Transcript

IN THE SUPREME COURT OF THE UNITED STATES

TOGO D. WEST, JR., SECRETARY OF VETERANS AFFAIRS Petitioner v. MICHAEL GIBSON

No. 98-238

April 26, 1999

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:02 a.m.

APPEARANCES:

BARBARA B. McDOWELL, ESQ., Assistant to the Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Petitioner.

TIMOTHY M. KELLY, ESQ., Chicago, Illinois; on behalf of the Respondent.

PROCEEDINGS

10:00 a.m.

CHIEF JUSTICE REHNQUIST: We'll hear argument now in Number 98-238, Togo West v. Michael Gibson.

Ms. McDowell.

ORAL ARGUMENT OF BARBARA B. McDOWELL ON BEHALF OF THE PETITIONER

MS. McDOWELL: Mr. Chief Justice, and may it please the Court:

The Equal Employment Opportunity Commission has the authority to award compensatory damages in the administrative process to redress violations of title VII by agencies of the Federal Government. That authority is conferred by two provisions of title 42 read together. The first is section 2000e-16, which authorizes the EEOC to award appropriate remedies in the administrative process against Federal agencies that violate title VII. The second is section 1981a, which authorizes awards of compensatory damages in title VII actions against the Federal Government.

QUESTION: But it doesn't specifically say by the EEOC in that section, does it?

MS. McDOWELL: No, it doesn't, Mr. Chief Justice, but we believe that the two sections, read together, provide the EEOC with that authority. Essentially, by waiving the Government's sovereign immunity with respect to compensatory damages, that made compensatory damages also an appropriate that may be awarded in the administrative process by --

QUESTION: So many administrative agencies award compensatory damages?

MS. McDOWELL: Yes, they do. Agencies themselves award it, and the EEOC on appeal also awards them in the administrative process.

QUESTION: In those instances is there judicial review from the amount -- from the agency award?

MS. McDOWELL: If an employee or applicant for employment is dissatisfied with the award that's made at the administrative level, he can bring an action de novo in district court.

QUESTION: What about the Government?

MS. McDOWELL: The agency does not, though.

QUESTION: So in the other statutory instances that you mentioned in your answer to the Chief Justice, I'm curious to know, are there any instances in which the Government is bound and cannot have judicial review of the amount of compensatory damages awarded by an agency?

MS. McDOWELL: There are other statutory schemes that are somewhat similar. For example, the Federal Employees Compensation Act, which compensates employees who are injured and killed on the job, doesn't have a judicial review mechanism.

QUESTION: So the Solicitor General is arguing here for the proposition that the Government is subject to unreviewable damage awards on the part of the EEOC.

MS. McDOWELL: Essentially, yes, Your Honor, that Congress made that determination in 1972 when it provided that only employees and applicants for employment can challenge EEOC awards.

QUESTION: But at that time there were no compensatory damages available.

MS. McDOWELL: That's correct, Your Honor, but there were back pay awards and other sorts of awards, including reinstatement, promotion and so on, that in many senses are more intrusive to agencies than compensatory damages.

Presently, of course, back pay and compensatory damages are both available in the administrative process and the back pay awards exceed the compensatory damages award by a factor of at least three.

QUESTION: The Government would have the usual appeal if the damages were awarded in the district court.

MS. McDOWELL: That's correct, Your Honor.

The court of appeals construed section 1981a as limiting the Government's waiver of sovereign immunity to proceedings in court in which a jury trial would be available. That position is incorrect for at least three reasons.

First, the court of appeals' position is inconsistent with the administrative exhaustion requirement of section 2000e-16(c), which is a condition on the Government's waiver of sovereign immunity under title VII.

QUESTION: May I just clarify one other thing about the damages. Supposing that the employee is dissatis -- gets damages from the EEOC but he's dissatisfied with the amount. Is it your view that the employee can go -- still file an action seeking greater damages?

MS. McDOWELL: Yes, Your Honor --

QUESTION: Okay.

MS. McDOWELL: -- he may.

QUESTION: And one further clarification. Is the EEOC a necessary stop for the employee, or can the employee go upon the agency to court? If the agency says no, no discrimination, or discrimination but no back pay, can the employee skip over the EEOC?

MS. McDOWELL: Yes, Your Honor. The EEOC is an optional choice, although it certainly is a choice that is made by most employees in the process. For example, in fiscal 1997 approximately 1,000 cases were filed by employees in court. Approximately 7,00 appeals to the EEOC were taken. That suggests that the EEOC is a desirable route for a large number of employees.

QUESTION: It might have made sense for Congress to say, if you want damages you go immediately to court, and if you don't want damages, you can go to the EEOC.

MS. McDOWELL: It might have made sense, but Congress did not say that. Congress didn't disturb the administrative exhaustion requirement, which had always been understood to enable an employee or applicant to obtain full relief in the administrative process.

QUESTION: But you say -- it's not exhaustion once it's an option that the employee can go there or not, and the second leg of your argument that I'm having difficulty with, I don't understand the extent of your exhaustion, waiver, or whatever.

Suppose the employee never asks the agency, it just said to the agency, you discriminated me -- against me on the basis of sex, and the agency said, and he doesn't specify damages. It was a he in this case. Does he forfeit compensatory damages by not asking for it before the agency, or does the forfeiture come only from not asking for it before the EEOC?

MS. McDOWELL: It would be our position in that situation that he would forfeit that by not asking for them at the agency level as well.

QUESTION: Is it true that most of these people at the agency level are not represented by counsel?

MS. McDOWELL: I believe that's correct, Your Honor, at least a large number of them are not. That's not to suggest, however, that most of them aren't asking for compensatory damages. Indeed, they are.

QUESTION: Well, a lay person, really, terms like compensatory damages, they're not familiar with those words. Does the agency or the EEOC have some kind of set of counsel, instructions, advice that says, when you file a complaint with us, this is what you can complain about, these are the possible remedies, so then we could say, well, the employee saw that, it's an intelligent action?

MS. McDOWELL: There's no requirement that an employee be specifically advised of what sort of remedies he can receive.

