How Texas Killed EEOC “Guidance”—in the Fifth Circuit, with a Gavel

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Administrative Law & Regulation Practice Group, was recorded on Tuesday, November 5, 2019, during a live teleforum conference call held exclusively for Federalist Society members.

 

Wesley Hodges:  Welcome to The Federalist Society’s teleforum conference call. This afternoon’s topic is “How Texas Killed EEOC ‘Guidance’ — in the Fifth Circuit, with a Gavel.” My name is Wesley Hodges, and I’m the Associate Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today’s call.

 

      After our speakers have their remarks today, we will have time for audience Q&A, so please keep in mind what questions you have for this topic or for our presenters today. So thank you very much for sharing with us today. Lee, the floor is yours for your remarks.

 

Hon. Eileen J. O’Connor:  Thank you, Wesley, and welcome Federalist Society listeners. I’m Eileen O’Connor, Chairman of the Administrative Law & Regulation Practice Group Executive Committee, which sponsors this teleforum. We’re fortunate to have with us today to talk about the Fifth Circuit’s August 6^th decision in Texas v. EEOC Mark Chenoweth, Executive Director & General Counsel of New Civil Liberties Alliance. Mark is a graduate of Yale College and Chicago Law, where he established the Institute for Justice Clinic on Entrepreneurship, after which he clerked on the Sixth Circuit for Judge Danny Boggs.

 

Before joining New Civil Liberties Alliance, Mark was, most recently, General Counsel of the Washington Legal Foundation. But earlier in his career, among other things, he was then-Congressman Mike Pompeo’s First Chief of Staff, in-house counsel for Coke Industries, counsel to a consumer product safety commissioner, and attorney advisor in DOJ’s Office of Legal Policy. Before turning the floor over to Mark to tell us about the Fifth Circuit decision that is the subject of this teleforum, I’ll spend just a minute setting the scene.

 

In the late 1990s, certain civil rights groups began a campaign that came to be popularly known as Ban the Box. The box referred to is the one on employment applications that asks whether the applicant has a criminal record. The idea was that anything that makes it harder for a former offender to gain employment makes it likelier he will reoffend. Over the years, several groups of social scientists have compared hiring practices before an after implementation of Ban the Box, sometimes called Fair Chance Act laws, and discovered what you might expect. They don’t really have the desired effect. The opposite of it, in fact, but that is a tale for another time.

 

In 1998, Hawaii was the first state to implement a Ban the Box law. By 2016, 24 states and the District of Columbia and 150 cities have banned the box for government jobs. In Texas v. EEOC, the Fifth Circuit grapples with the federal government, specifically the Obama administration’s effort to impose a Ban the Box rule on all employers, including states.

 

Mark, the floor is yours.

 

Mark Chenoweth:  Well, thank you very much, Lee, for the introduction and for the helpful background for this case. In addition to the factual background that Lee provided, the procedural history of this case is a bit complicated because it’s been up to the Fifth Circuit and back once before. But suffice it to say that Texas challenged the Equal Employment Opportunity Commission’s guidance on the states’ use of criminal background checks for state employment as an unlawfully promulgated substantive rule and sought a declaratory judgement, a dec action, allowing Texas to exclude felons from state employment without incurring Title VII liability for so doing.

 

The district court below had dismissed the dec action on summary judgement but enjoined the EEOC from enforcing its guidance until such time as EEOC complied with the notice and comment rulemaking requirements of the Administrative Procedure Act. That is, the district court had found that this guidance was actually a substantive rule and therefore required notice and comment rulemaking through the APA and enjoined it until such time as that was complied with.

 

The April 2012 guidance at issue, citing the disproportionate impact on minorities from blanket bans on hiring applicants with a criminal record, said, quote, “With respect to criminal records, there is Title VII disparate impact liability where the evidence shows that a covered employer’s criminal record, screening policy, or practice disproportionately screens out a Title VII protected group, and the employer does not demonstrate that the policy or practice is job related for the positions in question and consistent with business necessity,” end quote.

