The State of Texas Appeals and Challenges the Court’s Decision Regarding Its Case Against the EEOC

On November 19, 2014, Texas filed its opening brief in support of its appeal. The State of Texas appealed the U.S District Court for the Northern District of Texas dismissal. This high profile case, brought by the State of Texas against the EEOC regarding its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII”.  In State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014), the District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

This is a case to watch because the State of Texas has many state policies against hiring anyone with a felony record, by state regulation for certain positions, and as the State of Texas alleges, “without federal court intervention, the [EEOC] will be able to continue to use its threat of enforcement to bully employers into abandoning their no-felons policies”.

The summary argument by the State of Texas:

I.A. The State has standing for several reasons. First, Texas employs hundreds of thousands of people, and it receives thousands of job applications every year. In processing those job applications, the State’s agencies routinely apply the no-felons policies required by state law and prohibited by the Felon-Hiring Rule. That conflict makes the State an “object” of the Commission’s administrative action and easily satisfies the standing requirements of Article III. Any doubt about the concreteness of the State’s injury is resolved by the fact that the EEOC already has launched a “charge of discrimination” against DPS for categorically refusing to hire felons.

Moreover, the State has standing because the EEOC cannot attempt to both change the State’s hiring policies and nonetheless object to the State’s standing to challenge that attempt. Both the D.C. Circuit and the Seventh Circuit have rejected the EEOC’s have-and-eat its-cake strategy, and this Court should do so too.

And in all events, the State has standing to challenge any federal regulation that purports to preempt state law. The Rule expressly purports to preempt state law no-felons policies, like those required by Texas law, and as a result, the State has Article III standing to defend its laws.

I.B. The district court reached the opposite result because, in its view, no regulated entity ever has standing to bring a pre-enforcement challenge against any regulation. That result is foreclosed by decades’ worth of precedent, and no decision supports it.

II.A. The State’s claims are ripe. This is a facial challenge to the EEOC’s rule, and as such, it is quintessentially fit for review. And delaying review would impose significant hardships on the State.

Without federal court intervention, the defendants will be able to continue to use the threat of enforcement to bully employers into abandoning their no-felons policies. No tenet of the ripeness doctrine countenances that result.

 II.B. The defendants’ only argument to the contrary is that “further factual development” is necessary to determine whether and to what extent the State’s no-felons policies create unlawful disparate impacts. But the entire point of this lawsuit is that the federal government is not entitled to put the State to that proof. To the contrary, the Felon-Hiring Rule is facially invalid, and the State can refuse to hire felons (consistent with state law), regardless of whether the EEOC thinks such refusals create disparate impacts. Who’s right is a pure question of law — not one of fact — and thus the case is ripe for review.

III.A. Lastly, the Felon-Hiring Rule is a “final agency action” made reviewable by 5 U.S.C. § 704. An unbroken line of cases dating back decades holds that “guidance” documents are reviewable to the extent they bind the agency’s staff or force regulated entities to change their behavior. The Felon-Hiring Rule does both.

III.B. The defendants contend that the Felon-Hiring Rule is not a “final agency action” because it is not a “legislative rule” that carries the “force of law.” But no court has ever held that Section 704 allows review of only “legislative rules.” Indeed, were it otherwise, agencies like the EEOC could promulgate self-proclaimed “guidance” documents, use them to bully regulated entities, and forever avoid judicial review of their coercive efforts. Congress enacted the APA to foreclose that result.