In the
United States Court of Appeals
For the Seventh Circuit

No. 96-3776

MICHAEL GIBSON,

Plaintiff-Appellant,

v.

JESSE BROWN, SECRETARY,
DEPARTMENT OF VETERANS AFFAIRS,

Defendant-Appellee.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 96 C 223--Ruben Castillo, Judge.

ARGUED SEPTEMBER 24, 1997--DECIDED MARCH 3, 1998



 Before RIPPLE, MANION, and KANNE, Circuit Judges.

 MANION, Circuit Judge.  Michael Gibson, a career
federal employee at the Department of Veterans
Affairs, experienced sex discrimination in 1992
when he applied to be a supervisory accountant at
his supply depot but was turned down by his two
female supervisors. The EEOC ordered Gibson's
promotion (and backpay), but Gibson filed suit in
the district court when the VA was slow to comply.
By the time the district court ruled on his suit,
the VA had implemented most of the Commission's
order, making the complaint largely moot. But
Gibson's claim for compensatory damages remained.
The court dismissed that claim after concluding
that Gibson never asked the EEOC to compensate him
for the VA's discrimination. We reverse.

I.

 In 1988 Michael Gibson began his career working
for the VA as an accountant in the agency's
Albuquerque, New Mexico facility. He transferred in
1990 to the VA supply depot in Hines, Illinois,
where he later applied for a promotion to become a
supervisory accountant (at the time, he was a GS-9
accountant). He did not get the promotion, and when
Gibson's two female supervisors selected a woman
for the position instead of him, Gibson filed a
timely Title VII claim alleging sex discrimination.
In July 1993, about a year after he had filed his
claim, the VA issued its final agency decision
finding no discrimination. Gibson appealed to the
EEOC. In October 1995, the Commission reversed the
VA, finding that the VA had indeed discriminated
against Gibson in the promotion decision. 

 In the federal domain the EEOC's final
determinations of discrimination are binding
against government agencies unless the complainant
himself seeks de novo review of that finding in
federal court. See 29 C.F.R. sec. 1614.504(a) ("A
final decision that has not been the subject of an
appeal or civil action [by the complainant] shall
be binding on the agency."); Morris v. Rice, 985
F.2d 143, 145 (4th Cir. 1993) ("[Congress] provided
that final decisions of the EEOC were to be binding
on federal agencies."). Accordingly, along with the
parties we acknowledge that the VA discriminated
against Gibson when his supervisors chose a less-
experienced woman to be the supervisory accountant
at Gibson's supply depot. The Commission also
provided a remedy for the discrimination: it
ordered the VA to promote Gibson and issue him
backpay. The VA did these things, but reluctantly
(a month late), prompting Gibson to file a federal
complaint in district court seeking compliance with
the Commission's nonappealable order. See 29 C.F.R.
sec. 1614.408(a). 

 In the district court, Gibson asked for much of
the relief that the VA belatedly gave him, which
meant that for the most part his complaint was moot
by the time the VA moved to dismiss it. But
Gibson's claim for compensatory damages remained--
specifically, he asked for compensatory damages
relating to mental anguish and emotional distress
resulting from the VA's discrimination (and
experienced over the ensuing three years, during
which Gibson was forced to work for the same
supervisor who discriminated against him/1). The
district court interpreted the claim for
compensatory damages as an entirely new claim of
discrimination, and then dismissed it because
Gibson did not present it in the first instance to
the EEOC (or, in administrative law parlance,
because Gibson had failed to exhaust his
administrative remedies). The district court added
that even if it interpreted the new claim as one
seeking only relief (as we interpret it), viz.
compensatory damages, the same rule of exhaustion
would apply and require its dismissal.
 Apparently the district court interpreted
Gibson's claim for compensatory damages (as Gibson
phrased it, damages for the "humiliation, mental
anguish and emotional distress" caused by the VA's
discrimination) as a claim for retaliation or post-
discriminatory harassment. Gibson does complain
that he was forced to work for three years (from
1992-95, while the appeals were pending) for the
same supervisor who had discriminated against him,
but we do not interpret this as a new claim of
discrimination. Under the Civil Rights Act of 1991,
claims for compensatory damages are claims for
"future pecuniary losses, emotional pain,
suffering, inconvenience, mental anguish, loss of
enjoyment of life, and other nonpecuniary losses."
See sec. 1981a(b)(3). Gibson asks for exactly these
damages (even repeating the statute's language
concerning "mental anguish"). Accordingly, we will
treat his claim as one seeking recovery for the
VA's discrimination rather than a brand new claim
of discrimination./2 As far as the government is
concerned, the distinction ultimately makes no
difference--whether Gibson raises a new instance of
discrimination or a new demand for relief, it is
barred because Gibson never presented it to the
EEOC. Having determined that Gibson's complaint is
a claim for damages--not a new claim of
discrimination--we are left to decide whether the
government correctly argues that it is barred
anyway.