 

Having said that Title VII liability exists in this context, EEOC ominously noted that, quote, “National data provides a basis for the Commission to further investigate such Title VII disparate impact charges,” end quote. Nor would proof of a racially balanced workforce disprove disparate impact, according to the EEOC. Once charged, the State of Texas would have to show that conducting criminal background checks and excluding felons from state employment, quote, “effectively links specific criminal conduct and its dangers with the risks inherent in the duties of a particular position,” end quote. In other words, for every vacancy for which the state would which to exclude felons, it would have to meet the burden of proving that hiring a felon would be too dangerous for that particular role.

 

And one might easily imagine a court allowing the policy for, say, hiring prison guards. But what about a teacher? What about a desk job in the State Department of Transportation? Are past drug or gun or theft convictions enough to show danger? If one asks the criminal background check question but doesn’t have a blanket ban, how can the state be sure that it’s giving every candidate fair consideration according to the EEOC’s demand? So that’s the minefield of liability that EEOC’s guidance created. The only really feasible way for Texas to comply with this broad-based threat would be to stop asking the question entirely, at least for most job categories. And that may well have been EEOC’s purpose all along.

 

In any event, Texas brought its dec action seeking to maintain the state’s latitude to bar convicted felons or categories of felons from state jobs or certain job categories. And it also sought to enjoin EEOC and the Department of Justice from enforcing the guidance or from, in EEOC’s case, issuing right to sue letters pursuant to the rule. Texas also brought an action under the Administrative Procedure Act claiming that the guidance exceeded EEOC power under Title VII, failed to provide notice and seek comment, and was an unreasonable policy.

 

As I said before, the district court had dismissed the case for -- well, I should say the first time around the district court had dismissed this case for lack of subject matter jurisdiction. And as often happens with guidance like this, the court had deemed that the guidance did not constitute final agency action.

 

This is an endemic problem whenever states or other plaintiffs try to challenge agency guidance. Fortunately, a prior divided Fifth Circuit panel had reversed and found that there was final agency action here. But note that because it was a divided panel, that means two of the four federal judges who original considered Texas’s lawsuit and considered this policy would not even have allowed Texas to maintain the lawsuit.

 

And it had to come all the way up to the Fifth Circuit and go back down before Texas even got a ruling on the merits in this case. And even with the ruling on the merits, there continued to be ripeness and lack of final agency action arguments in the case. But at least Texas got to bring the lawsuit on the original -- on the district court’s original theory, Texas would have had to incur the liability before it could have sued to reverse EEOC’s policy.

 

On remand, the district court still denied the deck action and refused to uphold the state’s absolute bar on felon hiring. It also declined to enjoin EEOC from issuing right to sue letters. However, it did deem the guidance a substantive rule under the Administrative Procedure Act that lacked notice and comment. For some reason, the district court did not reach the question whether EEOC had power to promulgate substantive rules interpreting Title VII. And that becomes important, as we’ll see in a minute.

 

The Fifth Circuit began with the final agency action question, which is a jurisdictional question in the Fifth Circuit, at least, with whether or not Texas still had standing to challenge the guidance because, as I say, these jurisdictional and standing and mootness questions still permeated the case. EEOC, for example, claimed that the guidance could not be final agency action precisely because EEOC does not have the authority to issue binding interpretations of Title VII. The Fifth Circuit, nonetheless, found that the guidance bound EEOC staff and, quote, “reasonably led affected private parties to believe that failure to conform will bring adverse consequences,” end quote.

 

This holding is not a new treatment of final agency action, so I don’t want to mislead you in that regard. But given the district court’s judgement and the split earlier Fifth Circuit panel, it is noteworthy that the court found jurisdiction to adjudicate this guidance. As I say, something we have found at the New Civil Liberties Alliance, all too often, courts are quick to say that because it’s a guidance it escapes judicial review. And too many courts do that. They need to stop doing that. And I was glad to see that this subsequent Fifth Circuit panel got this issue right.

