Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—5th Cir.: Pro se status not required at time of EEOC filing to invoke exceptions to named-party exhaustion requirement, (Sep 18, 2014)

By Brandi O. Brown, J.D.

It was not necessary for employees who intervened in an EEOC suit to have been proceeding pro se when they filed their EEOC charges in order to take advantage to judicially-recognized exceptions to Title VII’s named-party exhaustion requirement, ruled a Fifth Circuit panel. When intervening in the suit, the restaurant franchise employees also named as a defendant the parent corporation. The appeals court vacated the lower court’s grant of summary judgment for that defendant (EEOC v. Simbaki, Ltd, September 17, 2014, Clement, E.).

Slapping and biting. Two employees of a Berryhill franchise filed EEOC charges against their former employer in 2007 and 2008 for sexual harassment. The facts they alleged, which were conceded in part by the franchise owner, included that the owner slapped and groped them, verbally harassed them, exposed himself, kissed them without permission, and spanked one employee on the bottom so hard that she was bruised. The owner also conceded that he asked one employee to have a child with him and invited her to go on his boat, with the invitation “Pants okay, but not necessary.” After receiving their complaints, he admittedly put up a sign stating, “Notice: sexual harassment in this area will not be reported. However, it will be graded.”

EEOC proceedings. When the employees filed their separate EEOC charges, they each named “Berryhill Baja Grill” and provided an address for the franchise location. They each identified the franchise owner as the “Owner.” Although the charges did not discuss Berryhill Corporate, the EEOC served notice on it as to both charges, informing it that discrimination charges had been filed against “your organization.” The letters were addressed to the CEO and Berryhill Corporate conceded their receipt. The Director of Operations responded in an internal email to the CEO that the charges were “BAD,” “toxic for Berryhill,” and implored the CEO not to do further business with the franchise owner.

Berryhill Corporate responded to the EEOC that they had nothing to do with the franchise owner’s operation and that it was not a corporate store. Thereafter, Berryhill Corporate’s role in the administrative proceedings was “murky” but they “clearly knew that EEOC proceedings were occurring.” The CEO testified that it could have stayed involved with the EEOC investigation had it chosen to do so. The EEOC’s internal documents indicated that it considered Berryhill Corporate to be a respondent, although it was not invited to the fact-finding conference. Most of the notices went to the franchise owner.

Corporate severed from suit. When the EEOC filed suit, it filed against the franchise. The two employees intervened thereafter and added the franchise owner and Berryhill Corporate as defendants. Berryhill Corporate moved for summary judgment, arguing, in part, that the two employees had not exhausted their administrative remedies against it because they had not named it in their charges. The district court agreed and also indicated that the two employees could not take advantage of judicially-recognized exceptions to the named-party requirement because they had been represented by counsel when they filed their EEOC charges. Berryhill Corporate was severed from the lawsuit and the employees appealed.

Only named franchise. In order to reach the question of whether the exception applied to employees who were represented by counsel, the panel first had to determine whether the lower court had erred in determining that the employees had not actually named Berryhill Corporate in their EEOC charges. The appeals panel agreed that they had not. The employees contended that because they had used Berryhill Corporate’s trade name in the charge (Berryhill Baja Grill), they had complied with Title VII’s requirement. However, the appeals panel explained that their argument attempted to “stretch a judicial recognition” that sometimes employees make mistakes when naming companies by their trade names “into a blanket rule that use of a trade name is always sufficient even when there is no other indication anywhere in the charge that the company violated Title VII.” Based on its review of the charges, the panel determined that the employees had only named the franchise.

The court also was not persuaded by the employees’ argument that they must have named the corporation because it was given notice of the charges against its organization. The panel concluded that “it would be inappropriate for us to look to a post-charge notice to determine whether a party was named,” much the same as the U.S. Supreme Court had determined in Federal Express Corp. v. Holowecki that it was inappropriate to look at post-charge notices in order to determine what constituted a charge.

Named-party requirement exception. Although leaving it to the lower court to apply, the appeals panel laid out the two main tests used to determine whether the named-party requirement exception could be invoked — the Glus v. G.C. Murphy Co. test and the Eggleston v. Chicago Journeymen Plumbers’ Local Union No. 130, U.A., test. Thus, the panel explained, it was necessary to examine “whether a party can meet either (1) the Third Circuit’s Glus test for whether there is an identity-of-interest or (2) the Seventh Circuit’s Eggleston test for whether there was actual notice of the charge and an opportunity to participate in conciliation.”

However, first, the panel had to determine whether represented parties could evoke those exceptions. No circuit court had addressed the “precise issue” and the district courts were split. The panel concluded that parties represented by counsel could invoke the exceptions. This determination was guided, first, by the principle of consistency. Although filings of pro se parties are construed liberally, the panel noted that pro se parties are still generally required to abide by federal court rules. “Fashioning a wholly separate set of exhaustion requirements for pro se parties—rather than simply construing pro se charges more liberally—would therefore be incongruous with our general requirement that pro se parties follow the rules of federal court,” the court explained.

Remedial purpose. A second guiding point for the panel’s determination was Title VII’s remedial purpose. “[T]his result is more consistent with our ‘well-recognized’ practice of liberally construing Title VII’s requirements in light of” that purpose, the court explained. The point of the exception was to permit suits to continue where the purpose of the named-party requirement—that the allegedly discriminating party receive sufficient notice—has been met. Thus, the panel rejected “a per se rule” preventing represented parties from invoking the judicially-recognized exceptions. Vacating the district court’s grant of summary judgment to Berryhill Corporate, the panel remanded, leaving it to the district court to determine whether the Glus or Eggleston exceptions were applicable.

The case is 13-20387.

Attorneys: Curtis Dean Herms, Jr. (Allen, Vahrenwald & Johnson) and Pam Rea (Stanley, Frank & Rose) for Simbaki, Ltd. Matthew Thomas Deffebach (Haynes & Boone) for Berryhill Hot Tamales Corp. John Bruce Shely (Andrews Kurth) for Laura Baatz.

Companies: Simbaki, Ltd.; Berryhill Hot Tamales Corp.

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