EEOC May Face $4 Million in Attorney Fees

Supreme Court clarifies that fees may be due even on procedural grounds

By Allen Smith, J.D. May 25, 2016
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The Supreme Court has made it easier for employers to recover attorney fees against the Equal Employment Opportunity Commission (EEOC) when it fails to conciliate claims. The high court ruled on May 19 that fees may be awarded even absent a ruling on the merits of the case.

Procedural grounds are enough to support an award, said Barbara Cusumano, an attorney with Littler in Washington, D.C. The decision means that the EEOC may have to honor a lower court’s ruling and pay an Iowa trucking company $4 million for fees incurred when investigating claims.

“This is a great decision for employers,” said Stanley Pitts, an attorney with Honigman in Detroit.

Cusumano agreed, saying the decision not only will make the recovery of fees from the EEOC easier for employers, but also will serve as a signal to the EEOC to “take its statutory obligation to conciliate and fully investigate seriously.”

Harassment Class Action

In 2005, Monika Starke, a new truck driver, filed a charge with the EEOC alleging that she was sexually harassed by two male trainers of CRST Van Expedited, a trucking company headquartered in Cedar Rapids, Iowa.

After investigating her charge, the EEOC informed CRST that it believed the company had subjected Starke and a class of employees to sexual harassment. The commission brought suit on behalf of more than 250 women.

The district court dismissed all of the claims, including the claims of 67 women whose charges the EEOC had failed to conciliate. The court dismissed the claims of nearly 100 women as a sanction due to the commission’s failure to make the women available for deposition. The other claims were rejected for a variety of reasons that didn’t address the merits of whether there was harassment, including the expiration of the statute of limitations and because of CRST’s prompt and effective response to the reports of harassment.

The district court then awarded CRST over $4 million in attorney fees. However, on appeal, the 8th U.S. Circuit Court of Appeals reversed the dismissal of two claims—Starke’s and another employee’s. That led the appeals court to vacate the award of attorney fees.

Starke and CRST then settled and the EEOC withdrew its other claim. But the district court again awarded more than $4 million in fees, and the EEOC appealed. The 8th Circuit reversed, holding that a defendant under Title VII of the Civil Rights Act of 1964 can be eligible for receiving attorney fees only by obtaining a ruling on the merits.

In a unanimous opinion written by Justice Anthony Kennedy, the Supreme Court reversed the circuit court’s decision. Congress did not intend that defendants should be eligible to recover attorney fees only when courts dispose of claims on the merits, the high court decided. Title VII’s fee-shifting provision allows defendants to recover money whenever the plaintiff’s claim was frivolous, unreasonable or groundless, it reasoned.

Much attorney time and employer expenditure can go into contesting a Title VII claim, even just on procedural grounds. Congress could not have intended to bar defendants from obtaining attorney fees in cases where the litigation was resolved in their favor but not litigated for them on the merits, the Supreme Court ruled.

The high court sent the case back to the 8th Circuit for resolution of the fee dispute, consistent with the Supreme Court’s opinion.

The decision is helpful, said Miriam Nemetz, an attorney with Mayer Brown in Washington, D.C. Employers “still can recover costs in the unusual case. But avoiding litigation still is the name of the game.”

This decision is CRST Van Expedited v. EEOC, No. 14-1375. ​

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