II.

 There is some dispute over whether Gibson asked
the EEOC for compensatory damages. If he did, then
the government's failure-to-exhaust argument
obviously is a non-starter. But both parties agree
that Gibson never asked to be compensated for
emotional distress, or humiliation, nor did he
invoke any other term typically associated with a
demand for compensatory damages. (At one point,
Gibson did instruct the EEOC investigator that he
would settle his case for a "monetary cash award";
the relief ordered by the EEOC included backpay.)
It would be simpler if we could say that Gibson put
the EEOC on notice that he was seeking compensatory
damages (as opposed to, say, backpay, which is
considered equitable relief, sec. 1981a(b)(2)), but
the record does not support it. Accordingly, we
must now decide whether his failure to exhaust
administrative remedies with respect to
compensatory damages means he could not later
obtain these damages from the district court. 

 Ordinarily, a failure to exhaust administrative
remedies on an issue means that the complainant may
not press his claim in federal court. McCarthy v.
Madigan, 503 U.S. 140, 144-45 (1992). Exhaustion
"serves the twin purposes of protecting
administrative agency authority and promoting
judicial efficiency." Id. at 145. But it could go
without saying that a party is not required to seek
relief from an administrative agency (before
seeking it from a federal court) if the agency does
not have the power to redress a claim in the way
the complainant requests. Id. at 148. In other
words, while an administrative agency may be
"competent to adjudicate the issue presented,"
(here, Gibson's claim of discrimination),
exhaustion is not required if it "lack[s] authority
to grant the type of relief requested" (in this
case, money damages). Id., citing McNeese v. Board
of Ed. for Community Unit School Dist. 187, 373
U.S. 668, 675 (1963) (students seeking to integrate
public school need not file complaint with school
superintendent because the "Superintendent himself
apparently has no power to order corrective action"
except to request the Attorney General to bring
suit); Montana Nat'l Bk of Billings v. Yellowstone
County, 276 U.S. 499, 505 (1928) (taxpayer seeking
refund not required to exhaust where "any such
application [would have been] utterly futile since
the county board of equalization was powerless to
grant any appropriate relief"). 

 In this case, Gibson says that while the EEOC can
adjudicate the merits of his discrimination claim,
and even provide equitable relief such as backpay
and a promotion (both of which it ordered in his
case), asking the EEOC to issue compensatory
damages would be asking it to do what it has no
authority to do. (Nothing in the statute or
regulations explicitly rules out the idea, though
the only payments mentioned in the regulations
relate to "loss of earnings"--presumably backpay--
caused by the federal agency's discrimination. See
29 C.F.R. sec. 1614.501(a).) 