 

Specifically for the administrative law aficionados out there, the parties did not dispute the first prong of the Bennett v. Spear test; that is, both sides conceded that the guidance was the consummation of EEOC’s decision making process. So the question turned on prong two; that is, whether any rights or obligations were determined by the guidance or whether legal consequences would flow from the guidance.

 

The Fifth Circuit noted that the guidance did contain a shallow safe harbor of a sort. And that contributed to the Fifth Circuit’s determination that legal consequences did flow from the guidance, thus making it final agency action and also ultimately a substantive rule. EEOC sought to dodge the final agency action determination by noting that EEOC cannot impose penalties on the State of Texas.

 

I think this is an interesting twist in the case. EEOC can only investigate and recommend that the Department of Justice bring an action against a state. EEOC can, of course, bring actions against private employers. But because the State of Texas is not a private employer, EEOC tried to say that this final agency action -- that this couldn’t be final agency action with respect to the State of Texas. Essentially, it was saying that DOJ’s decision would be necessary before any lawsuit could be brought against the State of Texas and that that somehow invalidated or somehow made EEOC’s determinations not final.

 

Fortunately, the Fifth Circuit would not accept that logic. And it noted that whether or not a guidance is final can’t turn on the identity of the plaintiff. In other words, this guidance, quote, “tells EEOC staff and all employers what sort of policy is unlawful,” unquote. And the fact that DOJ’s additional participation would be necessary to sue the State of Texas didn’t keep the guidance from being a final agency action.

 

The Fifth Circuit also notes that even thought the shallow safe harbors -- and the Fifth Circuit doesn’t use the word shallow. That’s my characterization that these safe harbors are shallow. But even though the Fifth Circuit denoted that the shallow safe harbors in the guidance apply only to private employers and do not bind the Department of Justice with respect to any lawsuit against the State of Texas, the Fifth Circuit still noted that the existence of the safe harbors still suggested the finality of the rule. And they do bind EEOC staff and so forth.

 

Now, quickly to standing, the Fifth Circuit easily found that Texas was an object of the regulation by its own terms. The Fifth Circuit found concrete injuries as well. First, increased regulatory burden on the state and, second, pressure to change state law, which the court implies but doesn’t quite state that that infringes state sovereignty. The Fifth Circuit also dispensed with the EEOC’s objection that the guidance does not compel Texas to do anything. It, quote/unquote, “strains credulity,” the Fifth Circuit said, to pretend that guidance declaring certain state practices unlawful wouldn’t require a state action in response. Furthermore, the Fifth Circuit decided that the guidance itself, and not Title VII — not the statute — was what condemned Texas’s non-felon hiring practices, and that it was, again, the guidance and not the statute that threatened referral to the Attorney General for enforcement action by EEOC.

 

There’s an interesting additional twist in this case because EEOC tried to take advantage of the Department of Justice’s current disagreement with the guidance saying that Texas runs no enforcement risk because the Department of Justice, you may recall, issued the Brand memo in, I believe, January of 2018. And then Associate Attorney General Rachel Brand had indicated that DOJ would no longer -- in the civil enforcement context, would no longer enforce guidance or treat guidance as binding. And relying on the Brand memo, EEOC tried to say that there was no risk to the State of Texas and therefore no standing.

 

But the Fifth Circuit pointed out that standing is judged at the time of filing and, furthermore, that favorable ruling would still redress Texas’s injuries. But the Fifth Circuit said it does raise that additional mootness question, then. But the Fifth Circuit found no direct evidence that DOJ has committed to not honoring EEOC referrals. And it also noted that Texas could reasonably expect its injury to recur. Without quite saying so, the Fifth Circuit essentially suggested that a future administration could quite easily revoke the Brand memo.

 

And all of this, I should say, takes up the first about seven-eighths of the opinion. The last three-and-a-half pages of the opinion are the only substantive part. But that is where it really gets interesting because the Fifth Circuit holds that the EEOC lacked the power to promulgate a substantive rule at all. That is, because the binding guidance was effectively a substantive rule, EEOC overstepped its statutory authority.

