United States: Sixth Circuit: Failure To Exhaust Administrative Remedies Not A Jurisdictional Bar For Title VII Retaliation Claim

Background

Plaintiff Serge Adamov began working at the predecessor of U.S. Bank (the Company) in 1998.  In 2009, Adamov brought concerns to his direct supervisor regarding discriminatory comments made by a vice-chairman and about not receiving a promotion.  Adamov's supervisor spoke to the vice-chairman and then assured Adamov that he was not prejudiced against Adamov.  Shortly thereafter, the Company opened an investigation into Adamov's banking activities. 

According to the Company, it received a request for an investigation from its corporate Anti-Money-Laundering Department on July 6, 2009.  The investigation revealed a loan for $10,000 that Adamov had made to a friend and Company customer in 2007.  Adamov said the loan was an informal transaction with a college friend whom Adamov brought to the bank as a customer years earlier.  But the Company concluded determined that the loan violated the bank's ethics policy, and terminated Adamov's employment on August 31, 2009.

District Court Proceedings

Adamov filed suit against the Company and individual supervisors claiming that he was retaliated against for complaining of discrimination and that he was discriminated against based on his Azerbaijani national origin.  The Company maintained that he was discharged for making a personal loan to a bank customer contrary to bank policy. 

Adamov then filed a lawsuit in state court asserting state law discrimination claims, which was ultimately removed to federal court.  The Company moved to dismiss on preemption grounds, and Adamov responded by asserting that he would amend his complaint to include non-preempted federal discrimination claims.  At the same time, Adamov submitted a draft EEOC charge, which was unsigned, undated and only contained a national-origin discrimination claim under Title VII.  Before the court ruled on the Company's motion to dismiss, Adamov filed a charge, which now included a retaliation claim. 

The Company filed another motion to dismiss, arguing that Adamov could not bring his claims against the individual defendants and that the factual allegations were insufficient as a matter of law to establish any violation of Title VII, and renewing their preemption argument.  The Company did not argue, however that Adamov's claims should be dismissed for failure to exhaust administrative remedies. 

Relying on Adamov's draft EEOC charge, the district court dismissed Adamov's retaliation claim sua sponte on jurisdictional grounds, ruling that Adamov had not exhausted administrative remedies with respect to his retaliation claim.  

The Sixth Circuit's Decision

The Sixth Circuit reversed the dismissal of the retaliation claim for lack of jurisdiction based on the Supreme Court's 2006 decision in Arbaugh v. Y&H Corp., 546 U.S. 500 (2006).  In Arbaugh, the Supreme Court held that "when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character." Id. at 516.  Finding that no such jurisdictional limitation exists with respect to Title VII's administrative-exhaustion requirements, the Sixth Circuit ruled that the district court could not dismiss Adamov's retaliation claim on jurisdictional grounds. 

The Sixth Circuit explained that while Title VII discusses the EEOC administrative process generally, describes the statute of limitations for filing a charge with the EEOC, and the EEOC's duties to investigate and respond, "[t]he statute says no more about the exhaustion requirement or any connection between the EEOC process and a limit on courts' jurisdiction to hear Title VII cases."   Moreover, the court found that by not raising the exhaustion defense before the district court, the Company forfeited the argument that the court lacked jurisdiction, and remanded the case back to the district court.

Implications

This ruling will likely increase the frequency with which employers are required to defend retaliation claims under Title VII on the merits in actions within the Sixth Circuit.  Additionally, employers faced with an EEOC charge alleging discrimination may be well-served in preparing to respond to a retaliation claim as well, even if the employee does not explicitly assert such a claim.

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