However, the EEOC does have procedures that agencies are required to follow, that if an employee says anything to indicate that he has suffered compensatory damages, if he mentions emotional distress, for example, if he mentions that he's seen a doctor, the agency is supposed to make further inquiry to see whether a compensatory damages claim is indeed appropriate in that case. The agency and the EEOC are not allowed to rely on an employee's failure to use particular magic words to request compensatory damages.

QUESTION: Well, how does the agency know, then, what amount of compensatory damages are being sought when it's defending these charges in the EEOC?

MS. McDOWELL: Well, presumably the employee, if he has made a claim for compensatory damages, bears the burden of proof, and the EEOC has held this, of establishing both the amount and the nexus to the alleged discrimination.

QUESTION: Does the employee file some sort of a paper that says, you know, I want $50,000 in compensatory damages before the -- in the EEOC proceeding?

MS. McDOWELL: Well, the second step, actually the administrative process is the filing of a formal complaint at the agency level and that typically, as in this case, asks the employee what relief are you asking for, and in this case Mr. Gibson requested back pay. He didn't request compensatory damages.

QUESTION: And so -- but under your view he didn't waive compensatory damages by not asking for them?

MS. McDOWELL: That's -- the view that the EEOC has taken is that he doesn't necessarily have to request them in his complaint or in particular words --

QUESTION: Well then, how --

MS. McDOWELL: -- but he does have to identify the need for compensatory damages at some point.

QUESTION: How does the agency know how to defend against a complaint like that if it doesn't even request compensatory damages?

MS. McDOWELL: Well, typically that is why it's our position that the employee does need to waive the compensatory damages claim if the --

QUESTION: I thought you said just a minute ago he didn't have to.

MS. McDOWELL: No, certainly he does. He doesn't have to say compensatory damages in so many words, or he doesn't necessarily have to say compensatory damages in his complaint, but at some point in the administrative process he certainly does have to put the agency on notice.

QUESTION: Well, but could it be at the very -- I mean, if he doesn't have to do it in his complaint, which is where most claims for compensatory damages are made, could be doe it at the very end?

MS. McDOWELL: Well, then there would have to be an investigation to determine the amount of his claim and whether it is connected with the alleged discrimination, so at some point there would be a fact-finding process. In many of these cases there's actually an administrative hearing before an EEOC administrative judge at the agency level, and at that point, at times the evidence that's taken on compensatory damages claims can be quite extensive, including reports from competing psychiatrists, and so on.

QUESTION: Doesn't it put the agency in a rather peculiar position? It's defending against a claim, and at the same time you're telling us that it will advise the plaintiff exactly what claim he has. You see that if he sees that -- if the agency sees that there's a basis for a compensatory claim, the agency will tell them to make a compensatory claim?

MS. McDOWELL: The EEOC has held that it's appropriate when an employee indicates that he suffered that kind of damage to make further inquiry to see if what he is really seeking are compensatory damages

QUESTION: I thought you said -- I thought you were referring about the agency by which he is was employed. He initially goes to that agency, doesn't he?

MS. McDOWELL: That's correct, yes.

QUESTION: Now --

MS. McDOWELL: And there's a --

QUESTION: And you say he has to make the compensatory claim before that agency, as well.

MS. McDOWELL: Yes, although the EEOC has said that in some instances he may defer raising the claim if he's not aware of it until he gets to the EEOC level, the second level. In that case, if he raises it first before the EEOC, the typical procedure is for it to be remanded.

QUESTION: But he ordinarily has to raise it before the employing agency, right?

MS. McDOWELL: Yes.

QUESTION: And you're saying that the employing agency is going, what, out of the goodness of its heart, to advise him that he has a compensatory claim which it should pay? It puts the employing agency in a strange position. It's both defending against the claim, and supposedly advising the plaintiff as to what claim he should make.

MS. McDOWELL: Yes, he does, it does, and --

QUESTION: Well, Ms. McDowell, this --

MS. McDOWELL: -- the EEOC has felt that --

QUESTION: -- the requirements, this is a peculiar kind of thing, but the -- isn't the agency required to have an EEO officer who, when people complain about discrimination, is there to aid the person, so you have the agency both as being assistant to the complainant, and the agency is the adversary, but am I wrong in thinking that the agency is obliged to have an EEO counselor?

MS. McDOWELL: Yes, and that's the very initial phase of the whole EEO process, is informal counseling, and this is an effort to try to resolve these complaints before a formal complaint is filed.

QUESTION: By the agency that would be the adversary?

MS. McDOWELL: Yes.

QUESTION: The informal counseling.

MS. McDOWELL: Yes, that is a counselor of that agency, yes.

QUESTION: And that's kind of a conflict of interest, where the agency is counseling the employee, and presumably that's to tell the employee what his rights are, and then the agency ends up being the target of whatever complaint the employee files, but the agency does have that obligation, to be a counselor to the employee.

MS. McDOWELL: That's correct, and as a practical matter there are different people performing these different functions within the agency. The EEO counselors are supposed to be independent of those who are making the determination on the merits of a claim when it comes to that.

QUESTION: Turning back to the sovereign immunity basic issue, are there any of these other statutes in which the agency has discretion to determine the scope of a sovereign immunity waiver?

MS. McDOWELL: We're not arguing that the agency has the discretion to determine --

QUESTION: Well, I thought you argued Chevron deference as to what is an appropriate remedy. Are you withdrawing that part of your argument?

MS. McDOWELL: We don't perceive that we were making precisely that argument, Your Honor. It's our position that there does need to be a clear waiver of sovereign immunity, and that was made here in section 1981, that the question of appropriate remedies by leaving this broad language in the statute enabled the EEOC to determine --

QUESTION: Well, your brief says -- your brief quotes the Chevron rule that you can fill in gaps that are left. It seems to me that you're saying that we should defer to your discretion in determining the scope of the waiver. Are there -- is there any other statute when an agency is allowed to do this?

MS. McDOWELL: Not that we're aware of, Your Honor, no.

Returning to the administrative exhaustion requirement of section 2000e-16, that requirement has always been understood to provide a mechanism for relief in the administrative process to enable employees and agencies not to have to go to court to litigate these issues. It would be inconsistent with that statutory design to require an employee who still, everybody agrees, must go to the administrative level to exhaust his claims of liability and equitable relief, then to have to go to the district court to seek compensatory damages.

