No. 10-20291 _______________________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _______________________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff/Appellant, v. PHILIP SERVICES CORPORATION, Defendant/Appellee. _______________________________________________________ On Appeal from the United States District Court for the Southern District of Texas _______________________________________________________ BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________________ P. DAVID LOPEZ General Counsel CAROLYN L. WHEELER Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel JULIE L. GANTZ Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E. Washington, D.C. 20507 (202) 663-4718 STATEMENT REGARDING ORAL ARGUMENT The Equal Employment Opportunity Commission respectfully requests that oral argument be granted in this case. The complaint alleges that the defendant repudiated oral conciliation agreements that settled charges of race discrimination filed by a number of present and former employees. The district court, without considering the merits or permitting any discovery, dismissed the suit, holding that an oral conciliation agreement settling Title VII charges may never be enforced in court. In the court's view, Title VII's confidentiality provision regarding the conciliation process precludes the EEOC from using anything said or done in conciliation in court, even in an action to enforce a conciliation agreement. If affirmed, this ruling would preclude the EEOC from ever enforcing its conciliation agreements and would severely hamper our ability to conciliate charges, contrary to Congress's strong preference for resolving Title VII disputes without litigation. Because there is no case law directly on point, the appeal will turn on a careful review of Title VII's confidentiality provisions, analogous cases involving settlement agreements, and the policy reasons weighing heavily in favor of encouraging settlement. We therefore believe that oral argument will be helpful to the Court. TABLE OF CONTENTS STATEMENT REGARDING ORAL ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . ii TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv STATEMENT OF JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ISSUE PRESENTED FOR REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF THE CASE A. Course of Proceeding. . . . . . . . . . . . . . . . . . . . . . . . . . 2 B. Statement of the Facts. . . . . . . . . . . . . . . . . . . . . . . . 3 C. District Court's Decision. . . . . . . . . . . . . . . . . . . . . . . . 6 STANDARD OF REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARGUMENT THE DISTRICT COURT ERRED IN HOLDING THAT TITLE VII PROHIBITS THE USE OF ANY EVIDENCE REGARDING WHAT WAS AGREED TO DURING CONCILIATION NEGOTIATIONS IN A SUBSEQUENT ACTION TO ENFORCE A CONCILIATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 CERTIFICATION OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 22 CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Alexander v. Gardner-Denver Co., 415 U.S. 36 (1977). . . . . . . . . . . . . . . . 12 Alexander v. Indus. of the Blind, Inc., 901 F.2d 40 (4th Cir. 1990). . . . . . . . 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). . . . . . . . . . . . . . . . . . . . 8 Branch v. Phillips Petroleum, 638 F.2d 873 (5th Cir. 1981). . . . . . 7, 11, 16, 17, 18 Cuvillier v. Taylor, 503 F.3d 397 (5th Cir. 2007). . . . . . . . . . . . . . . . . . 8 EEOC v. Assoc. Dry Goods Corp., 449 U.S. 590 (1981). . . . . . . . . . . . . . 18, 19 EEOC v. Liberty Trucking, 695 F.2d 1038 (7th Cir. 1982). . . . . . . . . . . . . . . .12 EEOC v. Safeway Stores, Inc., 714 F.2d 567 (5th Cir. 1983). . . . . . . . . . . . passim Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207 (5th Cir. 1981). . . . . . . . . . 13 Glass v. Rock Island Refining Corp., 788 F.2d 450 (7th Cir. 1986). . . . . . . . . . 14 Olitsky v. Spencer Gifts, 842 F.2d 123 (5th Cir. 1988). . . . . . . . . . . . . . . . 17 Rosenblatt v. United Way of Greater Houston, No. 09-20131, 2010 WL 2015362 (5th Cir. May 21, 2010). . . . . . . . . . . . . . . . . . . . . . . . . . 8 Worthy v. McKesson Corp., 756 F.2d 1370 (8th Cir. 1985) 14 STATUTES AND REGULATIONS Title VII of the Civil Rights Act of 1964 42 U.S.C. §§ 2000e et seq. . . . . . . . . . . . . . . . . . . . . . . . . 1, 2 42 U.S.C. § 2000e-5(b). . . . . . . . . . . . . . . . . . . . . . . . . . passim 42 U.S.C. § 2000e-5(f)(1). . . . . . . . . . . . . . . . . . . . . . . . . . 