 

And to remedy this, the Fifth Circuit upheld the district court’s injunction against the EEOC. But it struck the words at the end of that injunction. And this is where it’s very important. The district court injunction, you may recall, had told the EEOC it could not enforce the guidance, quote, “until the EEOC has complied with the notice and comment requirements under the APA for promulgating an enforceable substantive rule,” end quote.

 

Those are the exact words that the Fifth Circuit struck from the injunction, thus leaving in place an injunction that enjoined the EEOC and the Department of Justice full stop. It didn’t not allow the EEOC to go back and do notice and comment rulemaking, in other words. And the reason for that is, as the Fifth Circuit found, the EEOC does not have substantive rulemaking authority under Title VII. Congress never gave the Equal Employment Opportunity Commission that power. So if it doesn’t have rulemaking power, it cannot then do a guidance in lieu of rulemaking and somehow use its enforcement power coupled with its issuing of guidance power to create the ability to do rulemaking through the back door. So the Fifth Circuit, as I say, affirmed the injunction in modified form.

 

And to avoid any confusion, the Fifth Circuit said, quote, “We modified the injunction to clarify that EEOC and the Attorney General may not treat the guidance as binding in any respect,” end quote. So that’s pretty definitive. The Fifth Circuit did decline to consider the declaratory judgement action because it said that having infirmed the injunction, it didn’t need to do so.

 

So that’s the case. That’s the result. But as the title of this teleforum implies, there’s something, I think, bigger and more significant that happened here. It’s true that the injunction only applies to the State of Texas, but the logic of this decision applies to all employers who are subject to this guidance. Furthermore, the logic of this decision applies to all substantive guidance issued by the EEOC.

 

There’s no reason why, if this substantive guidance runs into the problems that we were talking about of backdoor rulemaking, there’s no reason why any other substantive guidance coming from EEOC wouldn’t be problematic for the exact same reasons. And for example, it would seem that the EEOC cases pending currently at the Supreme Court for which oral argument was held last month would be subject to this same analysis. That’s the Bostock v. Clayton County, Georgia case, the Altitude Express, Inc. v. Zarda case, and the Harris Funeral Homes v. EEOC case. All of those would be subject to this same kind of analysis.

 

As the summary that was sent out asked, does this logic apply, I think it does. And specifically, there’s a problem with a 1971 Supreme Court decision in a case called Griggs v. Duke Power Company. And if you want to see the full argument that I’m going to lay out on this, please consult the amicus brief that the New Civil Liberties Alliance filed in the Bostock, Zarda, and Harris Funeral Homes cases.

 

But in a nutshell, Congress did not give EEOC substantive rulemaking authority. But in 1971, the Supreme Court, in the Griggs case, called for courts to give, quote, “great deference,” unquote, to EEOC interpretations of Title VII. Doing so, however, effectively grants EEOC substantive rulemaking authority through the backdoor because, if the EEOC can interpret the statute, can issue guidance, and courts have to give great deference to that guidance, it’s hard to distinguish the result of that from actually substantive rulemaking authority.

 

And even though the Supreme Court has backed away from Griggs deference in a few subsequent cases, it hasn’t explicitly repudiated Griggs. And as a result, the lower courts tend to be all over the map on how much deference that they give to the EEOC. But I do think that what’s significant about this Fifth Circuit decision is it gives a roadmap for how to litigate against the EEOC in these kinds of cases.

 

Much as you might think of -- if I can use a -- we’re in football season. Let me use a football analogy. Sometimes there’s a team that’s doing extremely well, seems to be mowing down every team it faces. And then one team comes along and is able to implement a defensive game plan that really slows down or stops or defeats that offense. And that’s something that other teams can then latch onto and use and have a lot more success against that seemingly unbeatable offense that other teams couldn’t handle earlier in the season.

 

And I feel like that’s what may have happened here. The Fifth Circuit has essentially shown what the defensive game plan is to stop the EEOC when it tries to issue guidance or tries to issue substantive rulemaking disguised as guidance and, then tries to use its enforcement powers combined with judicial deference from the federal courts to force employers to follow the EEOC’s guidance in a way that is binding when Congress never gave EEOC binding rulemaking authority.