QUESTION: What would happen if the employee goes to the agency, gets counseled by the EEO advisor, who doesn't say anything abut the various types of damages, skips over the EEOC, goes directly to the court, at that point the employee has a lawyer and asks for back pay, compensatory damages, whatever. Would there be any forfeiture in such a case?

MS. McDOWELL: Yes, Your Honor. the employee would still be required to have raised his claim for compensatory damages at the agency level.

QUESTION: Even though we are envisioning an uncounseled employee, and an officer in the agency who has the obligation to advise this uncounseled person about his rights?

MS. McDOWELL: There's an obligation to advise about rights, but there's no requirement to advise about what remedies he should be requesting in the administrative process, so yes, we would say that his failure to exhaust administrative remedies by not requesting compensatory damages from the agency would require the dismissal of his claim. That wouldn't necessarily mean that his claim would have to be dismissed with prejudice, however. It's our position that the exhaustion requirement itself is jurisdictional to the extent that the issue must be raised before the agency, but the time limits for exhaustion are not, so in cases where justice might require, the district court could dismiss a case without prejudice to enable the employee to try to go back to his agency and exhaust the remedies that he failed to exhaust before.

QUESTION: It seems to me that if the EEOC is monitoring their system, it's very odd that there aren't instructions, as there are in many cases. Agencies will give a party appeal instructions, if you don't like what we do you can go here, and not to tell an uncounseled employee who just says, I want money, what the options are, and for the Government to be advocating that kind of a forfeiture, that kind of a waiver, an unintelligent waiver, seems to me strange.

MS. McDOWELL: Well, in many circumstances, Your Honor, somebody who is seeking relief from the Government is required to inform himself or herself of what the statutory remedies provide. Certainly in this case --

QUESTION: Yes, well, usually when we go to court, that's a different kind of setting, but here we're before the agency, where it's supposed to be not an adversary relationship at first, at the very first stage. It's an -- the agency says, here, we'll give you a counselor. The counselor will tell you all about what your rights are.

And then you say, well, the counsel should have told him that he waives something he didn't know about. It just strikes me as strange.

MS. McDOWELL: Well, as we say, it wouldn't entirely preclude an employee who could establish once he went to court that he had a good reason for not having raised the claim before.

It's our understanding that most employees are quite well-informed of their ability to obtain compensatory damages. Currently, I understand, of those cases that are appealed to the EEOC in which compensatory damages are theoretically available because they're under title VII of the Rehabilitation Act that in excess of 80 percent involve requests for compensatory damages, so I don't think the situation you posit of employees being uninformed of his rights --

QUESTION: Well, who is informing them, then, if they're now asking for something that a lay person would -- that term, as you said, that magic term wouldn't come into the head of uncounseled -- so you said -- and that may be what's happening now, but are they being advised by someone that there is this possibility?

MS. McDOWELL: Well, as I indicated previously, once an employee puts the agency on notice that he suffered emotional loss, medical expenses, something of that nature, then the agency is supposed to make inquiry, but as a general matter in every case across the board there's no instruction from the EEOC that employees have to advise -- employers have to advise employees of any particular remedies that are available to them, whether it's back pay or a statement of compensatory --

QUESTION: May I ask you a factual question just to -- in -- you said I think there are 7,000 complaints with the EEOC every year. Are those involving Government employees?

MS. McDOWELL: That's correct, yes.

QUESTION: And in 80 percent of those, damages have been awarded by the EEOC?

MS. McDOWELL: No. In 80 percent of those cases there's a claim for compensatory damages, which suggests simply that employees are aware of --

QUESTION: And -- but what roughly is the percent in which claims of compensatory damages are made, do you know?

QUESTION: Well, that's the 80 --

MS. McDOWELL: That's the 80 percent.

QUESTION: Oh, that's the 80 percent?

MS. McDOWELL: Yes.

QUESTION: Oh, I see, but they're -- now, does the EEOC write some kind of an opinion when it disposes of these cases?

MS. McDOWELL: Yes, it does.

QUESTION: And they're all reported, are they?

MS. McDOWELL: They're reported on West Law. They're reported through other mechanisms as well. They're not reported in a volume like F.Supp. though.

QUESTION: And there are cases in which the EEOC has awarded damages, and then the employee later sued and got more damages in court?

MS. McDOWELL: I'm not aware of any actual cases in which that happened. However, theoretically that's a possibility --

QUESTION: I see.

MS. McDOWELL: -- because an employee if dissatisfied can go to court.

QUESTION: How many cases before the agency request compensatory damages? Do you know that?

MS. McDOWELL: I'm not aware of that at this point, no.

QUESTION: And that is probably a much greater number of cases than the cases that go to the commission. I mean, most of the cases resolved finally at the agency level?

MS. McDOWELL: Most are. There were approximately 26,000 cases resolved at the agency level in fiscal '97 as opposed to 7,000 cases that were appealed, so one would think a lot of cases are going away at the agency level. About a quarter of the cases are settled at the agency level for relief that could include compensatory damages.

QUESTION: Can the agency award compensatory damages?

MS. McDOWELL: Our position is yes, Your Honor.

QUESTION: Well --

MS. McDOWELL: However, the Eleventh Circuit has held otherwise.

QUESTION: And what would be the authority for that, the statutory authority?

MS. McDOWELL: The statutory authority would be the same as the authority that applies to the EEOC itself. There's further authority in section 2000e-16 saying that the agencies are those who have the primary responsibility in the Federal Government of enforcing equal employment opportunity.

QUESTION: Well, does it say anything about awarding -- the agency awarding appropriate relief?

MS. McDOWELL: No. There's nothing about the agency itself awarding appropriate relief, although there is authorization, of course, to the EEOC to award appropriate remedies and for the EEOC also to promulgate rules and regulations.

QUESTION: Yes. That doesn't help you much with the agency, though, does it?

MS. McDOWELL: No, it doesn't.

QUESTION: And it would be a very strange scheme, it seems to me, if you don't have to ask for compensatories at the agency level but you do at the EEOC level, especially since you could come directly from the agency to district court if you wanted to.