12 28 U.S.C. § 1331. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 28 U.S.C. § 1345. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 29 C.F.R. § 1601.24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 28 U.S.C. § 1291. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 LEGISLATIVE HISTORY 110 Cong. Rec. 12819, 12723 (1964) . . . . . . . . . . . . . . . . . . . . . . . . . .18 110 Cong. Rec. 8193 (1964). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 STATEMENT OF JURISDICTION This is a breach of contract action brought by the Equal Employment Opportunity Commission pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. The district court had jurisdiction under 28 U.S.C. § 1345 (United States as a plaintiff) and 28 U.S.C. § 1331 (case arising under laws of the United States). See also EEOC v. Safeway Stores, Inc., 714 F.2d 567, 573 (5th Cir. 1983) (suit to enforce conciliation agreements negotiated by the EEOC was "brought under" Title VII). The district court entered final judgment on February 25, 2010. RE-Tab 4, ROA-608.<1> The Commission filed a timely notice of appeal on April 26, 2010. RE-Tab 2, ROA-615-16. This Court has jurisdiction under 28 U.S.C. § 1291. ISSUE PRESENTED FOR REVIEW Whether the district court erred in holding that the confidentiality provision contained in § 706(b) of Title VII precludes the use of evidence concerning what was agreed to in a conciliation proceeding even in a breach of contract action seeking to enforce the conciliation agreement. STATEMENT OF THE CASE A. Course of Proceedings This is an appeal from a final judgment of the district court dismissing this breach of contract action brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. This action was filed on May 28, 2009. RE-Tab 1, ROA-2, R.1 (docket sheet). The Commission filed an amended complaint on June 29, 2009. RE-Tab 1, ROA-2 (see R.3). On July 9, 2009, the defendant filed a motion to dismiss, or in the alternative, for summary judgment. RE-Tab 1, ROA-2 (see R.6); see also ROA-25 (PSC Motion to Dismiss). Two months later, the case was assigned to a magistrate judge. RE-Tab 1, ROA-3 (see R.14). The district court subsequently granted defendant's motion for a protective order precluding any discovery. RE-Tab 1, ROA-4 (see R.24); see also ROA-332 (transcript from October 15, 2009 motion hearing). Thereafter, the defendant filed a motion for Rule 11 sanctions against the EEOC and its attorney. RE-Tab 1, ROA-4 (see R.31); ROA-371 (PSC Motion for Rule 11 Sanctions). The magistrate judge issued a memorandum and recommendation on January 6, 2010, recommending that defendant's motion to dismiss be granted, that the summary judgment motion be denied as moot, and that the motion for sanctions be denied. RE-Tab 5, ROA- 499. On February 25, 2010, the district court issued an order adopting the magistrate judge's recommendation. RE-Tab 4, ROA-608. B. Statement of the Facts Nine current and former black employees of Philip Services Corporation ("PSC") filed race discrimination charges with the Houston District Office alleging that the company violated Title VII. RE-Tab 6, ROA-16-17 (First Amended Comp. ¶7). The district office found reasonable cause to believe that the charges were true and entered into conciliation discussions with PSC regarding eight of the charges. RE-Tab 6, ROA 17 (First Amended Comp. ¶8). The complaint alleges that the parties entered into eight conciliation agreements settling the claims of the charging parties and a class of black employees, and that the company subsequently "repudiated the Agreements and has failed to comply with the terms of the Agreements." RE-Tab 6, ROA-15 (First Amended Comp. ¶1). Although there was no discovery in this case, the parties each submitted a declaration from one of their negotiators. The EEOC submitted the declaration of James Sacher, who represented the Commission at a conciliation conference on February 23, 2009. RE-Tab 8, ROA-210 (see ¶3). The conference also was attended by the attorney for most of the charging parties, an EEOC investigator, and several PSC managers and attorneys. RE-Tab 6, ROA-17 (First Amended Comp. ¶8). According to Sacher's declaration, the parties discussed monetary and injunctive relief in a continuation of settlement offers and exchanges that predated the conciliation conference. RE-Tab 8, ROA-211-12 (Sacher Decl. ¶¶10-11, 14- 15). His declaration asserts that the parties orally agreed to a specific amount of monetary relief