When it comes to class litigation, the U.S. Equal Employment Opportunity Commission has a reputation for suing first and asking questions later.

Now an employer is crying foul. In a case that could rewrite the ground rules for high-stakes EEOC litigation, Marion, Ill.-based Mach Mining LLC has asked an appeals court to take a hard look at the agency's efforts — or lack thereof — to settle complaints before heading to court.

The EEOC sued Mach in 2011 for sex discrimination, alleging that the company has never hired a woman miner. But Mach claims that, before suing, the EEOC refused to explain its settlement demands, wouldn't meet in person and cut off negotiations even though the company wanted to keep talking. Mach wants the court to toss the suit as a result, claiming the EEOC did not comply with its obligation under Title VII of the Civil Rights Act to conciliate in good faith before bringing a suit.

The EEOC counters that the courts have no authority here — that Title VII "precludes judicial review of conciliation," according to the agency's brief. Instead, "the process is committed solely to the EEOC's discretion." The commission contends conciliation is a key part of enforcement practices.

An EEOC spokeswoman in an email message said that the agency's "brief speaks for itself and we do not comment while cases are pending in the courts of appeals."

The closely watched case, pending before the U.S. Court of Appeals for the Seventh Circuit, has attracted amicus curiae support from major business groups, all weighing in on Mach's side.

"More and more, employers are being required to face the Hobson's choice of either spending hundreds of thousands of dollars in counsel fees pushing back against unreasonable EEOC conciliation conduct, or blindly acceding to conciliation demands on behalf of entire classes of unidentified victims whose individual damages have never been disclosed," Rae Vann, a partner at Norris, Tysse, Lampley & Lakis, wrote on behalf of the Equal Employment Advisory Council and the Society for Human Resource Management.

Gerald Maatman Jr., co-chairman of the class action defense group at Seyfarth Shaw, agreed. In settlement talks, the EEOC tends to "meet employers with a stiff arm, to put a gun to their head," he said. "This is a key case because it's an opportunity for the Seventh Circuit to analyze what the obligation of the EEOC is to conciliate in good faith."

Title VII requires the EEOC, before filing suit, to engage in "informal methods of conference, conciliation and persuasion." Only if those efforts fail and the EEOC is "unable to secure from the respondent a conciliation agreement acceptable to the Commission" may the agency proceed to court.

"It's important that the EEOC as a federal agency play within the rules Congress set forth," said Deborah White, president of the Retail Litigation Center, which filed an amicus brief backing Mach that was joined by the U.S. Chamber of Commerce and National Federal of Independent Business' Small Business Legal Center. "Employers want to be engaged in meaningful conciliation."

By claiming that conciliation can't be reviewed by the courts, Morgan, Lewis & Bockius employment partner Paul Evans said, the EEOC is "asking the court to take its word for it as to whether it has conciliated as required by law. There's no good reason why the courts should shield EEOC enforcement efforts from judicial review."

In the Mach case, the EEOC said the southern Illinois coal mine operator, which employs more than 130 men, had received scores of applications from women since 2006 but hired none of them. In a September 27, 2011, press release announcing the suit, EEOC lawyer Gregory Gochanour said that Mach "needs to realize this is 2011, not 1911."

The agency filed suit in U.S. District Court for the Southern District of Illinois on behalf of Brooke Petkas and other female applicants, alleging discrimination in hiring on the basis of sex. Such cases of widespread, systemic discrimination are a top priority under the EEOC's new strategic enforcement plan.

DIFFERENCES OVER EXTENT OF TALKS

Mach, represented by R. Lance Wit­cher and David Schenberg in Ogletree, Deakins, Nash, Smoak & Stewart's St. Louis office, asserted that EEOC lawyers never really tried to settle the case before rushing to court. They said the suit was filed three days before the end of the fiscal year, when the agency's litigation activities are tallied and touted in an annual report. Witcher and Schenberg also declined to comment.

Mach in court papers said the EEOC refused to set forth any evidence supporting its findings or explain the basis of its settlement demands; wouldn't identify the female applicants that the EEOC said the company had to offer employment; balked at meeting in person; and cut off talks "despite Mach's numerous substantial counteroffers and Mach's express willingness to continue negotiations."

So Mach went on the offensive. In its answer to the EEOC's complaint, the company asserted that the suit against it should be dismissed because the EEOC failed to conciliate. The problem was not that the EEOC refused a particular settlement offer, Mach said. Rather, it was that the EEOC was "refusing to provide the information any reasonable employer would need to evaluate the EEOC's demand and formulate a reasonable response."

The EEOC in court papers didn't defend its efforts to conciliate with Mach. Instead, it moved for partial summary judgment, asserting that conciliations "are not subject to judicial review."

In May, U.S. District Judge J. Phil Gilbert disagreed, finding that "at least some level of inquiry into the conciliation process is appropriate."

The EEOC requested an interlocutory appeal from the Seventh Circuit, which agreed to review the case.

In its appellate brief, the EEOC said that conciliation "is central to the Com­mission's enforcement scheme," and that the agency had resolved nearly 13,000 cases this way during the past 10 years. In fact, the agency said, it gets more impressive results via conciliation, resolving 1,591 charges in 2012 and obtaining $364.5 million in settlements. By comparison, EEOC lawyers litigated 283 cases last year and won $44.2 million.

Still, the EEOC insists that the text of Title VII "does not provide for review of conciliation and leads to the conclusion that review is precluded." The agency said it should be sufficient for it to "certify in its complaint the fact that it had engaged in conciliation."

The brief by General Counsel P. David Lopez and lawyers from his office — Eric Harrington, Lorraine Davis and Carolyn Wheeler — argues the focus on conciliation is a way for employers to avoid facing the merits of EEOC charges. "In the EEOC's experience, this is becoming a routine defense tactic in EEOC-initiated suits, undermining conciliation itself."

Failure to conciliate was a major factor in one of the EEOC's most crushing recent defeats — a sexual harassment case against CRST Van Expedited Inc. In that case, the court found the EEOC made no attempt to conciliate the claims of individual class members and in August ordered the agency to pay $4.7 million in attorney fees.

Lawyers for Mach say the CRST outcome shows why judicial review of conciliation is needed. "History demonstrates that the EEOC's word on the subject is not always accurate," Witcher wrote. Furthermore, he argued, just because Title VII didn't specify that conciliation is subject to review, that doesn't mean it's not. "Congress cannot have intended to give the EEOC a blank check, and no court has allowed the EEOC to sit as judge of its own compliance."

Jenna Greene can be contacted at jgreene@alm.com.