Are We Done Yet ?… The Investigation That Never Ends.

The Issue

Does the EEOC have investigative authority to subpoena employers for information after the EEOC has issued an employee a right-to-sue letter? What about after a court has already entered a judgment on the merits in favor of the employer? The Seventh Circuit says yes. 

The EEOC… What Now?

The Equal Employment Opportunity Commission (EEOC) is an agency that was created by Congress under the Civil Rights Act of 1964. The purpose of the agency is to serve the public interest by enforcing the provisions of Title VII of the Civil Rights Act and other non-discriminatory legislation in the workplace context. Under the Equal Employment Opportunity Act of 1972, the EEOC’s power was magnified to include enforcement through the courts, longer periods of time for administration, and conciliation of charges. Further, Section 706 of this Act lays out the procedures and timing guidelines for claims filed with the agency.

First, an aggrieved employee may file a charge with the EEOC. Thereafter, the agency investigates the claim against the employer. This investigation could include a subpoena for relevant information and ultimately lead to a lawsuit filed by the agency itself. The charging employee has the option to allow the charge to be resolved by the EEOC or to obtain a right-to-sue letter from the EEOC, which is necessary to file a lawsuit in federal court (excluding charges under the Age Discrimination in Employment Act).

The Split

The Seventh Circuit joins the Ninth Circuit in holding that the EEOC has the administrative authority to investigate possible discrimination independent of the employee’s cause of action. In EEOC v. Union Pac. R.R (2017), the Seventh Circuit upheld the EEOC’s ability to continue investigating an employer after issuing a right-to-sue notice to an employee and after the dismissal of the employees’ subsequent civil lawsuit on the merits. The court reasoned that ruling otherwise would erroneously undermine the EEOC’s authority as “merely derivative” of the employee’s right to sue, which would be contrary to the holding of the Supreme Court in EEOC v. Waffle House (2002).

In EEOC v. Fed. Express Corp. (2008), the Ninth Circuit held that the issuance of a right-to-sue letter does not strip the EEOC of authority to continue to process the charge, including an independent investigation of allegations of discrimination on a company-wide basis. They reasoned that “the EEOC’s right of action is independent of the employee’s private action rights” and further that “it is the [EEOC]’s province–not that of the court–to determine whether public resources should be committed” to the continuing investigation of a charge.

However, in EEOC v. Hearst (1997), the Fifth Circuit held that the EEOC “may not continue an administrative investigation based upon an individual’s charge once the charging party has been issued a right to sue letter and has initiated litigation based upon that charge.” They reasoned the time for investigation passes after litigation has commenced.

Looking Forward

The Seventh Circuit’s opinion largely aligned with the US Supreme Court’s holding in EEOC v. Waffle House (2002).  The Supreme Court reasoned that “[t]he statute clearly makes the EEOC the master of its case and confers on the agency the authority to evaluate the strength of the public interest at stake.”

Following the Seventh Circuit’s decision, the EEOC’s investigative authority could be challenged in other circuits and present an opportunity for the Supreme Court to rule on this issue. In particular, the issue of whether a valid, final judgment on the merits presents enough discovered information on the employer’s practices would be a different issue from that of Waffle House. The Supreme Court of the United States may need to more definitively rule on this issue for uniformity of the law across circuits.

Agree to Disagree: Defining Submission to Police Authority

Issue

The Fourth Amendment of the Constitution protects against unwarranted searches and seizures, which begs the question—what exactly constitutes a seizure? In California v. Hodari D. (1991), the Supreme Court held that a “seizure” requires either physical force or submission to police authority. In the wake of this decision, circuit courts have struggled to define the phrase, “submission to police authority,” resulting in a split of authority. The emergent view in the Courts of Appeals, although admittedly uneven within the circuits, is that when a suspect does nearly anything more than pausing briefly, including any significant verbal engagement with the officer, that action is strong evidence of submission.” United States v. Camacho (1st Cir. 2011). Some courts have adopted this rather broad interpretation of the term, imparting a low standard for submission. Other courts have adopted a narrow view, requiring additional conduct to meet the standard.