MS. McDOWELL: That's correct, and that's why it's generally our position that one must raise it at the agency level.

QUESTION: I see.

MS. McDOWELL: There are those --

QUESTION: Yes, but it really is one hypothesis built on another. I mean, you have questionable authority for requiring it to be raised before the EEOC, and your only authority for requiring it to be raised and allowing the original agency to grant compensatory damages is, God, if you allow it at the EEOC it doesn't make any sense not to allow it at the agency.

MS. McDOWELL: Well, there's one other point, Justice Scalia, and that is that everybody agrees that an agency can settle a claim for an amount that includes compensatory damages.

The general rule there is that an agency can settle a claim for any sorts of damages that could be awarded ultimately in court, and so many of these cases in which compensatory damages as actually are paid over at the agency level involve settlements --

QUESTION: Well, we're --

MS. McDOWELL: -- so there's a reason to exhaust just for that purpose.

QUESTION: We're talking a lot of cases that will be dumped directly into district courts. I mean, more than the, what was it, 7,000 from the EEOC. It may well be that a large number of cases that never got to the EEOC that were resolved at the agencies with compensatory relief would not be resolved there any more but would have to come to the district courts if the plaintiff wanted compensatory relief.

MS. McDOWELL: That's correct, and if the court decided the case in a manner that precluded the agencies from awarding it as well.

QUESTION: Is there any sort of a contested proceeding before the agency? I mean --

MS. McDOWELL: Yes.

QUESTION: -- really the only -- I thought the only way an agency could handle the case would be to settle it or else to deny relief.

MS. McDOWELL: No. The agency conducts an investigation and ultimately issues a decision on the merits if the case hasn't previously been settled or dismissed on procedural grounds. The employee can request a hearing as well before an administrative judge of the EEOC. That is requested in a third to a half of all cases.

QUESTION: Does the -- do we find cases in which the agency awards compensatory damages against itself?

MS. McDOWELL: Yes. It's not a large number of cases, but there are some.

QUESTION: Could you focus for just a second, please, on the jury trial argument? I take the argument against you as being that 1981 says that in an action brought under 717, and this is an action brought under 717, a party can ask for compensatory damages, so you would have thought they could.

But it says in (c) that if a complaining party seeks compensatory damages any party may demand a trial by jury, and since it's obvious the EEOC is not a place where you'd have a trial by jury, it's obvious that this doesn't apply to the EEOC, the waiver that's in 1981.

That's the argument, and I'd like you to respond to that argument.

MS. McDOWELL: We think that the most appropriate construction of the jury trial provision as applied to Federal employee cases is that if, indeed, a case reaches district court because the employee was not satisfied with either the administrative agency's award or the EEOC's award, then either party can, indeed, request a jury trial, but this doesn't foreclose the EEOC from doing it.

QUESTION: Now, has that ever been determined? I ask that because the argument continues, the Government isn't going to be able to ask for a jury trial. They're going to be bound by the EEOC. Do you mean that a private party files the complaint for compensatories, they're denied, and then does the whole thing over again in the trial court? Is that your position, that that's what that provision means?

MS. McDOWELL: Yes. It's important to know --

QUESTION: Has it ever been interpreted?

MS. McDOWELL: Pardon me?

QUESTION: Has it ever been interpreted authoritatively?

MS. McDOWELL: No, not that I'm aware of.

QUESTION: But the Government's position is that means that if you don't get compensatories before the agency, you have a right under that provision to have the issue done anew in the trial court.

MS. McDOWELL: That's correct, yes.

It's important to recognize that the jury trial provision is a general provision. It was not directed specifically at the Federal Government. It's part of a provision that applies to all title VII cases whether against the Government or against private employees. This provision is already in the legislation that became section 1981a before Senator Warner offered his amendment to extend compensatory damages to Federal employees as well.

QUESTION: Of course, the words appropriate remedies were also in 2000e-16 before they included compensatory damages, weren't they?

MS. McDOWELL: That's correct, and Congress was certainly award of that provision at the time that it enacted section 1981a. If it had intended at that point to limit the available remedies to appropriate equitable remedies, presumably Congress would have said so, but it didn't.

QUESTION: No, but the amendment in 1981a, the jury trial point, it emphasized it focuses on actions for damages. You think of a judicial proceeding, and that indirectly is amending in your view also the authority of the EEOC under 2000e-16.

MS. McDOWELL: Yes.

QUESTION: Yes.

MS. McDOWELL: It's also important to recognize that all of this legislation was enacted against a historical background of Congress' historical aversion to jury trials on monetary claims against the Government. Certainly that's reflected in the Tucker Act and the Federal Tort Claims Act, where a condition of the Government's waiver --

QUESTION: Yes, but the Government -- there is a right to a jury trial on both sides once you get to court, in your view.

MS. McDOWELL: That's correct, so this is a somewhat different provisions but in order to jump from the existence of this provision to a condition on the waiver of sovereign immunity is a greater --

QUESTION: Well, but this is less favorable to the Government than simply having no jury trial for either party. Here, the plaintiff gets to go to district court if he's dissatisfied. The Government doesn't get to go at all.

MS. McDOWELL: Yes, and that's a choice that Congress made back in 1972, Your Honor.

QUESTION: You say that Congress made this choice when it favors your position, but then you say that traditional sovereign immunity principles suggest that the Government doesn't like jury trials. The Government certainly would rather have a jury trial than no trial at all, I would think.

MS. McDOWELL: Well, Congress decided otherwise when it determined that finality was more important than whatever extra accuracy would be obtained by judicial proceedings with respect to equitable relief, back pay and so on, under title VII. That's --

QUESTION: Of course, when the Government has no trial at all, it's the Government's own fault, right, because it's the Government itself which has given judgment against itself at the agency instance, right, so --

MS. McDOWELL: Well, to a certain extend --

QUESTION: Yes.

MS. McDOWELL: -- one could look at it that way.

QUESTION: You could blame it on itself.

(Laughter.)

MS. McDOWELL: If there are no further questions, I'd like to reserve the remainder.

QUESTION: Very well, Ms. McDowell.

Mr. Kelly, we'll hear from you.