 On the one hand it sounds logical that the EEOC
can issue compensatory damages. After all, the
agency was created by Congress not only to
investigate complaints of discrimination, but, in
the federal sector, to adjudicate them. And more
than this, in the federal sector, Congress
empowered the EEOC to enforce Title VII's anti-
discrimination provisions by issuing "such rules,
regulations, orders and instructions as it deems
necessary and appropriate to carry out its
responsibilities." 42 U.S.C. sec. 20002-16(b). It
is not unreasonable to conclude that this mandate
might be broad enough to allow the EEOC to award
compensation for mental anguish and emotional
distress, much like the damages Gibson seeks in
this case. Indeed, the Fifth Circuit cited this
statutory language in concluding that Congress
intended the EEOC to redress discrimination by any
means necessary, including by issuing awards of
compensatory damages; the court punctuated its
determination by noting that the statute already
allows the Commission to issue back pay, "which is
a form of compensatory damages." Fitzgerald v.
Secretary, Veterans' Affairs, 121 F.3d 203, 207
(5th Cir. 1997). The Fifth Circuit certainly was
correct to turn first to the language of Title VII
to determine the scope of the EEOC's binding
adjudicative powers, though we note its misstep in
referring to backpay as a subset of compensatory
damages. The Civil Rights Act of 1991 (governing
awards for compensatory damages under Title VII)
plainly states that they are distinct remedies. See
42 U.S.C. sec. 1981a(b)(2) ("Compensatory damages
. . . shall not include backpay"). 

 Fitzgerald places some emphasis on the EEOC's
conclusion that the agency can issue awards for
compensatory damages; the EEOC reached that
determination through its adjudicative rather than
rule-making authority. The EEOC is free to choose
that route to announce new principles (even a
principle as significant as the one at play in this
case), see SEC v. Chenery Corp., 332 U.S. 194, 202
(1947), but the availability of its rule-making
powers means that "it has less reason [than a
court] to rely upon ad hoc adjudication to
formulate new standards of conduct." Id. Instead,
the "function of filling in the interstices of
regulatory statutes should be performed, as much as
possible, though [the] quasi-legislative
promulgation of rules to be applied in the future."
Id. Even allowing some measure of deference to the
EEOC's position, we note that the decisions
themselves contain no particularly persuasive
reasons why the agency should be allowed to issue
compensatory damages, other than the reasons
already noted by Fitzgerald itself. It appears that
Fitzgerald cites these agency decisions (at least
six of them) in order to give them deference, not
because it finds them in any way convincing.

 We have no difficulty in affording the EEOC a
measure of deference--even when interpreting its
own powers under a statutory scheme--so long as the
interpretation is consistent with the plain
language of the statute. See EEOC v. Arabian
American Oil Co., 499 U.S. 244, 257-58 (1991)
(rejecting EEOC's interpretation that Title VII
applies extraterritorially because it "lack[ed]
support in the plain language of the statute"). The
section of Title VII pertaining to the federal
sector, 42 U.S.C. sec. 2000e-16, is silent on the
issue of compensatory damages, which makes sense
because they were not even available in Title VII
suits until Congress passed the Civil Rights Act of
1991, 42 U.S.C. sec. 1981a. Section 1981a mentions
compensatory damages in several places: in
announcing their availability in "an action brought
by a complaining party" (sec. 1981a(a)(1)), in
excluding backpay from them (sec. 1981a(b)(2)), in
limiting their amount (sec. 1981a(b)(3)), and,
finally, in legislating that "[i]f a complaining
party seeks compensatory or punitive damages . . .
(1) any party may demand a trial by jury" (sec.
1981a(c)). It is this last provision of the statute
that is not discussed in Fitzgerald or, for that
matter, in any of the EEOC decisions relied upon in
Fitzgerald.