for seven of the charging parties and the class either that day or a few days afterwards. Id., ROA-212-14 (Sacher Decl. ¶¶15, 19-21, 23, 27). Sacher also states in his declaration that the EEOC was willing to settle any number of the nine charges and would not condition settling one on settling any other charge. Id., ROA-212 (Sacher Decl. ¶18). Sacher's declaration states that PSC was amenable to settling some of the claims even if all the charging parties did not settle. Id., ROA-212 (Sacher Decl. ¶17). According to Sacher, the parties also agreed on injunctive relief, including anti-discrimination training, revision of the process for evaluating supervisors, changes to promotion criteria, and posting of a notice to employees regarding the company's commitment to follow anti-discrimination laws. Id., ROA-213, 214 (Sacher Decl. ¶23, 29); RE-Tab 6, ROA-17 (First Amended Comp. ¶9). Sacher states in his declaration that the EEOC investigator handed PSC copies of a written conciliation agreement with general terms and that PSC stated that the agreement was acceptable. Re-Tab 8, ROA-213, 214 (Sacher Decl. ¶¶23, 30). PSC attorney Timothy Watson states in his declaration that there was no written agreement of any kind exchanged or signed by the parties. RE-Tab 7, ROA-58 (Watson Decl. ¶¶6, 9). Watson states that on February 25, the attorney for eight of the charging parties asked him for final written offers for his clients. Id., ROA-59 (Watson Decl. ¶10). According to Watson, PSC emailed settlement figures to them, stating that each settlement would be conditioned on the execution of a full release which would include a confidentiality provision. Id. Watson states in his declaration that, as of March 1, 2009, the agreements still had not been reduced to writing and two of the charging parties refused to settle their claims without more money. Id. (Watson Decl. ¶11). Additionally, he asserts that the company was never willing to settle unless all of the charging parties agreed to the monetary amounts offered. Id., ROA-58, 59 (Watson Decl. ¶¶6, 14). Watson also states that on March 3, 2009, he sent an e-mail to the charging parties' attorney that contained a revised draft agreement and stated "I HAVE NOT GOTTEN THIS APPROVED YET BY MY CLIENT." Id., ROA-59 (Watson Decl. ¶12) (original in upper case). The complaint alleges that on March 12, 2009, EEOC learned from the charging parties' attorney that PSC no longer wished to settle any of the charges. RE-Tab 6, ROA-19 (First Amended Comp. ¶15); see also RE-Tab 8, ROA 214 (Sacher Decl. ¶31). According to Watson's declaration, PSC decided to withdraw from final negotiations at that time because two charging parties were still demanding additional money, none of the other parties had executed a final release, and the EEOC had not supplied the proposed written agreement. RE-Tab 7, ROA-59-60 (Watson Decl. ¶¶13-15). C. District Court's Decision The district court adopted the magistrate judge's January 6, 2010, Memorandum and Recommendation and dismissed the Commission's case. RE- Tab 4, ROA-608 (Order Adopting Magistrate Judge's Memorandum and Recommendation at 1). The magistrate judge held that § 706(b)'s confidentiality provision was "an insurmountable impediment to proving the existence of an oral conciliation agreement." RE-Tab 5, ROA-511 (Memorandum and Recommendation ("Mem.") at 13). According to the magistrate, "filing a lawsuit to enforce an oral conciliation agreement directly violates both halves of the Title VII confidentiality provision: it makes public what was said and done in the conciliation process and it uses that information in a subsequent proceeding." Id. at 508 (Mem. at 10). The magistrate distinguished this case from EEOC v. Safeway Stores, 714 F.2d 567 (5th Cir. 1983), where this Court held that the EEOC could bring an action to enforce three conciliation agreements resolving Title VII charges, on the ground that the agreements in that case were in writing. Id. at ROA-509-10 (Mem. at 11-12). In Safeway Stores, the magistrate stated, "[t]he terms of each written agreement were provable by reference to the document itself without revelation of 'proposals and counterproposals of compromise made by the parties' during conciliation efforts." Id. at ROA-509 (Mem. at 11) (quoting Branch v. Phillips Petroleum, 638 F.2d 873, 881 (5th Cir. 1981)). The magistrate judge concluded that there was no way for the Commission to prove the existence of an alleged oral contract in this