 

Another question that may come up is whether the President’s recent executive orders change the outcome here in any way. I think the short answer to that is no. For one thing, the executive orders do not proport to reach independent agencies. That said, I think the result in State of Texas v. EEOC is completely consistent with the logic of the executive orders that binding guidance is not allowable. So I think that there’s nothing in the executive orders that undercuts the Fifth Circuit’s decision here in any way.

 

The other questions also asked is binding guidance from other agencies at risk? And to that, I would say binding guidance from other agencies is more at risk from the Sessions memo, from the Brand memo, from the President’s executive orders than from this case necessarily. But this case does provide a roadmap. The difference is that there may not be that many agencies that have been specifically denied the statutory authority to do rulemaking in the way that EEOC has been explicitly denied that rulemaking power.

 

So I don’t know how broadly outside the EEOC context this decision will reverberate, but I think that it is very significant for -- certainly for disparate impact liability cases within the EEOC context. Lee, is there anything else that you wanted me to cover before we throw this open for questions?

 

Hon. Eileen J. O’Connor:  I think you’ve covered everything beautifully. It’s such an interesting case in so many respects. You mentioned that the EEOC is without authority, according to the Fifth Circuit, to issue and impose the rules that it did on the State of Texas. The Obama administration is the one that had issued these rules. The Trump Justice Department said that it’s not going to enforce subregulatory guidance.

 

So one of the defenses that the EEOC brought out in its rules is, “Oh, don’t worry about it, court. We’re not going to enforce these anyway because there was the DOJ memo saying that we won’t.” And the court found that unpersuasive. You’ve tied it into the cases that are presently pending in the Supreme Court and the effect that this sort of analysis might have on them.

 

I think we’re ready to have some audience questions. What do you say, Wesley?

 

Wesley Hodges:  It looks like we do have one question in the queue, and go ahead and go to this caller.

 

Mike Daugherty:  Well, Mark, hi. Mike Daugherty. To me, listening to your very nice presentation here, I cannot help but think that this is yet just another of an infinite scheme that an agency’s going to try to pull to dance around any sort of outside authority over it. And if this one fails, they’ll spin another one that they’ll learn from another agency. That just is, to me -- I call this the long slog up Justice Mountain because most people are not going to climb the mountain to fight these people. And they know it. Hence, to hell with rulemaking, or let’s call a lamb a goat, or let’s play games.

 

So what type of chilling effect do you see, hopefully, that the Fifth Circuit jumping on this and the Supreme Court doing is going to stop what I see as a really in between the lines type of behavior by a lot of these agencies of just flaunting any attempt to reign them in?

 

Mark Chenoweth:  That’s a great question, Mike, and I should note that, given your own history with the Federal Trade Commission, that I think that, just as this decision was predicated on the lack of statutory authority for the EEOC to do rulemaking under Title VII, I think in the FTC context there is no explicit statutory authority for the FTC to engage in, for example, rulemaking about data privacy practices. And one could certainly argue that the guidance that the FTC has put out, or really, it’s mostly relying, if I understand correctly, mostly relying on all the various settlements that it has entered into with folks in lieu of doing either guidance or rulemaking. But there could be a similar tack on that practice based on the logic that’s used by the Fifth Circuit here.

 

But to answer your question more directly, I would like to think that the Supreme Court in the Bostock, Zarda, and Harris cases will follow the suggestion of NCLA’s amicus brief and repudiate Griggs deference and call attention to the EEOC’s lack of substantive rulemaking authority and perhaps settle the cases that way. To be honest with you, oral argument didn’t provide much support for the idea that that’s the direction that the Court is headed. So it could well be that the Supreme Court will decide those cases on different grounds entirely.

 

And my hope would be that, if it does that, it doesn’t in any way undercut what the Fifth Circuit has ruled in State of Texas v. EEOC because I think that the logic of the Fifth Circuit is impeccable. And I don’t think that there’s anything in the pending cases at the Supreme Court that should undermine that in any way. But certainly, we need to pay attention to what the forthcoming decisions in Bostock, Zarda, and Harris Funeral Homes because there is potential there for undercutting what the state has done here.

