Publications: EEOC v. Sidley Decision Confirms Commission’s Authority To Pursue Individual Claims In the Public’s Interest

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The U.S. Equal Opportunity Commission recently won a significant victory in its age discrimination suit against Chicago-based international law firm Sidley Austin Brown & Wood when Federal District Judge James Zagel denied Sidley’s motion for summary judgment. The court ruled that the EEOC could seek damages for 32 former Sidley partners though they had not filed timely administrative charges under the Age Discrimination in Employment Act. (EEOC v. Sidley Austin Brown & Wood, LLP, N.D. Ill., No. 05 C 0208, 6/9/05). It determined that in fulfilling its important mission of protecting the public interest the EEOC was empowered to bring suit and obtain individual relief for the aggrieved Sidley partners despite their lack of timely individual charges. It found that the “EEOC’s ability to seek monetary relief on behalf of the individuals is derived from its own statutory rights to advance the public’s interest and is unrelated to any individual’s right,” and concluded that “concerns over bringing stale claims do not override the EEOC’s right to advance the interests of the public by seeking individual relief for at least some of the individuals in this case.”

In reaching its decision the EEOC v. Sidley court found that the Supreme Court’s 2002 decision in EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) overturned the Seventh Circuit’s 2001 decision in EEOC v. North Gibson Sch. Corp., 266 F.3d 607 (7th Cir. 2001). The North Gibson case held that the EEOC could not sue for individuals who failed to file timely administrative ADEA charges, concluding that the Commission was authorized to pursue claims only where it could “step into the shoes” of an aggrieved employee. But the EEOC v. Sidley Court adopted the reasoning of the Supreme Court’s subsequent decision in EEOC v. Waffle House, Inc., 534 U.S. 279 (2002), which held that the EEOC could sue in court under the Americans with Disabilities Act (“ADA”) for individuals whose claims would otherwise be subject to mandatory arbitration under an agreement with their employer. Characterizing the EEOC as the “master of its own case,” the Waffle House Court held that it “may seek to vindicate a public interest…even when it pursues entirely victim-specific relief.”

The EEOC v. Sidley Court analogized the Sidley partners’ situations under the ADEA to that of the workers whose ADA protections were at stake in Waffle House. It held that the “EEOC’s right to bring suit seeking individual monetary relief goes beyond that of the individual and reaches the territory of public interest, thereby allowing the EEOC to seek relief for individuals, like the affected Sidley partners, who could not, for any variety of reasons, do so themselves.”

The EEOC v. Sidley case stems from an extensive EEOC investigation that began after Sidley announced a retirement policy change in late 1999. The change required certain partners over 40 to accept demotion to “of counsel” or “senior counsel” status or leave the firm, and reduced a mandatory retirement age of 65 to a sliding scale of 60-65. The EEOC sued on behalf of 32 Sidley partners forced to leave the firm because of this policy change.

Should the case go to trial, a major point of contention will be whether the affected Sidley partners were “employees” or “employers” for ADEA purposes. This determination may hinge on their degree of control over firm management. An earlier Seventh Circuit decision in the case (involving Sidley’s efforts to resist a Commission subpoena) discussed at length the issue of whether “the 32 demoted partners were in fact employees within the meaning of the age discrimination law,” but the appeals court ultimately disclaimed ruling on that issue. EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696, 707 (7th Cir. 2002).

Not surprisingly, the Commission is urging that the practical reality of the Sidley partners’ relationship with the firm made them employees entitled to full ADEA protections, not “employers.” It maintains that despite their partnership titles, their lack of substantial involvement in law firm management made them protected employees, not employers. While not conceding that the 32 Sidley partners even meet state law criteria for partnership status, the Commission also denies that their classification under state partnership law determines their status under federal antidiscrimination law. Id., at 702.

The Sidley case is being closely watched for a number of reasons, principal among which is its potential ramifications for whether the partners of law firms and other businesses organized as partnerships will be treated as employees or employers for purposes not only of the ADEA, but the other major federal anti-discrimination laws. In an age of super-sized professional services firms with varied classes of unequal partners, many of whom have little or nothing at all to do with firm management, the case couldsignificantly impact partnerships’ employment liability.