case "[w]ithout making public or using what was 'said or done' during the conciliation conference." Id. The magistrate judge declined to rule on the defendant's argument that the EEOC's regulations and Compliance Manual preclude oral conciliation agreements. RE-Tab 5, ROA-510 (Mem. at 12). However, the court noted that, even if the guidelines are not mandatory, they demonstrate that "the agency recognizes the importance of reducing conciliation agreements to writing, at least in part, in order to be in compliance with Title VII confidentiality requirements." Id. at ROA-510-11 (Mem. at 12-13). Because "the court is able to resolve the entire case based solely on the complaint and applicable law without the consideration of outside evidence," the magistrate judge denied the defendant's motion for summary judgment and the Commission's motion for a continuance to conduct discovery under Rule 56(f) as moot. Id. at ROA-511 (Mem. at 13). Finally, the magistrate denied PSC's motion for Rule 11 sanctions. The court stated that, although it "understands Defendant's frustration with the EEOC's refusal to accept the effect of Title VII's confidentiality provision on this suit," "[n]evertheless, the EEOC presents an unconvincing, yet nonfrivolous argument in support of its position." Id. at ROA-513 (Mem. at 15). The court conceded that Safeway Stores "arguably provides a launching pad for the EEOC's argument." Id. STANDARD OF REVIEW This Court reviews a district court's dismissal of a case under Rule 12(b)(6) de novo. See, e.g., Rosenblatt v. United Way of Greater Houston, No. 09-20131, 2010 WL 2015362, at *2 (5th Cir. May 21, 2010). The Court must accept as true all well-pleaded facts. Id. "To survive a Rule 12(b)(6) motion to dismiss, a complaint 'does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief including factual allegations that when assumed to be true 'raise a right to relief above the speculative level.'" Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). SUMMARY OF ARGUMENT Resolving Title VII disputes through voluntary conciliation and compliance was selected by Congress as the preferred means of eliminating employment discrimination. The Commission alleges in this action that it successfully negotiated conciliation agreements in this case, but the defendant repudiated them while the Commission was in the process of reducing them to writing. The district court dismissed the Commission's breach of contract action seeking specific performance of the agreements, holding that, even if the parties had agreed to settle the charges during conciliation, the agreements would be unenforceable because they were not written. In the court's view, the confidentiality provision contained in § 706(b) of Title VII makes it impossible for the Commission to establish that an oral contract had been formed. The district court's interpretation of § 706(b) is erroneous. According to the district court, § 706(b), which disallows the Commission from revealing as evidence what was "said or done" during and as part of conciliation efforts in a subsequent proceeding, necessarily would be violated in the case of an enforcement action involving an oral conciliation agreement. Under the district court's reasoning, even if it were incontrovertible that valid agreements had been reached, the Commission would be unable to enforce the agreements in court because the defendant repudiated the agreements before they were put into writing. This result is at odds with the Congressional goal of encouraging voluntary settlements of Title VII disputes. This Court has held, in EEOC v. Safeway Stores, 714 F.2d 567 (5th Cir. 1983), that the Commission can sue to enforce its conciliation agreements in federal court. The district court distinguished the instant case from Safeway Stores because the conciliation agreements in Safeway Stores were written and signed. This distinction does not withstand scrutiny for two reasons. First, the written agreements at issue in Safeway Stores were something "done during conciliation" which, if the district court's interpretation of § 706(b) were correct, could not be used in a subsequent proceeding to enforce the agreements. Furthermore, the district court's assumption that the terms of a written agreement would always be clear enough that evidence of what was "said and done" in the settlement process would be unnecessary is belied by Safeway Stores itself where the trial court relied on evidence concerning the parties' statements