 

There’s one other aspect of the Fifth Circuit decision that I don’t think I touched on earlier, Mike, that your question brings to mind. And that’s the fact that it was the State of Texas, after all, a public employer, who was suing the EEOC here. And it was suing the EEOC over policies that overwhelmingly affect private employers. And as much as the EEOC tried to squirm out of any logic that the Court of Appeals was using, inasmuch as it would apply to private employers, the Fifth Circuit was pretty explicit about saying that its logic was not limited to a lawsuit brought by the State of Texas.

 

So that is, at least in the Fifth Circuit if you’re private employer who had been bound by this EEOC guidance, the coast should be clear now. And certainly if a future private employer case reached the Fifth Circuit, I would expect that future panel to feel bound by this precedent.

 

Mike Daugherty:  Do you know who was on this panel real quick? And then I’ll sign off.

 

Mark Chenoweth:  I do. The opinion is written by Jerry Smith. And Jacques Weiner and Jennifer Elrod were the other two judges on the panel.

 

Mike Daugherty:  That’s a great panel. And they did exploit a very good opportunity, so good for them. Thanks.

 

Wesley Hodges:  It looks like we do have another question from the audience. Caller, you are up.

 

Mike Caldwell:  Are there any decisions in the Eleventh Circuit that would conflict with this decision that you’re aware of?

 

Mark Chenoweth:  I’m not aware of any, but I haven’t looked. So I say that very tentatively, just looking really quickly here at some notes I had. I’m afraid I don’t have anything definitive here on the Eleventh Circuit. Sorry about that.

 

Mike Caldwell:  We pride ourselves on being on of the most conservative of the circuits.

 

Mark Chenoweth:  And plus, the Eleventh Circuit always, obviously, isn’t bound by Fifth Circuit precedent anymore, but it used to be part of the Fifth Circuit and I think tends to look to the Fifth Circuit for persuasive authority.

 

Mike Caldwell:  Yeah. I think they consider the Fifth Circuit a step above, certainly the Ninth, but so would a moot court seem in a board law school. Thank you.

 

Wesley Hodges:  Looks like we do have one more question. Caller, you are up.

 

Bob Fitzpatrick:  Hi. This is Bob Fitzpatrick in D.C. I’m curious your discussion about Griggs and its apparent demise. How does Justice Kennedy’s fair housing opinion -- I forget the name. I want to say something like Inclusive Communities. It was a 5-4 opinion three, four years back where he embraced, as I recall, disparate impacted fair housing cases, which would seem to be an embrace of Griggs also. How does that impact on your thinking about the future of Griggs?

 

Mark Chenoweth:  Well, I think that Justice Kennedy’s replacement by Justice Kavanaugh certainly has potential to revisit the landscape of disparate impact litigation. So I think you raise a good question. I’m not familiar enough with the particular precedent that you cite to speak with specificity as to how Griggs might be impacted by that case because Griggs deference really is limited to the EEOC, at least my understanding is, and so wouldn’t necessarily affect the fair housing context. I don’t know if there is a different deference doctrine, aside obviously from Chevron or Auer or Kaiser, something like that that would be specific to the fair housing context.

 

I hasten to add that we spent a lot of time working on judicial deference doctrines at the New Civil Liberties Alliance. And it seems that hardly a month goes by that I don’t learn about some new judicial deference doctrine, which we’ve come to start calling government bias deference doctrines or government litigator bias doctrines. And one of the arguments, if you look at the amicus brief that NCLA filed in the Bostock case, we share with the Court not only these backdoor rulemaking problem that deference creates, but we also note that these judicial deference regimes violate Article III as well as the due process clause. And this is something that our founder, Professor Philip Hamburger at Columbia Law School, is well known for and associated with having introduced these arguments to the debate.