 We cannot sidestep it. Our reading persuades us
that it means what it says: if the complaining
party (defined by sec. 1981a(d) as someone capable
of suing in the first place) seeks compensatory
damages, either party, including the defendant
government agency, may demand a jury trial on the
issue. Of course the EEOC does not provide jury
trials; they are obtained in federal district
court. See sec. 1981a(c)(2) ("the court shall not
inform the jury of the limitations [on compensatory
damages] described in subsection (b)(3) of this
section"). Perhaps we could say that the EEOC has
the right to issue compensatory damages in the
first instance, and the losing party may seek de
novo review of the damages by demanding a jury
trial. Not only would that be expensively
duplicative, but it also probably would violate the
rule that the EEOC's final determinations are
binding against the agency (and thus are
nonappealable). See 29 C.F.R. 1614.504(a). So we
are left with this: if the EEOC issues compensatory
damages, they necessarily are binding against the
employing agency, meaning that the agency is
deprived under the statute of its right to a jury
trial. We agree with Gibson that the statutory
scheme promulgated by Congress does not allow the
EEOC to issue what would be nonappealable awards
for compensatory damages; compensatory damages are
awarded within the jury system established by the
statute.

 We part company with Fitzgerald in reaching this
conclusion for several reasons. Most important of
these is the statutory language that Fitzgerald
does not cite--the right of the complainant or the
government agency to demand a jury trial under sec.
1981a(c) if the complaining party seeks
compensatory damages. Under Fitzgerald's approach
(and for that matter the EEOC's), the right to a
jury trial under that section is lost. If we are to
give effect to each section or provision in a
statute, United States v. Franz, 886 F.2d 973, 978
(7th Cir. 1989), it follows that we are
particularly reluctant to interpret a statute in a
way that altogether strikes a provision and a
significant procedural right provided by it. It is
quite possible that the Fitzgerald court never
discusses the jury trial issue because the parties
never raised it, thereby never alerting the court
that the right to a jury trial conferred by sec.
1981a compels the conclusion we make today. Indeed,
had the Fifth Circuit benefitted from as full a
briefing on the issue as we have before us, it
might well have reached a different conclusion. 

 In addition to the statutory language conferring
a right to a jury trial, we note that the statute
allows compensatory damages only "[i]n an action
brought by a complaining party" under section 717
(the part of Title VII allowing federal employees
to sue the government for discrimination, 42 U.S.C.
sec. 2000e-16). See 42 U.S.C. sec. 1981a(a)(1)
(emphasis added). Is an action a federal suit in
district court, an EEOC proceeding, or both?
Congress has demonstrated that it knows the
difference between a civil action and an
administrative proceeding--in fact, it
distinguishes between the two in the statute. See
42 U.S.C. sec. 1981a(d)(1)(A) (defining complaining
party as "a person who may bring an action or
proceeding under Title VII") (emphasis added). 

 Indeed, throughout the statutory scheme, Congress
makes it clear that "actions" are civil actions
pursued in courts, not administrative agencies.
Section 706 of Title VII (the part applying to the
private sector) tells us that the United States
district courts--not the EEOC or any other
administrative agency--"have jurisdiction of
actions brought under [Title VII]." See 42 U.S.C.
sec. 2000e-5(f)(3). The same holds true in federal
sector suits like Gibson's. See sec. 717 of Title
VII, 42 U.S.C. sec. 2000e-16 ("civil actions"
against the government are to be pursued exactly
"as provided" in section 706). Thus, when Congress
uses the term "action" in Title VII, it is speaking
of civil actions filed in federal court, not
complaints of discrimination lodged with the EEOC.
In enacting the Civil Rights Act of 1991, Congress
could have chosen a more expansive term than
"action" or even redefined "action" to include EEOC
proceedings, but it did not./3

 One additional factor persuades us that a
government agency may not be held liable for
compensatory damages without the benefit of a jury
trial. By its terms, Title VII constitutes a waiver
of sovereign immunity because it allows the
government to be sued, Irwin v. Department of
Veterans' Affairs, 498 U.S. 89, 94-95 (1990); the
Civil Rights Act of 1991 extends that waiver by
allowing the government to be sued for compensatory
damages. But unless Congress tells us otherwise, we
cannot further extend that waiver by allowing the
government to be liable for compensatory damages at
the administrative level (and without the benefit
of a jury trial). See id. at 95 (interpreting the
very same provisions of Title VII--allowing suits
against the government--and noting that "[a] waiver
of sovereign immunity cannot be implied but must be
unequivocally expressed."). 