The issue of defining submission is incredibly significant because of its impact on other aspects of a case. For example, whether or not a defendant is deemed to have submitted to police authority can determine what evidence may be presented at trial, which can significantly influence the outcome of a case. The Fourth Amendment serves to protect against unwarranted invasions of privacy by requiring probable cause. The Fourth Amendment “prohibition on unreasonable searches and seizures is enforced through the exclusionary rule, which excludes evidence seized in violation of the Fourth Amendment.” United States v. Camacho (1st Cir. 2011).

The Split

The following circuits have adopted the view that brief compliance followed by flight does not constitute submission.

  • Second Circuit: In United States v. Huertas (2d Cir. 2017), the court held that, in dealing with the police, conduct that amounts to evasion cannot be considered submission.
  • Third Circuit: In direct contradiction with the Tenth Circuit’s ruling, the court in United States v. Valentine (3d Cir. 2000) held that a brief pause does not make for a submission, and therefore the defendant in this case was not seized within the Fourth Amendment meaning.
  • Ninth Circuit: In United States v. Hernandez (9th Cir. 1994), the court rejected the defendant’s argument that he was “seized” because he briefly submitted to the police officer’s show of authority before fleeing. The court here requires a discernible showing of compliance to constitute submission:

“We decline to adopt a rule whereby momentary hesitation and direct eye contact prior to flight constitute submission to a show of authority. Such a rule would encourage suspects to flee after the slightest contact with an officer in order to discard evidence, and yet still maintain Fourth Amendment protections.”

The following circuits have adopted the view that brief compliance followed by flight does constitute submission.

  • First Circuit: In United States v. Camacho (1st Cir. 2011), the court held that once a defendant responds to questions posed by the police, he or she has submitted to police authority.
  • Tenth Circuit: In United States v. Morgan (10th Cir. 1991), the court held that even the slightest form of compliance, in this case, a momentary hesitation, is enough to constitute submission. The court explains its reasoning as follows:

“Here, the intrusion on Mr. Morgan in regard to the initial attempted questioning by Officer Eubanks and the subsequent exchange between the two was minimal. However, since Officer Eubanks had followed the car in which Defendant was a passenger for several blocks with his red lights flashing; since Officer Eubanks exited from a marked police car, in uniform, and asked the Defendant to hold up; and since Defendant, at least momentarily, yielded to the Officer’s apparent show of authority, we find Mr. Morgan was seized for purposes of the Fourth Amendment during the initial portion of the encounter.”

  • D.C. Circuit: In United States v. Brodie (D.C. Cir. 2014), the court ruled that when a defendant complies with an officer’s orders by engaging in overt acts, such as putting one’s hands on the car, the defendant has submitted to police authority.

Looking Forward

Although the Supreme Court expressly outlined the requirements for a “seizure” in California v. Hodari D. (1991), it still left some questions unanswered—circuit courts were tasked with the responsibility of defining “submission to police authority,” and conflicting rulings resulted. Branden Huertas submitted a petition for writ of certiorari to the Supreme Court in December 2017, in hopes of appealing the Second Circuit’s decision in United States v. Huertas (2017). In the petition, Huertas discusses the split among the lower courts and urges the Supreme Court to review the issue. In his petition for a writ of certiorari to the U.S. Court of Appeals for the Second Circuit, Huertas notes: “The conflict is widely recognized by courts and commentators. It also is deeply entrenched; the courts on either side of the split have acknowledged the contrary reasoning of their peers and have had multiple opportunities to reconsider their positions, but the conflict has persisted. Thus, only this Court can restore uniformity on this important question of Fourth Amendment law.” For further reading, see the petition for writ of certiorari: Huertas v. United States.