 

But just to summarize them briefly here, the idea is that Article III gives the courts a duty of independent judgement. There’s obviously all sorts of things from life tenure to the inability to reduce salaries and so forth that are put in place in order to secure the independence of the judiciary. And when the judiciary, particularly through a judicially adopted deference doctrine, decides to abandon that independence and instead decides to give over its authority, its decision making power, to an Article II entity like the EEOC, that creates a problem of constitutional scope, or so we argue.

 

And the other problem, obviously, from a due process perspective, is that both litigants in front of a federal court have a right to fair hearing from that court. And if the judge is pre-committed to deferring to the legal interpretation of one of the parties before it, that is, if it is pre-committed to giving great deference to the statutory interpretations of the EEOC, it’s hard to see that the other litigant in front of that court is getting due process. So for that reason, as well, we have suggested that Griggs deference, like many other forms of judicial deference, needs to fall by the wayside.

 

Wesley Hodges:  Thank you very much. Next caller, you are up.

 

Mike Caldwell:  This is Mike Caldwell again in the Eleventh Circuit. How have the last two arguments that you’ve mentioned been accepted by the courts in which you’ve argued it?

 

Mark Chenoweth:  Great question. NCLA has only been around making these argument for about a year. So most of the cases in which we have made these arguments -- I don’t think any of the cases have produced decisions yet. So we don’t really know quite how the courts are going to treat these arguments. I can say that, when the Wisconsin Supreme Court last year got rid of the state version of Chevron deference in the State of Wisconsin, it did cite to Professor Hamburger’s scholarship in doing so. And we saw similar that when the Mississippi Supreme Court did away with Chevron deference at the state level in the State of Mississippi, it also cited to some of Professor Hamburger’s work.

 

So we have seen some courts that have certainly warmed to these arguments. We haven’t seen it as much at the federal level yet, but we are certainly optimistic that we will. We did, for example, make this argument in the Kaiser case. And even though Justice Kagan’s, I guess you would call it plurality opinion for the Court completely ignored the argument, Justice Gorsuch took it up in the dissent. And right, if I remember correctly, right in the first paragraph of the dissent, he talks about these problems as pertains to Auer deference.

 

So I think that that’s probably -- and we had raised these arguments and I believe were the only amicus brief that had raised these arguments in the Kaiser case. So I do think that there were at least four justices, Gorsuch and the other dissenters in Kaiser, who have endorsed this view. So I think the question is where is the Chief Justice on these issues?

 

Mike Caldwell:  I think it’s very critical that this argument be made over and over because I think its an extremely persuasive argument.

 

Mark Chenoweth:  Well, thank you for saying that. Part of the reason that our organization was established was precisely to make these arguments over and over. And we are looking to file cases around the country. So if you’re aware of any cases where we ought to be coming in with an amicus brief or representing a party to make these cases, we’re always happy to hear about them.

 

Hon. Eileen J. O’Connor:  While we’re waiting for someone else to queue up, and I hope they do. This is such an interesting conversation. Mark, it was the State of Texas that challenged EEOC here. Is there any reasons to believe that a private company would not have had the same success?

 

Mark Chenoweth:  I don’t think there’s any reason to think a private company wouldn’t have had the same success. But I think that, if you think about this, this guidance came out in 2012. And here we are August of 2019 is when the Fifth Circuit’s decision finally came out. It’s going to be an awfully hardy company that’s going to be able to endure seven years of litigation in order to reach this kind of result. I don’t know what the average lifespan of a CEO is, but I suspect that it’s well below half of seven years.

 

So to find a company that would be willing to challenge the EEOC and risk incurring the liability for maintaining this policy during the pendency of the litigation, I think from a practical standpoint, it would have been very difficult to see that happen. Now that this precedent is in place, if there is a company who maybe had a policy that it abandoned and wants to put back in place -- and Lee, this goes to your point. To the extent that the social science research shows the disparate impact, if you will, has gotten worse in the wake of not being able to ask individual applicants about their criminal history, there may well be companies that want to put the question back in place.

