Title VII of the Civil Rights Act of 1964 allows employers on or near an Indian reservation to give preferential treatment to Indians living in the vicinity. But the Equal Employment Opportunity Commission (EEOC) takes the position that this provision doesn’t permit preference for members of a particular tribe. In the continuing saga of a case that has dragged on for years, the Ninth U.S. Circuit Court of Appeals ruled that the EEOC may pursue its position, at least partway.
Is Navajo Preference Permissible?
Peabody Western Coal Company mines coal at locations on the Navajo and Hopi reservations in northeastern Arizona. The leases for the operations were agreed to by Peabody’s predecessor back in the 1960s. Under the Indian Mineral Leasing Act of 1938, the secretary of the interior must approve the terms of all such leases.
Under one of the leases, Peabody “agrees to hire Navajo Indians when available in all positions for which, in the judgment of [Peabody,] they are qualified.” It is also required to “make a special effort to work Navajo Indians into skilled, technical and other higher jobs in connection with [its] operations under this Lease.” A second lease has similar provisions but permits Peabody to extend the preference to Hopi Indians as well.
The EEOC concedes that these specific terms were imposed at the direction of the Department of the Interior. Nonetheless, the agency contends that the terms violate Title VII because they provide a preference not for Indians in general but instead for Navajo (and potentially Hopi) Indians exclusively. The tribal limitation, according to the EEOC’s lawsuit, amounts to unlawful national origin discrimination against Indians from other tribes who live in the vicinity of Peabody’s operations.
When the case began nearly a decade ago, Peabody contended that the EEOC couldn’t file its lawsuit without including the Navajo Nation as a party. Clearly, rights of the nation would be affected by the suit’s outcome. In 2002, the trial court agreed with Peabody’s position and dismissed the lawsuit because the nation wasn’t a party. On appeal by the EEOC, the Ninth Circuit in 2005 ruled that the nation needed to be included but that the EEOC could file an amended complaint rather than face dismissal.
The EEOC then tried again. Its amended complaint named both Peabody and the Navajo Nation. But this time around, the nation argued that law precluded the agency from seeking any remedy against it. And both the nation and Peabody claimed there was still a necessary party missing — namely, the secretary of the interior. After all, it was the Interior Department that had insisted on the specific preferences in the leases, and Peabody argued that it shouldn’t be penalized for complying with the terms a government agency had imposed. The trial court agreed and again dismissed the case. And again, the EEOC appealed.
Violation or Not, Can EEOC Proceed?
The outcome of a federal lawsuit against a particular party could, depending on the circumstances, affect the rights of others. For example, if the EEOC filed suit only against Peabody and demonstrated that the Indian preference provisions of the leases violate Title VII, rights of the Navajo Nation also would be affected. In addition, Peabody would want to assert a claim against the secretary of the interior, who had dictated the provisions. To protect such interests, federal court rules in some situations permit a lawsuit to go forward only if all affected parties are included. Those rules were the focus of the Ninth Circuit’s recent decision.
First addressing the dismissal of the EEOC claim against the nation, the Ninth Circuit agreed with the trial court that the agency couldn’t seek relief against the nation. But that didn’t mean the nation should be dismissed from the lawsuit. Its interests would be affected by the outcome, and its presence as a party would permit it to address and protect those interests.
The court next turned to the question of whether the secretary of the interior was a necessary party in order for the EEOC’s claim to proceed against Peabody. Under principles of sovereign immunity, Peabody wouldn’t be able to file a claim against the Interior Department for any damages obtained by the EEOC. That would be unfair because a necessary party — the secretary of the interior — couldn’t be brought into the case. But according to the court, that didn’t mean the EEOC’s lawsuit should be dismissed, as the trial judge had concluded, but only that it would be unfair to permit the EEOC to seek any monetary damages from Peabody.
Despite sovereign immunity, Peabody and the Navajo Nation could file a separate suit to bar the Department of the Interior from future enforcement of the preference provisions it had written into the leases. Given the availability of that remedy in case the preferences were held to violate Title VII, the case could proceed without the secretary of the interior. The EEOC’s action, if successful, would be limited to changing the lease terms on a going-forward basis. No damages would be allowed for the effects of any past violation. EEOC v. Peabody Western Coal Co. , Case No. 06-17261 (9th Cir., June 23, 2010).
Bottom Line
This lawsuit demonstrates the challenge an employer faces when different government agencies impose contradictory requirements. Peabody didn’t design the Indian preference provisions in its leases; the Interior Department specified the exact language. The EEOC, charged with enforcing Title VII, can’t sue the Interior Department, so it sued Peabody and the Navajo Nation instead. The court’s decisions in the matter have not yet addressed the discrimination issue. Rather, they have turned on esoteric procedural rules, likely costing the parties millions of dollars to litigate over nearly a decade.