ORAL ARGUMENT OF TIMOTHY M. KELLY ON BEHALF OF THE RESPONDENT

MR. KELLY: Mr. Chief Justice, and may it please the Court:

I'd like to address initially Justice Ginsburg's concerns about the issue as to how an employee goes about requesting compensatory damages. I think if you take a look at the appendix, the joint appendix in this case, at the two fold-out pages in the center, I believe pages 23 and 24, you'll see the actual EEO form that Mike Gibson filled out back in 1992 when this case initially arose, and you'll see in that form that there's really no place for an employee to indicate that he wants compensatory damages.

The only question that's asked on this form relating to any kind of remedy at all, it asks not what injury you suffered, but what corrective action are you seeking. It's our position that this request for corrective action is in direct lineage with the interpretation of the Federal employee section of title VII, which has always held that only equitable remedies were available for either Federal employees or private employees of discrimination until the 1991 act was passed.

QUESTION: And I suppose it goes to the obligation to raise the issue at the agency level. I mean, if I were reading that form I would not get a hint from the section referring to corrective action that it might be appropriate for me to ask for damages.

MR. KELLY: And that's exactly our position both in the district court and in the Seventh Circuit with respect to Mike Gibson's exhausting his administrative remedies and the argument that the Government ought to be estopped from raising the bar of exhaustion in this particular case, because the facts are undisputed that Mike Gibson was never advised of a right to compensatory damages.

QUESTION: Mr. Kelly --

MR. KELLY: Yes, Your Honor.

QUESTION: -- the records, your client's name is Michael Gibson on the record. Is there any particular reason you refer to him as Mike?

MR. KELLY: Only because that's how I know him, Judge.

QUESTION: Well, this is a court, not a jury.

MR. KELLY: Mr. Chief Justice, and I apologize.

QUESTION: You have a bad form there. Maybe they should amend the form.

MR. KELLY: Well --

QUESTION: The fact that that doesn't clearly say -- and I agree with you, corrective action does not suggest compensatory damages. It suggests back pay, reinstatement, and so forth, so they should devise a new form.

MR. KELLY: Well, and --

QUESTION: I mean, they have to make -- well, I'm -- I shouldn't be critical. This may win your case, but it doesn't -- but not on the ground that you're arguing for, not on the ground that the statute doesn't require it to be asked for. Maybe on the ground that your client was misled or something, but --

MR. KELLY: Well, and Justice Scalia we have argued all three of those grounds. The Seventh Circuit decided the case on the sovereign immunity issue, but we have maintained the argument that Mike Gibson was deceived, and in fact that Mike Gibson --

QUESTION: Well, we didn't grant cert on that, did we, and if it came to that we would probably -- my guess is remand to let them figure that out.

MR. KELLY: You did not, Your Honor, but the opinions of this Court indicate that it's the judgment that's reviewed not the reasoning of the court of appeals, and all of the arguments that we've presented are strong reasons to affirm the judgment of the court of appeals if not according to the same reasoning, and we do agree with the reasoning of the Seventh Circuit.

I point this out because not only did the form draw Mike Gibson in a different direction, the regulations, the EEOC regulations specifically require the agency and the EEOC to advise Mike Gibson of his rights and to oversee this instruction of pro se litigants through the administrative system, and that was never done.

QUESTION: Well, that -- I repeat, that's really not the issue that we're interested in. Why don't you assume for purposes of your argument that this form were required to be corrected, as the Government would doubtless say it ought to be, to say what -- not what corrective action are you seeking, but what remedies of any sort, including compensatory damages, are you seeking. Then what would your argument be?

MR. KELLY: Well, in that event, Your Honor, we have argued also that Mike Gibson invoked the compensatory damage remedy by telling the investigator from the Veterans Administration that he was seeking a monetary cash award.

The EEOC has ruled that a request for an appropriate cash reward is a request for compensatory damages, and for the agency to take the position that monetary cash award is a request for compensatory damages, and appropriate cash reward is not a request, or vice versa, we think is a return to the hypertechnical exhaustion requirement that predates giving Federal employees access to the Federal courts in 1972.

With regard to the sovereign immunity issue, we have argued not only the jury trial provision of section 1981a, and I believe that the -- Ms. McDowell misreads section 1981a(c), because the jury trial provision does not begin with, if a case gets to Federal district court, then you have a right to trial by jury. It says, if a complaining party --

QUESTION: Where are you reading from, Mr. Kelly?

MR. KELLY: I'm reading from section 1981a(c).

QUESTION: And where will we find that in the brief?

MR. KELLY: Your Honor, that's in the appendix to the cert petition, page -- that's page 32a.

QUESTION: Thank you.

MR. KELLY: The statute says, if a complaining party seeks compensatory or punitive damages, then either party may demand a trial by jury.

In this case, it must be conceded that a Federal employee asking for compensatory damages at the administrative level is a party seeking compensatory or punitive damages. The definition of complaining party specifically includes both actions and proceedings, and so that provision must refer to all instances when a party --

QUESTION: And yet clearly no party can demand a trial by jury before the EEOC.

MR. KELLY: Clearly, which is why we interpret section 1981a to provide for compensatory damages at the Federal district court level, not at the administrative level. In addition to the right to a jury trial, section 1981a(a)(1), which is on page 31a of the appendix, provides in the operative language granting the right to compensatory damages for compensatory damages in an action, and skipping down to the bottom of the provision, in addition to any relief authorized by section 706(g) of the Civil Rights --

QUESTION: This is (a)(1) you're reading from?

MR. KELLY: This is (a)(1) of 1981a. In addition to any relief authorized by section 706(g) of the Civil Rights Act of 1964. Those provisions, both by referring to an action as opposed to a proceeding, and by referring to the judicial remedy provision of title VII, which is 706(g), specifically refer to actions, civil actions in Federal district court, and not to administrative proceedings.

In title VII, as the Court recognized in New York Gaslight Club v. Carey, in general the term action refers to civil action, and when Congress is referring to more general issues of State and local and administrative enforcement, it almost always uses the word, proceeding, or proceedings.

