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Can the Equal Employment Opportunity Commission (EEOC) be held liable for nearly $4.7 million in attorney fees and costs paid by a trucking company in defense of a sexual harassment action brought against it by the agency? That was the question before the Supreme Court in the March 28 oral arguments in CRST Van Expedited Inc. v. EEOC (No. 14-1375).
The trial court awarded the $4.7 million—the largest amount ever levied against the EEOC—under a provision of Title VII of the 1964 Civil Rights Act that allows a “prevailing party” to recover its attorney fees, but the 8th U.S. Circuit Court of Appeals reversed the award of fees, holding that the company, CRST, was not a “prevailing party” under the law because it did not win “on the merits” of the EEOC’s claims. There never was a judicial determination as to whether CRST violated Title VII. Instead, the case was dismissed based on the EEOC’s failure to carry out its obligations to investigate, find reasonable cause and attempt to conciliate a case before filing suit.
Impact on Employers and HR
The high court may take a hypertechnical approach and avoid the fundamental question of whether the EEOC should be liable for fees when a case is dismissed for the agency’s failure to satisfy its statutory pre-suit obligations, according to David Barmak, an attorney with Mintz Levin in Washington, D.C. But if the court does reverse the 8th Circuit’s decision and reinstate the fee award, “it will be a win for employers. They will have some reaffirmation of the principle that if they are dragged through litigation in which they prevail and in which the EEOC did not do everything it was supposed to do to ensure that it was pursuing meritorious claims, they can collect a significant portion of their legal fees,” he said.
“In this case, the EEOC pretty much admits that it did not fulfill the statutory prerequisites for filing suit,” said Stan Pitts, an employment attorney in law firm’s Honigman’s Detroit office. It didn’t give the employer the opportunity to find out who the victims were or a chance to try to settle any claims before trial. “The EEOC is making very technical arguments as to why it should not be liable for fees. It failed to fulfill its responsibility and is trying to dodge responsibility for that.”
A high court reinstatement of the fee award “might make the EEOC do what it is supposed to do,” Pitts said.
Sexual Harassment Lawsuit Dismissed
The EEOC originally sued CRST for an alleged pattern or practice of tolerating the sexual harassment of female trainees for interstate driver positions.
But a federal district court in Iowa found that the EEOC failed to show a pattern or practice of discrimination. It also dismissed most of the EEOC's individual claims because the agency hadn't separately investigated, found probable cause or attempted to conciliate any of the sex bias claims except for two named claimants.
The 8th Circuit in 2012 affirmed the district court's dismissal of the EEOC's claims, but, in its 2014 decision, the appellate court said the $4.7 million award of attorney fees and costs to CRST must be vacated with regard to claims dismissed because the EEOC hadn't fulfilled its pre-lawsuit prerequisites under Title VII.
Title VII provides for attorney fee awards to “prevailing” defendants if they can show the EEOC's position was “unreasonable or frivolous.”
The EEOC has stopped defending the 8th Circuit’s reasoning—requiring a decision “on the merits” before fees can be awarded. Instead, the agency argued before the high court that after the district court's 2009 order dismissing the case, it could sue again regarding the 67 sexual harassment claims at issue if it satisfied Title VII's preconditions of investigating, making cause determinations on and conciliating those claims.
Because the EEOC could theoretically bring the lawsuit again, CRST could not be considered a “prevailing party” entitled to fees, Assistant to the Solicitor General Brian Fletcher argued on behalf of the EEOC.
Representing CRST, Paul Smith, an attorney with Jenner & Block in Washington, D.C., argued that the district court's order “barring” the EEOC from pursuing the sex discrimination claims effectively gave CRST a victory ending the lawsuit. There was no reason the employer shouldn't be considered a prevailing party given those circumstances, he claimed.
“Almost all employers involved in Title VII litigation have had the experience of losing a case and having to pay the other side’s legal fees,” Barmak said. “This case could provide some sense of fairness. At least if the EEOC comes after us in a case that is not well–founded, we can recover our legal fees.”
The Supreme Court is expected to issue a decision by the end of June.
Joanne Deschenaux, J.D., is SHRM’s senior legal editor.
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