Federal Court Leaves Opportunity For A 'Compelling' Exhaustion Argument

Seyfarth Synopsis: The U.S. District Court for the District of New Jersey recently issued a ruling with respect to Defendants' "compelling" exhaustion argument that Plaintiffs failed to exhaust administrative remedies with respect to their disparate treatment and disparate impact theories of Title VII claims relied on to support their motion for class certification, as those claims were outside the scope of Plaintiffs' underlying EEOC charges. In rejecting Defendants' argument, the Court invited Defendants to raise their argument more appropriately on a motion for summary judgment. The decision is an important one for employers facing employment discrimination class actions.

Case Background

In Smith v. Merck & Co., No. 13-CV-2970, 2018 U.S. Dist. LEXIS 129126 (D.N.J. July 31, 2018), a former Merck & Co. employee filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"), individually and on behalf of a class of similarly-situated employees, alleging that Merck violated Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e, and other state and federal laws. Id. at 2. After receiving a Right-To-Sue Notice from the EEOC, Plaintiff filed a Complaint in the U.S. District Court for the District of New Jersey against Merck & Co. raising claims consistent with those alleged in her EEOC charge.

Plaintiff twice amended her Complaint. First, she added several more named plaintiffs, each of whom had filed administrative charges with the EEOC on behalf of a class. The Second Amended Complaint added named Defendants, Merck Sharp & Dohme, Corp. and Intervet, Inc., and fourteen causes of action. Id. at 3.

Plaintiffs moved for class certification based on disparate treatment and disparate impact. Defendants filed their own motion for partial judgment on the pleadings under Federal Rule of Civil Procedure 12(c), which permits a party to secure a dismissal after the pleadings close without delaying trial. Id. at 6. Defendants argued that Plaintiffs failed to exhaust their administrative remedies with regards to the disparate impact and disparate treatment claims, as required by Title VII, because those claims were not supported by the pleadings or underlying EEOC charges. Id. at 5. Instead, Defendants argued that the disparate impact and treatment claims were "newly asserted challenges," based on at least four policies that Plaintiffs obtained and learned about during discovery. Id. at 4. At the EEOC charge...