 

Hon. Eileen J. O’Connor:  Right. And it’s interesting, I think, that the 2012 guidance specifically made itself applicable to states and localities and to governments. So if that guidance had limited itself to private entities, probably no one would have challenged it, and it would continue to survive. And EEOC would be administering or enacting and implementing rules that it doesn’t have the authority to do so.

 

Mark Chenoweth:  I think that’s a great point. And I think even in the cases pending at the Supreme Court right now where there are some private litigants — Harris Funeral Homes is a private litigant, and Altitude Express, Inc. is a private litigant — these are not the arguments that are at the forefront of those cases. And that’s why I mentioned earlier that the Supreme Court may choose to decide the cases on other grounds. I think that the conversation we’ve had today is absolutely an available ground for the Supreme Court to decide the case on, but it’s not the one that the parties spent the most time on by any stretch. So I think that maybe that would have been different if the Fifth Circuit’s opinion had come out a year or two earlier.

 

As I mentioned to Lee, we didn’t even cite the State of Texas v. EEOC case in our amicus brief to the Supreme Court in Bostock because our brief was later in August. But we just hadn’t realized quite the significance of the Fifth Circuit opinion at the time that we finalized our amicus brief. But I think now that this argument is out there and the Fifth Circuit has spelled it out, my hope would be that other folks would make this argument more prominently than the litigants did in the three cases currently pending at the Supreme Court.

 

Wesley Hodges:  So caller from 404, you are up.

 

Mike Daugherty:  Well, since we’re passing out second calls, it’s Mike Daugherty again. But I have to pick up on what Lee just alluded to which is to say and sort of enforce, I think one thing we have to do within this whole administrative state exposure process, which I think is the long term goal is that when you’re in a private company and you are presented with this as a CEO, the uphill battle to choose to sue is huge just inside your organization. I could have never in a million years put up the FTC if I didn’t own 100 percent of my company because every single attorney and advisory board member said, “Forget it. It’s not worth it. You’ll never win. Just accept it.”

 

And that is a resounding echo from the whole legal community. And that’s not wrong advice, given the cards that are on the table. Had it not been impacting patient lives so much, I probably would have taken that advice. I think that has to really be understood in the legal and judicial community that the agencies have put such a steep hill in front of people that they know almost everyone will fall off the side. And that’s why these cases that do come up are so absolutely critical to adjudicate all the way because they’re few and far between.

 

Hon. Eileen J. O’Connor:  That is a valuable insight.

 

Mark Chenoweth:  Completely agree with you, Mike. And the only thing I would add to that is that the judiciary doesn’t make matters better when it defers to those agencies under ill conceived judicial deference doctrines. That just makes the uphill climb that much steeper.

 

Hon. Eileen J. O’Connor:  Do you want to sum up, Mark?

 

Mark Chenoweth:  Sure. I would just sum up by saying that the Fifth Circuit has done something, I think, that reverberates beyond the confines of the State of Texas v. EEOC case because it has demonstrated that EEOC’s attempts to do guidance are outside of its statutory authority when that guidance becomes final agency action, when its substantive, when it proports to bind folks outside the agency. And that by calling the Agency on it, exceeding its statutory mandate here, the Fifth Circuit has shown that it is possible to put guardrails on the administrative state.

 

       And in addition to other future litigants taking a lesson from what the Fifth Circuit has done here, it would be nice to see other members of the judiciary take a lesson from what the Fifth Circuit has done here and hold the EEOC and other administrative agencies to the statutory limits that Congress has placed upon them.

 

Hon. Eileen J. O’Connor:  Mark, this was so informative. Thank you so much for adding your expertise to our teleforum today. I think it was a wonderful conversation.

 

Mark Chenoweth:  Well, thanks to you and thanks to The Federalist Society for hosting this teleforum and helping to spread the word about this important decision.

 

Wesley Hodges:  Absolutely. Well, hey, on behalf of The Federalist Society, I’d like to thank both of you for the benefit of your valuable time and expertise. We welcome all listener feedback by email at [email protected]. Thank you all for joining us for the call. We are now adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.