 As we have discussed, we think the government's
statutory right to a jury trial is a clear
expression by Congress that it has limited its
waiver of sovereign immunity. If Congress wishes to
extend the waiver of sovereign immunity so that the
government may be liable for compensatory damages
without the benefit of a jury trial, it is free to
say so unequivocally. What the government asks us
to do in this case is read an extension of the
waiver into Title VII, for good reason something we
should not do. The Supreme Court has instructed
that "limitations and conditions upon which the
Government consents to be sued must be strictly
observed and exceptions thereto are not to be
implied." Lehman v. Nakshian, 453 U.S. 156, 161
(1981). In other words, a court has no business
tinkering with elaborate statutory machinery like
Title VII to find a waiver of sovereign immunity;
the Government's consent to be sued must be
interpreted, "in terms of its scope, in favor of
the sovereign," Lane v. Pena, 116 S. Ct. 2092, 2096
(1996), and not "enlarged . . . beyond what the
[statutory] language requires." United States v.
Nordic Village Inc., 503 U.S. 30, 34 (1992). See
also United States v. Williams, 514 U.S. 527, 531
(1995) (when confronted with a purported waiver of
the Federal Government's sovereign immunity, the
Court will "constru[e] ambiguities in favor of
immunity"). In this case, we would be doing more
than tinkering--we would be redrafting (actually,
reducing) the scope of sovereign immunity under the
statute by allowing an administrative agency to
issue nonappealable awards for compensatory
damages, thereby wresting the matter from district
courts and juries. That would not be consistent
with our role, or with the statute Congress wrote.

III.

 In concluding that the EEOC may not order the
government to pay compensatory damages, we
recognize the EEOC's responsibility to issue any
orders it deems "necessary and appropriate." We are
not displacing any right that the EEOC historically
has enjoyed. We simply conclude that Congress has
determined it is inappropriate for the EEOC to
order the government to pay compensatory damages,
a right which it never had in the first place.
Fitzgerald concludes otherwise, but the statutory
provisions at play convince us not to follow the
Fifth Circuit's lead./4 "Our duty is to
independently decide our own cases, which sometimes
results in disagreements with decisions of the
other circuits." Atchison, Topeka and Santa Fe
Railroad Co. v. Pena, 44 F.3d 437, 443 (7th Cir.
1994) (en banc), aff'd sub nom. Brotherhood of
Locomotive Engineers v. Atchison, Topeka and Santa
Fe Railroad Co., 116 S. Ct. 595 (1996). In this
case, that means Gibson should have been allowed to
pursue his claim in the district court. We already
have concluded that it was not a new claim of
discrimination. It was a claim for compensatory
damages relating to his employer's discrimination,
and it was not redressable by the EEOC. We reverse
the district court and remand Gibson's claim so
that it may be tried to a jury, which is what he
has demanded in his complaint and what the statute
allows.


FOOTNOTES

/1 We express no opinion as to whether the working
environment described by Gibson is worthy of
compensatory damages.

/2 Even if we had interpreted Gibson's claim to be one
of retaliation (for bringing his discrimination
charge), we might not have agreed with the district
court that Gibson was required to file a new charge
of discrimination with the EEOC. A complainant need
not file a new charge of discrimination to complain
that the defendant retaliated against him for
filing the first charge. See McKenzie v. Illinois
Dep't of Transp., 92 F.3d 473, 482 (7th Cir. 1996).
"In such cases, only a single filing [is] necessary
to comply with the intent of Title VII." Id.

/3 In addition to the statute, the Regulations
distinguish between civil actions (filed in court)
and complaints (filed with administrative agencies)
by allowing a complainant "who has filed an
individual complaint" to file a "civil action in an
appropriate United States District Court" within 90
days of a final agency decision. See 29 C.F.R. sec.
1614.408(a).

/4 Because of this disagreement, this opinion was
circulated to the full court for a vote on whether
to grant rehearing en banc in advance of decision.
See Circuit Rule 40(e). There were no votes to
grant rehearing.

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