during conciliation to determine the parties' understanding of the written conciliation agreements. The better reading of § 706(b) would construe the phrase "subsequent proceeding" as limited to subsequent proceedings on the merits of a charge. This interpretation is consistent with the provision's legislative history and is more consistent with the primacy of conciliation in the Title VII enforcement framework. Such a reading would encourage free negotiations in the conciliation process yet give assurances that any agreement entered into would be legally binding. The district court also lost sight of the fact that the Commission was in the process of committing the agreements to writing when PSC allegedly repudiated them. To be sure, it is the Commission's practice to enter into written conciliation agreements, but the agency should not be left without a remedy where, as here, an employer reneges on its agreement before the contracts are signed. This Court should remand this case for discovery regarding whether valid contracts were formed during the conciliation process. ARGUMENT THE DISTRICT COURT ERRED IN HOLDING THAT TITLE VII PROHIBITS THE USE OF ANY EVIDENCE REGARDING WHAT WAS AGREED TO DURING CONCILIATION NEGOTIATIONS IN A SUBSEQUENT ACTION TO ENFORCE A CONCILIATION AGREEMENT. Congress placed so much importance on efforts to resolve discrimination claims informally that it directed the EEOC to "endeavor to eliminate any such alleged unlawful employment practices by informal methods of conference, conciliation, and persuasion" when it finds probable cause to believe that a charge of discrimination is true. 42 U.S.C. § 2000e-5(b). As this Court has recognized, "[c]ooperation and voluntary compliance are the preferred means for the elimination of unlawful employment discrimination, and Congress created the Commission and established an informal dispute resolution procedure to accomplish this goal." Branch v. Phillips Petroleum Corp., 638 F.2d 873, 880 (5th Cir. 1981). See also Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1977) (Congress selected "voluntary compliance" as the preferred means for eliminating discriminatory employment practices.); EEOC v. Liberty Trucking, 695 F.2d 1038, 1042 (7th Cir. 1982) ("Resolution of complaints of employment discrimination through conciliation agreements and avoiding resort to litigation has consistently been the primary means through which the EEOC vindicates rights secured by Title VII."). Indeed, conciliation is so important to the statutory scheme that the Commission is expressly prohibited from initiating legal action until it has attempted to negotiate a voluntary resolution of a charge of discrimination. See 42 U.S.C. § 2000e-5(f)(1) (If "the Commission has been unable to secure from the respondent a conciliation agreement acceptable to the Commission, the Commission may bring a civil action . . . ."). See also EEOC v. Safeway Stores, Inc., 714 F.2d 567, 572 (5th Cir. 1983) (noting same); Liberty Trucking, 695 F.2d at 1042 (noting same). Pursuant to these provisions, the Commission initiated conciliation efforts with PSC after finding reasonable cause to believe that nine charges of race discrimination by the company were true. In this action, the Commission alleges that it reached oral agreements with the company resolving seven of the charges, one of which included a class claim. When PSC repudiated the agreements before they had been committed to writing, the Commission sued to enforce the oral contracts. The district court dismissed the suit. According to the court, even if the Commission and PSC entered into oral agreements settling the charges, those agreements cannot be enforced because § 706(b), the same provision that requires the Commission to attempt to conciliate charges, prohibits the Commission from introducing evidence that oral agreements were reached. The district court relied on the language in § 706(b) stating that "[n]othing said or done during and as part of such informal efforts [to conciliate a charge] may be made public by the Commission, its officers or employees, or used as evidence in a subsequent proceeding without the written consent of the persons concerned." 42 U.S.C. § 2000e-5(b). The district court's view that § 706(b) precludes enforcement of an oral conciliation agreement is wrong for several reasons. It is well established that oral agreements to settle legal disputes, including Title VII claims, are generally enforceable. As this Court has stated, "[a]bsent a factual basis rendering it invalid, an oral agreement to settle a Title VII claim is enforceable against a [party] who knowingly and voluntarily agreed to the terms of the settlement or authorized his attorney to settle the dispute." Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir. 1981). If a party to a Title VII suit who has previously authorized a settlement changes his mind when presented with the settlement documents, that party remains bound by the terms of the agreement. Id. Other courts concur that a party may not change its mind after orally authorizing a settlement in a Title VII action. See, e.g., Alexander v. Indus. of the Blind, Inc., 901 F.2d 40, 41 (4th Cir. 1990); Glass v. Rock Island Refining Corp. 788 F.2d 450, 454-55 (7th Cir. 1986); Worthy v. McKesson Corp., 756 F.2d 1370, 1373 (8th Cir. 1985). The district court held, however, that this principle does not apply to Title VII conciliation agreements because enforcement of an oral conciliation agreement would necessarily violate § 706(b). Such an interpretation of this provision cannot be squared with this Court's prior jurisprudence. As the district court recognized, this Court has already held in Safeway Stores, 714 F.2d at 573, that the EEOC may bring a proceeding to enforce an agreement reached during conciliation. "In view of [the] federal policy requiring employment discrimination claims to be investigated by the EEOC and, whenever possible, administratively resolved, it would be at war with the statutory scheme to conclude that Congress did not intend to permit enforcement of these voluntary agreements in federal court." Safeway Stores, 714 F.2d at 572. The district court distinguished this case from Safeway Stores solely because the conciliation agreements in that case were in writing. RE-Tab 5, ROA-509 (Mem. at 11). According to the district court, because the terms of written and signed conciliation agreement in Safeway Stores "were provable by reference to the document itself," the agreement could be enforced without violating § 706(b)'s prohibition on using something "said or done" during conciliation as evidence in a subsequent proceeding. Id. This assumption is wrong for two reasons. First, a written conciliation agreement is clearly something "done during" conciliation. Accordingly, the written agreement itself could not be used in a subsequent breach of contract action if the district court's interpretation of § 706(b) were correct. Second, as Safeway Stores itself illustrates, the district court's assumption that a written conciliation agreement can be enforced without resort to evidence about what was said or done during negotiations is incorrect. In that case, the EEOC and Safeway signed three conciliation agreements settling the claims of four charging parties alleging race discrimination. Several months later, Safeway reneged on one of the provisions, which necessitated the negotiation of an addendum agreement. See 714 F.2d at 570. After the addendum expired, the parties disputed whether the original terms of the conciliation agreements were reinstated. Id. The Commission sued for breach of contract and requested that the original conciliation agreement be specifically enforced. Id. A trial was conducted regarding what the parties had agreed to in the addendum conciliation agreement. "Considerable evidence was presented at trial concerning the negotiation between the parties which preceded the signing of the addendum [to the conciliation agreement]." Id. at 576 (footnote omitted). Accordingly, if the phrase "subsequent proceeding" were construed to encompass proceedings to enforce agreements reached during conciliation, it would preclude the effective enforcement of any conciliation agreements by the EEOC. That result would frustrate Congress's intent that informal conciliation would be the primary means to resolve complaints of employment discrimination and would be inconsistent with this Court's decision in Safeway Stores. The better construction of § 706(b) would construe the phrase "subsequent proceeding" as limited to subsequent proceedings on the merits of a charge. As this Court stated in Branch, 638 F.2d at 880, "[t]he obvious purpose of the statute's prohibition on revealing statements made or actions taken during the Commission's conciliation efforts is to promote the congressional policy favoring unlitigated resolution of employment discrimination claims." That purpose is served by