As we reported earlier this year (EEOC Files Suit Over Separation Agreement Language), the Chicago District Office of the Equal Employment Opportunity Commission (EEOC) filed suit against CVS Pharmacy alleging that the company’s standard separation and release agreements were “overly broad, misleading, and unenforceable.” Specifically, the EEOC argued that provisions in CVS’s agreements infringed on the employees’ rights to file discrimination charges and participate in EEOC investigations.

On October 7, 2014, U.S. District Court Judge John W. Darrah issued a Memorandum Opinion and Order granting CVS’s Motion for Summary Judgment and dismissing the EEOC’s lawsuit against CVS. Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., No. 14-cv-863 (N.D.Ill.2014).

Judge Darrah did not rule on the issue of whether the terms and conditions of CVS’s Severance Agreement are enforceable.  He dismissed the lawsuit because the EEOC did not fulfill the administrative prerequisite of attempting to conciliate with CVS before filing the lawsuit.  Nevertheless, in a footnote in the opinion, Judge Darrah indicated that the settlement agreement properly carved out employee rights to participate in EEOC investigations and also indicated that any attempt to restrain such participation would be unenforceable in any event.

It is unfortunate that Judge Darrah did not have an opportunity to squarely address the challenge presented by the EEOC, but the opinion is still a setback for the EEOC in its efforts to invalidate private settlement terms.  The EEOC may appeal the dismissal to the 7th Circuit and we will keep you posted on new developments, including the outcome of a similar case filed by the EEOC in a different district court.