QUESTION: Well, I don't -- I -- going back for a second to your jury trial, which is the point that is confusing me at the moment, I might agree with you -- I don't see how -- the Government originally said that if it's not an administrative action there'll be a lot of extra time, expense, disruption, delay to give them -- you remember that in their brief, or petition for cert.

MR. KELLY: I do, Your Honor.

QUESTION: All right. I accept that that's not so if you're going to give two bites at the apple to every plaintiff, but in their brief on the merits here they don't say the plaintiff gets two bites at every apple. What they say is, maybe there isn't a jury trial right, but they say may -- in footnote 19, do you remember that? When they go into that, they say, maybe there is, maybe there isn't. It says, arguably, at least, the Federal employee is not proceeding under this section. Do you remember that?

MR. KELLY: In --

QUESTION: And it's under this section you get the jury trial right.

MR. KELLY: And it's --

QUESTION: My question is, can you elucidate that a little bit? I mean, I'd get your point completely if it's really true there's a jury trial right, but I'm not sure they've conceded that in their brief, and so I'd like a little bit of elaboration on the assumption that there isn't a jury trial right for a plaintiff who says, I want -- he says to the agency, I want a compensatory action. You get that before the agency, but maybe you don't get it in court.

I've got it on the assumption you do get it in court, but what if it isn't, if you don't have a jury trial right?

MR. KELLY: I'm sorry, Justice, I'm not understanding in what circumstance you might not get a jury -- the right to a jury trial if you went to court. By my reading --

QUESTION: What they say in their brief is, a Federal employee may not be proceeding under this section, within the meaning of section 1981a(c)(1), which he seeks compensatory damages under the administrative process. He is instead proceeding under 42 U.S.C. 2000e-16(b), which, as discussed above, gives the EEOC the authority to enforce title VII remedies. Maybe I didn't understand that properly.

MR. KELLY: As I understand the Government's argument, it is that they're proceeding under section 717, or section 2000e-16, that is, rather than under section 1981a, and I think that there are several problems with that approach.

QUESTION: Mr. Kelly, before you describe the problems, did you understand that to -- the Government to be saying that there's no right to jury trial in the court? I thought that this was just an explanation of why there is no right to jury trial before the agency.

MR. KELLY: That's the way that I understood it, Your Honor.

QUESTION: Maybe that's the explanation. Maybe that -- okay. Sorry. Skip it.

QUESTION: It's the only reason I didn't underline footnote 19 in red when I read the brief.

QUESTION: We can ask the Solicitor General to clarify that, but it seems absolutely clear that when you're in district court you get a jury trial. That's what Congress provided, and -- but your reading of this does seem to me a little strange, because you're talking about, oh, they waive sovereign immunity, the Government waives sovereign immunity but only in district court, not at the lower level, and yet Congress is acting in the interest of the Government.

When you get into court with a jury, there is the possibility of a bigger box than what you would get before the agency, so in the Government interest to get the thing wrapped up at the agency level, so if they're going to waive sovereign immunity before a jury, then it seems most likely that they will say, of course we'd rather have it disposed of without making it a Federal case and without the possibility of a jury making the award.

MR. KELLY: Well, and Judge, I think that the answer to that is that the title VII procedures for Federal employees have always been perceived as primarily a conciliatory mechanism and not necessarily an adjudicatory one. The idea in the agency is to resolve the problem, get the employee back on track and working, and working at the level that he should be working, and that can be done by offering compensatory damages, by offering equitable relief, and there's no bar in the statute to voluntary mechanisms for achieving that.

What the problem comes in is having the agency award compensatory damages, or having an EEOC force an agency to spend money in compensatory damages to an employee.

I think that there are really four reasons that Congress would have conferred this right in a Federal district court and not in an administrative agency. The first is the independence and objectivity of the judicial branch. These employment discrimination suits are mainly intramural events between executive branch officials and their agencies, or between the agencies and the EEOC.

QUESTION: Before you go onto that, can you go back to what you said before, because I'm not sure I grasped it. I thought -- are you saying that if the agency wants to, it -- what authority, in your view, does the agency and EEOC have to -- with respect to compensatory damages?

MR. KELLY: It -- Judge, it's -- it's our -- I'm sorry, Justice Ginsburg, it's our understanding that the Government, like a private litigant, is able to offer relief or damages in settlement in anticipation of a liability. The liability for compensatory damages at the Federal district court level we believe authorizes the agency to offer a settlement. This is done voluntarily, not under compulsion, not -- and only --

QUESTION: But I didn't know that the agencies had authority to voluntarily waive sovereign immunity unless Congress sanctioned that.

MR. KELLY: Well, it's our position that they don't have the ability to voluntarily waive sovereign immunity.

QUESTION: But you just said that they could make a settlement that included --

MR. KELLY: And --

QUESTION: -- compensatory damages.

MR. KELLY: And it's my understanding that the Federal Government is able to make a settlement, to engage in voluntary negotiation in the same way that a private party is, which is different than the exercise of Government --

QUESTION: There's some general settlement statute, isn't there? I think there used to be, anyway.

MR. KELLY: I believe that this is -- and there's -- the Comptroller General's Office has issued regulations that indicate that a settlement in anticipation of litigation is an appropriate means for --

QUESTION: Isn't that the answer? They can always anticipate that at some point the claimant will end up in court, and they know that if the claimant ends up in court, there can be damages, so therefore their settlement authority would include the payment of something with respect to compensatory damages. That would -- isn't that the answer to sort of the waiver problem?

MR. KELLY: That's much more succinct than --

QUESTION: The trouble is, I don't know of any settlement authority to settle for more than is asked for, and what you're allowed to ask the agency for is restitution, you know, back pay and reinstatement. It's hard to come under a settlement authority when, you know, you're asking for $100,000 and the agency says, well, we'll settle for two. I doubt whether that comes within the settlement authority.

QUESTION: May I -- I'm sorry, have you answered his question?

MR. KELLY: I'm not -- I'm not sure if it was a question.

QUESTION: That's what you're saying, isn't it, that you can come before an agency with no compensatory claims, just reinstatement and back pay, and say, you know, I want $100,000 and the agency says, well, you know, we'll settle for two. Can the agency do that?