precluding the use of evidence concerning settlement negotiations to undermine an opposing party's position in a trial on the merits, but it is not served by precluding use of such evidence in a proceeding to enforce the agreement itself. On the contrary, there would be no effective way for the EEOC to enforce a conciliation agreement if we could not introduce evidence of what was "said or done" during the conciliation process. And, as the court recognized in Safeway Stores, the conciliation process would be meaningless if conciliation agreements were not enforceable. See 714 F.2d at 573 ("If conciliation agreements were unenforceable, there is little question that this primary role of voluntary compliance would be undermined."). The cases relied upon by the district court (see RE-Tab 5, ROA 505-07) are inapposite because they address the use of statements made in conciliation to prove the underlying discrimination claim once conciliation had failed and the plaintiff brought a discrimination action. In Olitsky v. Spencer Gifts, 842 F.2d 123, 125, 127 (5th Cir. 1988), the plaintiff's "determinative" piece of evidence was a statement in the EEOC's conciliation file by the defendant's counsel suggesting he would not be able to rebut the plaintiff's age discrimination allegations, "a virtual concession of liability." This Court held that admitting the EEOC's file into evidence was a violation of § 706(b) because the incriminating statements are "exactly the kind of exchange among the parties and the EEOC that informal conciliation ought to encourage." Id. at 126, 127. In Branch, 638 F.2d at 876, 880, an employer brought a subpoena enforcement action seeking "any and all records related to any charge of discrimination filed by [the plaintiff]" in its effort to demonstrate that the plaintiff was a chronic complainer who had filed charges against prior employers. The EEOC refused to comply with the subpoena, citing the confidentiality provision of § 706(b), and appealed the district court's order compelling compliance. Id. at 876-77. This Court held that materials associated with the EEOC's conciliation efforts were privileged. Id. at 881 ("To the extent that the district court required disclosure of proposals and counter-proposals of compromise made by the parties during the Commission's efforts to conciliate [the plaintiff's] charges . . . its disclosure order was in error."). The court noted that "disclosure of conciliation materials, even to the parties, would discourage negotiated settlement and frustrate the intention of Congress." Id. Branch and Olitsky arose from substantive discrimination actions and did not contemplate or envision the breach of contract action at issue here. Accordingly, neither case justifies the district court's categorical rule that § 706(b) will always bar the introduction of evidence of what was "said or done" during conciliation in a subsequent breach of contract suit. The legislative history of § 706(b) supports the proposition that the "subsequent proceeding" envisioned by Congress was a discrimination suit on the merits. Senator Humphrey, a cosponsor of the Senate bill containing restrictions on public disclosure of charges of discrimination and conciliation efforts to resolve charges, "explained that the purpose of the disclosure provisions was to prevent wide or unauthorized dissemination of unproved charges, not limited disclosures necessary to carry out the Commission's functions. '[T]his is a ban on publicizing and not on such disclosure as is necessary to the carrying out of the Commission's duties under the statute . . . . The amendment . . . is aimed at the making available to the general public of unproven charges.'" EEOC v. Assoc. Dry Goods Corp., 449 U.S. 590, 599 (1981) (quoting 110 Cong.Rec. 12819, 12723 (1964)) (emphasis in Assoc. Dry Goods). See also Branch, 638 F.2d at 879 (quoting same language). Senator Dirksen, the other sponsor of the Senate bill, explained, "'The maximum results from the voluntary approach will be achieved if the investigation and conciliation are carried on in privacy. If voluntary compliance with this title is not achieved, the dispute will be fully exposed to public view when a court suit is filed.'" Assoc. Dry Goods, 449 U.S. at 600 n.16 (quoting 110 Cong. Rec. 8193 (1964)). PSC also argued below that the EEOC's regulations and Compliance Manual require that conciliation agreements be in writing. See ROA 37-42 (PSC Motion to Dismiss at 7-12). The district