5/06) [pdf].

Even though this case involved the administrative scheme for government employees, insofar as the exhaustion principle, the Court found it was the same test as used for private sector employees and the scope of a charge filed with the EEOC.

The Court outlined an intra-circuit dispute -- whether the failure to exhaust was jurisdictional or merely a pre-requisite to suit, and thus subject to waiver and estoppel, but since no claim of the latter was made, found it did not have to choose sides.

The Court also found nothing in the record to indicate an abuse of discretion in the district court's rejection of plaintiff's request for discovery of
FAA employee-promotion data dating back to 1995, five years before the policy of which he apparently complains was implemented. More importantly, Pacheco requested this data for the entire Southwest region even though he never alleged discrimination by anyone but the Manager of the FAA’s CorpusChristi facility.
An inquiry which the Court dubbed "broad, and largely irrelevant, discovery." A good reminder of the proper scope for discovery in discrimination cases.

Concluding this simple case that managed to raise a host of novel issues, the Court joined other circuit courts which had addressed the situation by finding the district court's failure to award costs to the prevailing defendant under Rule 54(d)(1) was an abuse of discretion. Because of the strong presumption that costs should be awarded, any denial must be accompanied by a reason. When pressed here the trial court said:
It is clear that Plaintiff brought this action in good faith. He is represented by an excellent lawyer who litigates in good faith. Under such circumstances, each party should bear its own costs.
Given that every lawsuit is required to be brought in good faith, such a standard is not enough, said the Court sending the case back to the court for further consideration.

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