MR. KELLY: Like any other litigants, if the complainant says, if you don't give me $100,000 I'll take you to court, I think that the agency has the ability to take into consideration a compensatory damage claim that will be made in the future in order to settle the case in --

QUESTION: So all he has to say is, I want back pay, I want reinstatement, and I want $100,000.

MR. KELLY: Right.

QUESTION: And if you don't give it to me, I'm going to go to court.

MR. KELLY: That's right, and it's clear that Congress -- whether he's correct or not in wanting $100,000 for compensatory damages, it's clear that Congress gave him the right to go to court whether he gets it or not.

QUESTION: Are you -- you were in the midst of four reasons, and the first one was the, I guess relative objectivity of the court.

MR. KELLY: That's right. The judiciary acts as a check in that instance on executive officials awarding nonpecuniary compensatory damages to --

QUESTION: Yes, but isn't the danger not that executive officials are going to give the bank away, but that a jury is going to give the bank away?

MR. KELLY: Well, and that's the second reason, Your Honor, and that's the expertise of the Federal district court and juries in awarding compensatory damages. Compensatory damages have been committed to the judgment of juries and judges for at least a couple of hundred years.

QUESTION: Of course, your --

QUESTION: The expertise of juries?

QUESTION: That's the reverse Chevron doctrine.

(Laughter.)

QUESTION: Your argument has to be the same, I take it, for punitive damages.

MR. KELLY: Well, there are no punitive damages available against the Federal Government.

QUESTION: You're basically -- you've clarified

QUESTION: May I ask a question about this -- I really am confused about this statutory scheme, I have to confess. I had read, before getting more confused during the argument --

(Laughter.)

QUESTION: -- the 2000e-16(b) as the kind of authority to EEOC where the EEOC was the original, you might say the nisi prius tribunal, where an original complaint is filed with them, but actually in the system as it actually works, the EEOC is sort of an appellate tribunal. It reviews what the separate agencies do.

Is there any statutory language anywhere that says that what they're supposed to do, that they have a review function that in fact passes on --

MR. KELLY: The --

QUESTION: -- and if so, where is it?

MR. KELLY: The same section, subsection (b), indicates that the EEOC may promulgate rules, regulations, orders --

QUESTION: Right.

MR. KELLY: -- and so forth.

QUESTION: But decide cases on review of decisions by other agencies, does anything say that?

MR. KELLY: Well, there's a -- kind of a glancing blow that idea in section 2000e-16(c), which refers to the procedure that needs to be followed before the case goes to Federal district court. That refers to the time limits after an agency decision, and if --

QUESTION: I see. Yes, right. I see.

MR. KELLY: -- there is an appeal to the EEOC --

QUESTION: Thank you.

MR. KELLY: -- then the time limit after the EEOC.

QUESTION: Do you just -- one quick thing. Surprisingly enough, you did clarify the role of the jury in my mind. The other thing I'm not certain on is, I gather in -- historically speaking there's -- what I heard was the Government say about 80 percent of these types of complaints before the EEOC do ask for some kind of compensatory damages in some way or other. Have you any rough idea as to how many cases they were granted in? Is this zero? Is this the first one? Is it -- do we have any rough idea of what the history is?

MR. KELLY: There are some published statistics. Unfortunately, the EEOC doesn't keep its statistics according to the number of compensatory damages cases where awards were made, and so it's impossible to say how many -- in how many cases compensatory damages were awarded, but there has been money awarded both at the EEOC level and at the agency level for compensatory damages, according to the statistics.

QUESTION: So there's some kind of practice and history of them awarding compensatory damages.

MR. KELLY: Well, beginning in 1992 with the Jackson decision, which by the way is not published, and was not published in West Law or any of the private reporters, not all EEOC decisions are published in those sources, but beginning in 1992, agencies grudgingly began to award compensatory damages, or at least consider awards of compensatory damages in certain cases, and the EEOC generally has remanded cases for consideration of compensatory damages rather than awarding them itself, but there are some cases where the EEOC has awarded compensatory damages.

QUESTION: Can you go back and finish your fourth -- I mean --

QUESTION: Three and four. Our attention span is really not that long.

(Laughter.)

QUESTION: I'm glad you didn't have seven or eight points, because -- what are three and four? Could you tell us quickly?

MR. KELLY: The third reason I think is parity of Federal employees and private employees, and in this situation, finally I think Congress has managed to pout Federal employees and private employees on an equal standing with regard to compensatory damages. When they've attempted that in the past they've failed for various reasons.

QUESTION: But they have not put private employers and Federal employers on a parity, have they, for damages?

MR. KELLY: They -- with respect to --

QUESTION: So far as the right to go from the agency to court.

MR. KELLY: With respect to all of the damages except punitive damages, I believe that they are on a parity.

QUESTION: Well, a private employer can appeal an EEOC award to the district court, can it not?

MR. KELLY: The EEOC doesn't make awards against private employers. The function of the EEOC in private cases is entirely conciliatory in mediation. There's no --

QUESTION: So it has to go to court itself to --

MR. KELLY: Those cases go to court, or they're settled before they get to court.

QUESTION: And how does it work with the legislative employees, because that's yet another scheme. We have the private sector, we have the Federal Government, and what is for the legislative employees?

MR. KELLY: Well, the congressional Accountability Act sets up I think yet another scheme, administrative scheme for awarding compensatory damages, and that's an election system.

After 90 days, the Federal -- or the congressional employee has the option of either staying in an administrative process where the administrative agency is explicitly given the power to award both equitable and compensatory damage type relief, or he can elect to go outside the administrative system and straight to Federal district court.

QUESTION: In the -- for the legislative employee, if he elects the administrative route, the EEOC route, is -- can he, as in the case of an executive employee, go to court at the end of the line for de novo review if he's dissatisfied?

MR. KELLY: No. It's not technically the EEOC that he goes to. It's an administrative agency within the Congress.

QUESTION: Right.

MR. KELLY: But no. Those cases are appealed --

QUESTION: So it's self-contained. It's either, you get court route, or you get the administrative route, but you don't get, as with executive employees you can go to the EEOC if you want to, but you've always got a right in the end to come to court.

MR. KELLY: That's correct, Judge.