court declined to rule on that argument because, in its view, dismissal of the Commission's case was compelled by § 706(b). See RE-Tab 5, ROA-510, 511 (Mem. at 12, 13). The court, however, noted that "the EEOC regulations acknowledge the importance of the confidentiality of the conciliation process by requiring that all conciliation agreements be in writing." Id. (citing 29 C.F.R. § 1601.24). The court also stated that the Compliance Manual provision directing that conciliation agreements be written and signed by all parties, while not mandatory or legally binding, demonstrates the importance the agency places on written agreements. Id. The provision in the EEOC's regulation that conciliation agreements "shall be reduced to writing" does not preclude enforcement of the oral agreements in this case. The Commission does not dispute that its practice is to enter into written conciliation agreements. The district court, however, ignored the fact that the complaint alleges that at the time PSC repudiated the oral agreements, the EEOC was in the process of committing them to writing in accord with our regulation and the Compliance Manual. RE-Tab 6, ROA-19 (First Amended Comp. ¶15). It would be unreasonable to construe the regulation to waive the EEOC's right to enforce an otherwise valid oral agreement merely because it was breached before it was committed to writing. The fact that putting the terms of a conciliation agreement into writing is important does not mean the Commission should be left with no means of enforcing an otherwise valid oral agreement. Leaving the Commission without a way to enforce a breach of a conciliation agreement would give a perverse incentive to employers, who could be rewarded for engaging in conciliation, breaching the agreement, and then making the bringing of an underlying suit more difficult after the delay involved in the conciliation process and potential breach. See Safeway Stores, 714 F.2d at 573 ("Were we to accept [the defendant's] position, an employer would be free to enter into a conciliation agreement, bide its time for so long as it benefited from doing so, and then breach the agreement with no fear of sanction. The employer would have lost nothing."). Such a distorted interpretation of § 706(b) is inconsistent with Safeway Stores and the jurisprudence favoring conciliation as a resolution to discrimination charges. Indeed, this court's decision in Safeway Stores was "predicated upon the primacy of conciliation to the Title VII statutory scheme." 714 F.2d at 572. CONCLUSION For the foregoing reasons, the judgment of the district court should be reversed and the case remanded for further proceedings. Respectfully submitted, P. DAVID LOPEZ General Counsel CAROLYN L. WHEELER Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel s/ Julie L. Gantz________ JULIE L. GANTZ Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E. Washington, D.C. 20507 (202) 663-4718 CERTIFICATE OF COMPLIANCE This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because it contains 4,691 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2003 in Times New Roman 14 point. s/ Julie L. Gantz________________ JULIE L. GANTZ Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M Street, N.E. Washington, D.C. 20507 (202) 663-4718 Dated: June 28, 2010 CERTIFICATE OF SERVICE I, Julie L. Gantz, hereby certify that I electronically filed the foregoing brief via CM/ECF on June 28, 2010. I also certify that I served two copies of the foregoing brief by overnight delivery to the following counsel of record: David W. Garland SILLS, CUMMIS & GROSS, PC 1 Riverfront Plaza Newark, NJ 07102 s/ Julie L. Gantz_________________ Julie L. Gantz Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M Street, N.E. Washington, D.C. 20507 (202) 663-4718 *********************************************************************** <> <1> "RE-Tab [#]" refers to tabbed material in the EEOC's Record Excerpts. "ROA- [#]" refers to the paginated, certified Record on Appeal. "R.[#]" refers to the district court docket entry. <2> Eight of the charging parties have since filed an action in state court which has been stayed pending resolution of this action. RE-Tab 7, ROA-57 (Watson Decl. ¶2). <3> Because this is an appeal from a motion to dismiss, the parties' differing versions of events and the question of whether an oral contract was formed are not relevant to this appeal. The declarations are summarized to provide background information to the Court.