Supreme Court ruling is a cautionary tale to employers

Employers Beware: In a cautionary tale to employers, the U.S. Supreme Court held that employers defending harassment claims under Title VII may waive a "potentially dispositive defense" if asserted too late. Writing unanimously for the court, Justice Ruth Bader Ginsburg held that the charge-filing requirement under Title VII of the Civil Rights Act of 1964 is a nonjurisdictional claim-processing rule. Accordingly, while it is a potentially dispositive defense, it is subject to waiver if asserted by an employer too late in the litigation process. Fort Bend County, Texas v. Davis, 2019 DJDAR 4761 (June 3, 2019).

Raising Failure to Exhaust Early

Davis was working in IT for Fort Bend County, Texas, when she notified human resources that the director of IT was sexually harassing her. Her employer investigated the allegations and the director subsequently resigned. Davis alleges that she experienced retaliation (curtailment of work responsibilities) for reporting sexual harassment.

Seeking redress, Davis filed a charge with the Equal Employment Opportunity Commission alleging sexual harassment and retaliation for reporting the harassment to her employer. While her EEOC charge was pending, Fort Bend told Davis to report to work on an upcoming Sunday. Davis told her supervisor that she had a church commitment on Sunday and offered to arrange for another employee to cover the shift. Davis' supervisor told her that if she did not show up for work, Fort Bend would terminate her employment. Davis went to church. Fort Bend terminated her employment.

After her termination, Davis handwrote "religion" and checked the "discharge" and "reasonable accommodation" boxes on her EEOC intake questionnaire but she made no changes on her formal EEOC charge. Davis obtained a "right to sue" and filed a civil action in the Southern District of Texas. Fort Bend obtained summary judgment, which the 5th U.S. Circuit Court of Appeals upheld as to retaliation but reversed as to religion-based discrimination. "Years into the litigation," when it returned to the district court for adjudication of Davis' religion-based discrimination claim, Fort Bend moved to dismiss "assert[ing] for the first time that the District Court lacked jurisdiction to adjudicate Davis' religion-based discrimination claim because she had not stated such a claim in her EEOC charge."

The district court granted Fort Bend's motion, the 5th Circuit reversed, and the U.S. Supreme Court granted Fort Bend's petition for certiorari to answer the following question: "Is Title VII's charge-filing precondition to suit a 'jurisdictional' requirement that can be raised at any stage of a proceeding; or is it a procedural prescription mandatory if timely raised, but subject to forfeiture if tardily asserted?"

The import of the distinction is explicit in the question itself: Holding that Title VII's exhaustion requirement is a nonjurisdictional claim-processing rule rather than a jurisdictional prescription opens up the possibility of an employer waiving or forfeiting the potentially-dispositive defense. And that is exactly what the Supreme Court held.

Title VII's exhaustion of administrative remedies is a claim-processing rule that is "'mandatory' in the sense that a court must enforce the rule" if an employer properly raises the rule. But an employer may forfeit the potentially dispositive defense if it "waits too long" to raise the defense.

Under the Supreme Court's ruling, the exhaustion of administrative remedies is mandatory but not jurisdictional. In other words, a court "must enforce the rule" if timely raised but not if a party "waits too long to raise the point." The court's holding does not provide a bright line for what it considers "too late" for an employer to raise the defense. But based upon the Supreme Court affirming the 5th Circuit's decision in the Fort Bend matter, waiting "[y]ears into the litigation" to "assert[] for the first time" failure to exhaust the administrative prerequisite of filing a charge with the EEOC is too late.

California Impact

Most discrimination claims filed in California are claims under the California Fair Employment and Housing Act rather than under Title VII. Under a work-sharing agreement, charges filed with either agency are deemed filed with the other. Under the FEHA, the California Supreme Court has held that filing an administrative charge before filing a civil action in court is "a jurisdictional prerequisite to resort to the court." Johnson v. City of Loma Linda, 24 Cal. 4th 61, 70 (2000). Accordingly, FEHA lawsuits are subject to dismissal for failure to file an administrative charge before commencing a civil lawsuit. Okoli v. Lockheed Tech. Ops. Co., 36 Cal. App. 4th 1607, 1613 (1995).

California case law already suggests that that failure to raise administrative exhaustion as a defense in the trial court may waive the defense on appeal. See, e.g., Mokler v. County of Orange, 157 Cal. App. 4th 121 (2007); Kim v. Konad USA Dist., Inc., 226 Cal. App. 4th 1336 (2014). So management-side employment counsel have long had reason to raise administrative exhaustion as a defense in FEHA matters. And to raise it early on in litigation.

Fort Bend is a cautionary tale to raise the failure to exhaust administrative remedies defense early or risk forfeiting the potentially dispositive defense. Because the employer waited "[y]ears into the litigation," where the deadline on forfeiture, at least ast to Title VII claims, is unclear. What is clear is that exhaustion of administrative remedies is mandatory under Title VII and the FEHA. Whether or not it is jurisdictional (and what exactly the impact of a jurisdictional requirement means) is less clear though Davis holds that exhaustion of administrative remedies is a nonjurisdictional claim-processing rule for purposes of Title VII. Either way, the defense is potentially dispositive. Management-side defense counsel are well advised to raise the defense early in litigation. In the words of RBG: "Defendants, after all, have good reason promptly to raise an objection that may rid them of the lawsuit filed against them."