Categories: Financial Services

On May 9, 2012, the Second Circuit held that Title VII’s “participation clause,” prohibiting an employer from retaliating against any employee who participates in an investigation “under” Title VII, requires participation in a formal investigation involving the Equal Employment Opportunity Commission (“EEOC”) – participating in purely internal investigations, conducted pursuant to the employer’s own policies and procedures, is not sufficient to trigger the statutory protections. Townsend v. Benjamin Enterprises, Inc., No. 09-0197. 

The Second Circuit thereby reaffirmed the approach taken by its sister courts in the Fifth, Sixth, Seventh, Ninth and Eleventh Circuits, leaving intact a significant legal defense against retaliation claims under Title VII.        

Plaintiff Claimed that She Had Been Terminated in Retaliation for Participating in an Internal Investigation into Alleged Sexual Harassment of Another Employee

Martha Townsend was hired as an office manager and receptionist by Benjamin Enterprises, Inc. (“BEI”) in June 2002. She claimed that from the summer of 2003 through March 2005, Hugh Benjamin, BEI’s sole corporate Vice President and a corporate shareholder, had sexually harassed her. In March 2005, Townsend reported the sexual harassment to BEI’s Human Resources Director, Karlean Grey-Allen. 

Grey-Allen began an investigation, interviewed Townsend and Benjamin, and discussed the allegations with both a private management consultant and the New York State Division of Human Rights. Claiming that her conversation with the private management consultant had been a breach of confidentiality, BEI’s President, Michelle Benjamin – who was also Hugh Benjamin’s wife – fired Grey-Allen and took over responsibility for the investigation. Critically, at the time Grey-Allen conducted her investigation and when she was terminated, no formal charge had been filed with the EEOC on Townsend’s underlying sexual harassment claims.           

Second Circuit Follows Lead of Sister Courts in Adopting a Limited Approach, Leaves Open Question of Participation in Post-Charge Independent Investigations  

Grey-Allen claimed that BEI had terminated her in violation of Section 704(a) of Title VII, 42 U.S.C. § 2000e-3(a), the so-called “participation clause,” which makes it unlawful for an employer to retaliate against an employee “because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.” The Second Circuit noted at the outset that “whether the participation clause covers internal investigations not associated with a formal EEOC charge is a question of first impression in this Court.” 

The court looked first to the language of Title VII itself, in particular the participation clause’s requirement that the investigation in which the employee participates be one “under this subchapter.” Reasoning that “much of this subchapter is devoted to describing the enforcement powers of the EEOC and the procedures by which the EEOC carries out its investigations and hearings,” the court agreed with the Eleventh Circuit’s decision in EEOC v. Total System Services Inc., 221 F.3d 1171 (11th Cir. 2000), that an investigation “under this subchapter” thus refers solely to an investigation occurring in conjunction with the filing of a formal EEOC charge and does not include purely internal investigations conducted by an employer pursuant to its own policies and procedures.

Grey-Allen argued that “because internal investigations are integral to the deterrent aims and effective operation of Title VII,” her participation in BEI’s internal investigation should have afforded her the protections of the participation clause. In an amicus brief, the EEOC had likewise argued in favor of a more expansive interpretation of the participation clause. Observing that every Court of Appeals to have considered the issue had rejected such an interpretation, the Second Circuit likewise “decline[d] to adopt such a strained interpretation of the language of the statute.” 

The Second Circuit in Townsend was quick to note that it “express[ed] no opinion on whether participation in an internal investigation that is begun after a formal charge is filed with the EEOC falls within the scope of the participation clause.” Although it made clear that, because no EEOC charge had been filed at the time Grey-Allen participated in the internal investigation, the question was not before it, the Second Circuit acknowledged that “some courts have answered this question in the affirmative.”

It remains to be seen, then, whether the Second Circuit would extend the protections of the participation clause to an employee who participates in an internal investigation commenced in response to an EEOC charge. There is an argument to be made that, because such an investigation is nonetheless conducted pursuant to the employer’s policies rather than the EEOC’s own enforcement and investigative procedures, it should not be considered “under” Title VII any more than an internal investigation begun before a charge has been filed. 

For the time being, however, Townsend reaffirms the principle, adopted by every Court of Appeals to have considered the issue, that Title VII’s participation clause does not extend its protections to employees who participate in purely internal investigations. This principle thus remains a strong potential defense which should be considered by employers facing claims of retaliation under Title VII.

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