Card Declined: The Credit Card Fraud – Crime Sentencing Transaction

The Issue

Wire fraud, an intentional act to defraud another individual or entity of property (usually money) through electronic means, is becoming an increasingly common and widespread crime in the United States. According to a study by Javelin Strategy & Research in partnership with LifeLock, Inc., approximately 15.4 million consumers were victims of identity theft or fraud in 2016, up 16 percent from 2015, and more than ever recorded by the firm. Obtaining credit card numbers, encoding them on blank cards, and making purchases or withdrawals from automated teller machines (ATMs) has become a favorite medium of crime among fraudsters. When determining how a perpetrator of wire fraud should be sentenced for possessing credit cards that are canceled, expired or attached to an account from which all funds have been successfully siphoned, a key issue is whether the “access device” is in fact usable by the perpetrator.

The Split

Credit cards that have been encoded with stolen numbers and used fraudulently are governed by 18 U.S.C. § 1029(e)(1) and (e)(3). Of particular importance, Application Note 3(F)(i) of § 2B1.1 of the sentencing guidelines says in cases involving “unauthorized access devices,” in this case credit cards, “loss includes any unauthorized charges made with the counterfeit access device.”

The Ninth Circuit ruled on this issue in 2012, when it considered United States v. Onyesoh, which explored access device fraud under 18 U.S.C. § 1029 and whether the government must prove the usability of an expired credit card number in order for a district court to increase the severity of a sentence. In Onyesoh, the Ninth Circuit held that unauthorized access devices must be usable:

An “unauthorized access device” must be an “access device,” which itself must be capable of obtaining “money, goods, services, or any other thing of value.” 18 U.S.C. § 1029(e)(1) and (e)(3). The statute’s language is clear and we give it full effect—unauthorized access devices are a subset of access devices, and therefore must be capable of obtaining something of value…The statute is intended to target major fraud operations instead of individual [fraud]…But the kind of devices potentially covered by the statute says nothing about the quantum of proof necessary to establish usability. The legislative history simply does not address that issue. No court, in this or any other circuit, has read usability out of the statute.

But in deciding United States v. Popovski at the end of 2017, the Seventh Circuit changed the score. Judge Easterbrook adopted the Sixth Circuit’s 2015 decision in United States v. Moon, arguing that the statute and note must be read together:

[T]he definition of “unauthorized access device” in § 1029(e)(3) includes “any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud”. This necessarily implies that a card, number, or other identifier with a potential to obtain goods or initiate a transfer of funds remains an “access device” even if it is “expired, revoked, [or] canceled.” These two statutory paragraphs can work together only if paragraph (1) defines an “access device” according to its nature—the sort of thing that could in principle be used to get goods or funds, whether or not it would work in practice…. If a calculation under Application Note 3(F)(i) overstates the seriousness of the offense, a district judge must adjust accordingly. That process, rather than warping the language of § 1029(e), is the way to avoid the Ninth Circuit’s parade of horribles.

While the Ninth Circuit’s decision was likely predicated on a desire to prevent obtuse sentences for criminals who possessed but did not use expired credit card numbers, Judge Easterbrook’s scathing critique of the Ninth Circuit made clear that the Seventh Circuit, like the Sixth Circuit, will not cut financial criminals any sentencing slack:

Like the panel in Onyesoh, we too think that a district judge should not increase a sentence just because the defendant possessed ancient pieces of plastic or lists of numbers useful only during the reign of Xerxes. But we disagree with Onyesoh’s view that this result should be achieved by treating the language in § 1029(e)(3) as irrelevant to the meaning of “access device”. Courts must read the statute to reconcile these paragraphs.

Looking Forward 

After a new sentencing hearing, the Ninth Court of Appeals and the Supreme Court denied Onyesoh’s petition for a writ of certiorari.  Certiorari is currently pending for Popovski, but the Supreme Court has not expressed interest in ruling on the case in the current session.

Judge Easterbrook, in deciding United States v. Popovski, came down hard on the Ninth Circuit’s interpretation of the sentencing law regarding this sort of wire fraud. He argued, in part, that district judges can come to a workable resolution under the current law without disregarding any specific portion of the statute. Following Judge Easterbrook’s logic, it seems unlikely that this issue will pique the Supreme Court’s interest. Nevertheless, if credit card fraud continues to rise at record levels and continues to emerge as the cause celebre of the consumer crime world, constituent pressure may push Congress to act.