Tenth Circuit Permits EEOC Interference Claim to Go Forward

Edgar M. Rivera, Esq.

On September 5, 2017, the Tenth Circuit reversed the district court’s decision in EEOC v. CollegeAmerica Denver, Inc., allowing the Equal Employment Opportunity Commission to proceed with its interference claim against CollegeAmerica.

On September 1, 2012, after Debbi Potts’s resignation as campus director for CollegeAmerica, a private college based in Salt Lake City, she and CollegeAmerica entered into an agreement which provided that CollegeAmerica would pay her $7,000 in exchange for her waiving any claims against CollegeAmerica (Ms. Potts had asserted that CollegeAmerica owed her $7,000 in unpaid bonuses), refraining from personally contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance against CollegeAmerica, and refraining from disparaging the reputation of CollegeAmerica.

On January 11, 2013, CollegeAmerica notified Ms. Potts that it considered online messages she sent via LinkedIn to a former employees to have violated the Agreement’s non-disparagement clause (Ms. Potts made several comments critical of CollegeAmerica and its top executives) and demanded the return of its $7,000 payment. Ms. Potts to filed a charge with the EEOC asserting age discrimination.

On March 25, 2013, CollegeAmerica filed an action in state court alleging breach of the non-disparagement clause. Ms. Potts filed another charge with the EEOC. On August 12, 2013, in opposition to Ms. Potts’s motion to dismiss the complaint, CollegeAmerica argued that Potts had violated the Agreement “through her filing of additional administrative claims against the College, including multiple changes with the EEOC, alleging federal age discrimination.” Also, between August and October 2013, CollegeAmerica demanded that the EEOC turn over any documents Ms. Potts submitted to it on the grounds that any disparaging statements Ms. Potts made to the EEOC, whether in a discrimination charge or not, violated the Agreement.

The EEOC sent CollegeAmerica a letter of determination finding that the Agreement’s bar against Ms. Potts filing charges with the EEOC or participating in its investigation was unlawful. In January 2014, CollegeAmerica disavowed this legal position, stating “the College does not currently allege and will not allege at any time in the future that Ms. Potts is liable for breaching [the Agreement] based on the filing of her charges with the Commission.” After conciliation efforts failed, the EEOC filed a federal lawsuit alleging that CollegeAmerica interfered with the EEOC’s statutorily assigned responsibility to investigate discrimination charges and retaliated against Ms. Potts by filing the state action, which was stayed pending the resolution of the federal action.

CollegeAmerica moved to dismiss the federal action, and the district court granted the motion in part, dismissing the interference claims, while keeping the retaliation claim. The district court found that CollegeAmerica’s representations and assurances that it does not and will never assert a waiver of Ms. Potts’s rights via the Agreement sufficed to moot the interference claims. After the claims were dismissed, however, CollegeAmerica returned to essentially hold the same position in defending the retaliation claim, claiming that Ms. Potts had breached the Agreement by reporting adverse information to the EEOC without notifying CollegeAmerica. The EEOC viewed this defense as again interfering with Ms. Potts’s statutory rights and appealed the dismissal of the unlawful-interference claim, arguing that the claim was not moot. The Tenth Circuit agreed.

This case dealt with the Constitutional issue of mootness. Under Article III of the U.S. Constitution, the judicial power of federal courts is limited “to deciding actual ‘Cases’ or ‘Controversies.’” A case or controversy does not exist when a claim is moot and, therefore, moot claims must be dismissed. Reversing dismissal of the interference claim, the Tenth Circuit explained that a “claim is moot when a plaintiff loses a personal stake in the outcome because of some intervening event.” If the defendant voluntarily stops the challenged conduct, a special rule applies and the claim will be moot only if: (1) it is “absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur;” and (2) interim relief or events have “completely and irrevocably eradicated the effects of the alleged violation.

The Tenth Circuit found that the first condition of the special rule was not satisfied. After CollegeAmerica agreed to abandon the position allegedly constituting an interference claim, it subsequently asserted a new theory that Ms. Potts breached the settlement agreement by reporting adverse information to the EEOC, essentially standing by the same theory it vowed to renounce. According to the EEOC, this demonstrated CollegeAmerica’s ongoing interference with statutory rights. Because CollegeAmerica stood by this new theory of breach on appeal, it failed to demonstrate the absence of a potential for recurrence. Consequently, the Tenth Circuit could not find mootness based on voluntary cessation.

Also unconvincing was CollegeAmerica’s argument that the case was moot because the outcome would not affect anything in the “real world.” In the state action, however, CollegeAmerica intended to argue that Ms. Potts breached the settlement agreement by reporting adverse information to the EEOC without notifying CollegeAmerica. According to the EEOC, this argument would constitute unlawful interference with Ms. Potts’s statutory rights. The Tenth Circuit concluded that, if the EEOC prevailed on the merits, CollegeAmerica could not present its new theory in the state-court suit against Ms. Potts. The inability to present this theory would constitute an effect in the “real world,” preventing dismissal based on mootness.

If you feel you have been retaliated against for filing a charge or communicating with the EEOC, please contact The Harman Firm, LLP.