QUESTION: I give up, Mr. Kelly. I'm not going to wait for your fourth point.

MR. KELLY: The fourth --

(Laughter.)

QUESTION: I have a question that has perplexed me. What happens when you -- when a claimant brings an action or a proceeding before -- administratively, is unsatisfied with the result, and therefore may institute suit in district court for the back pay and the reinstatement remedy, right?

MR. KELLY: Correct.

QUESTION: Now, that same claimant under your system, if he had a compensatory damages claim, would have filed a compensatory damages claim in district court.

MR. KELLY: Correct.

QUESTION: Do those two district court actions now proceed separately?

MR. KELLY: It's my understanding that the Federal employee is still required to exhaust administrative remedies with respect to the equitable relief and therefore it would not be until after the administrative process was exhausted --

QUESTION: Right.

MR. KELLY: -- that he would make both the claim for equitable relief and the compensatory damages --

QUESTION: Why? Why would he make them all together? I mean, why couldn't he file a suit immediately for the compensatory relief while he's asking for the other relief administratively, if there's no exhaustion requirement?

MR. KELLY: Well, it would be difficult to point to the statute and say what the answer to that question is, but in Brown v. General Services Administration this Court interpreted section 2000e-16(c) to mean that the Federal employee is required as a prerequisite to going into Federal court to exhaust administrative remedies.

QUESTION: But you're telling us there's no exhaustion. I mean, I thought your whole case was that there's no exhaustion requirement in this situation.

MR. KELLY: There's no requirement to present the compensatory damage claim to the agency. There's a right to present a compensatory damages claim in the first instance to the Federal district court. I believe that there's merit in the suggestion that a Federal employee could bring a compensatory damage claim separately. I wonder whether --

QUESTION: If he brought them all together, if he waited for the agency to deny his back pay and reinstatement claim, and then he could bring them all together and get a jury trial on the back pay and reinstatement, which he would not get otherwise.

MR. KELLY: I don't think that that's the way that it would work, Your Honor.

QUESTION: Well, if you're entitled to a jury, you're entitled to a jury on all the factual questions in the case. You can't have the jury deciding the facts one way and the judge deciding it another for the other two issues. I mean, surely the jury would determine all the factual matters, wouldn't it?

MR. KELLY: I believe that the jury would determine the factual matters in that it would determine whether discrimination occurred and what amount of compensatory damages was available.

QUESTION: And --

MR. KELLY: I think that the judge could then determine, after the jury had decided those facts, based on the facts, whether equitable relief in addition to the compensatory damages was appropriate in that circumstance.

QUESTION: But the amount of back pay due, that factual matter would be decided by the jury, I guess, wouldn't it?

MR. KELLY: The amount of --

QUESTION: And the level of reinstatement to which he was entitled, I would assume that's a factual matter. That would be decided by the jury.

MR. KELLY: I --

QUESTION: I don't know. I mean, it just changes the scheme a whole lot, that's what I'm saying here, when you pour them all into one action.

MR. KELLY: I -- and I agree that it does change the scheme. I understand that in at least most cases, in all of the cases that I've seen, the jury's determination as to discrimination and compensatory damages would determine the outcome of the equitable relief except for --

QUESTION: Well, you don't have to read subsection (c) the way you're reading it. It says, if a complaining party seeks compensatory or punitive damages under this section, any party may demand a jury trial. You could read that as limiting the right to jury trial to the demand for compensatory damages.

MR. KELLY: That's correct. I was refer -- I'm sorry, I was referring to 2000e-16(c), which is the Federal employee section of title VII, not the new compensatory damage remedy, and that provision has been determined by the court in Brown v. General Services administration to require exhaustion prior to --

QUESTION: But Mr. Kelly, I thought your point was that, to the extent that there are common fact questions like, was there discrimination, how long did it go on, if you have a combined legal and equitable claim, the jury goes first, and the jury's findings of fact become issue preclusive on the judge. That was settled in Beacon Theaters and Dairy Queen decades ago by this Court.

MR. KELLY: I believe that's correct, Your Honor.

QUESTION: Thank you, Mr. Kelly.

Ms. McDowell, you have 2 minutes remaining.

REBUTTAL ARGUMENT OF BARBARA B. McDOWELL ON BEHALF OF THE PETITIONER

MS. McDOWELL: To respond to Justice Breyer's question --

QUESTION: No, no, you needn't. I think I understand it. The key are the words, this section. This section refers to 1981, not 717.

MS. McDOWELL: Yes. It is the Government's --

QUESTION: Okay. You don't need to go further. You have 2 minutes.

MS. McDOWELL: -- position that there is a jury trial if the case ripens into an action into district court. It's our position that the jury in that sort of case would determine issues of liability as well as issues of compensatory damages, although equitable relief would continue to be awarded by the Court following the jury's decision.

In terms of the question about the historical practice of awarding compensatory damages at the administrative level, we don't have a count on the exact number of cases. However, in fiscal 1997, $3.5 million worth of compensatory damages were awarded at the agency level. Since often these awards are quite --

QUESTION: Agency level, do you mean EEOC, or the original --

MS. McDOWELL: No, the agency level, the initial level. Since often these rewards are really quite small, $500, $1,000, $2,000, that could be a large number of cases, but we don't have a count on that.

If there are no further questions from the Court --

QUESTION: Yes, I have one --

MS. McDOWELL: Oh.

QUESTION: -- further, and that's again on the forfeiture, or waiver, whatever you call it. It seems that if you are insisting that the employee ask for this before the agency, ask for it before the EEOC, instead of taking it out of a general demand for relief, then you're asking for an exactness in the administrative proceeding that 54(c) says, in court -- it says, the court will give you the relief to which you're entitled even if you haven't asked specifically for it.

MS. McDOWELL: Yes. The 54(c) talks about relief that you have actually proven, and that's consistent with the EEOC's position here, that if you have proven compensatory damages in the administrative process, yes, you can recover them, but an agency and the EEOC shouldn't be forced to guess at what damages you may have suffered.

Thank you.

CHIEF JUSTICE REHNQUIST: Thank you, Ms. McDowell.

The case is submitted.

(Whereupon, at 11:02 a.m., the case in the above-entitled matter was submitted.)