When a former employee sues for discrimination or retaliation, the employer generally is unable to recover its fees or costs for defending the lawsuit, even if the employer prevails. That was not the case, however, in a recent class action brought by the agency tasked with enforcing federal anti-discrimination laws, the Equal Employment Opportunity Commission (EEOC). A federal court recently slammed the EEOC with over $4.6 million in attorneys’ fees, costs and out-of-pocket expenses after finding that the EEOC’s pattern or practice class action claim and 153 of the individual discrimination claims were unreasonable or groundless. EEOC v. CRST Van Expedited, Inc., No. 07cv95 (N.D. Iowa, August 1, 2013).
EEOC Sued Employer Alleging Sexual Harassment
In September 2007, the EEOC filed a lawsuit against trucking company, CRST Van Expedited, Inc. (CRST) alleging that the company’s lead drivers and team drivers subjected female employees to sexual harassment and created a sexually hostile environment in violation of Title VII. The EEOC filed its action on behalf of employee Monika Starke and a class of similarly situated female employees.
After almost a year of discovery in the case, the EEOC was pressed to identify the total number of harmed individuals making up the purported class. In October 2008, the EEOC identified 270 allegedly aggrieved female employees. When the EEOC failed to make all of the individuals available for deposition by a court-ordered deadline, the District Court barred the EEOC from pursuing claims on behalf of those 99 individuals who were not deposed.
CRST filed multiple motions for summary judgment to get the remaining claims dismissed before trial. First, CRST succeeded in getting the EEOC’s pattern or practice claim dismissed, which meant that the EEOC was left to pursue harassment claims only on behalf of individual employees. CRST then hammered away at all of the individual claims and succeeded in getting them all dismissed for a multitude of reasons, ranging from lack of evidence that some individuals had suffered severe or pervasive harassment to some individuals not reporting any harassment to the company. Significantly, the Court dismissed 67 of the individual claims because the EEOC had failed to exhaust administrative prerequisites by failing to investigate or attempt conciliation of the claims. Having dismissed all claims against CRST, the District Court found that CRST was the prevailing party and was entitled to recover its attorneys’ fees and costs, which exceeded $4.5 million.
EEOC Appeals and Keeps Two Claims Alive
The EEOC appealed the dismissal of 107 of the claims to the Eighth Circuit Court of Appeals. The Eighth Circuit reversed the dismissal of the claims on behalf of two female employees and consequently found that CRST was no longer the prevailing party entitled to recover its attorneys’ fees and costs. The case was sent back to the District Court for continuation of those two claims.
District Court Awards Millions in Attorneys’ Fees, Costs and Expenses
After the case was sent back to the District Court, the EEOC voluntarily dismissed one of the two remaining claims because it had failed to exhaust the administrative prerequisites as to her claim. CRST agreed to settle the remaining claim for $50,000 and the parties asked the Court to dismiss the case in its entirety as a result of the settlement. CRST then asked to recover its attorneys’ fees, costs and expenses for the claims on which it prevailed.
In order to recover its attorneys’ fees, costs and expenses, CRST needed to show that it was the prevailing party for purposes of Title VII and that the EEOC’s claims were frivolous, unreasonable, or without foundation. The Court ruled that CRST was the prevailing party on the EEOC’s pattern or practice claim and on 153 of the EEOC’s individual claims. CRST was not the prevailing party, however, for the claim it settled, for the three claims withdrawn by the EEOC and for 98 claims that the Court dismissed as a discovery sanction against the EEOC. The Court then ruled that the EEOC’s failure to exhaust Title VII administrative prerequisites of investigation and conciliation for 67 of the individual claims was unreasonable. It further ruled that the EEOC’s pattern or practice claim was unreasonable as it was based only on anecdotal evidence. In total, the Court found that 153 of the individual claims as well as the pattern or practice claim were unreasonable or groundless.
After discounting the total amount of CRST’s attorneys’ fees, costs and out-of-pocket expenses to reflect those claims for which CRST was not the prevailing party, the Court ordered the EEOC to pay CRST $4,694,442. This award represented $4,189,296 in CRST’s attorneys’ fees, $91,758 in costs and $413,387 in out-of-pocket expenses for expert witness fees, travel expenses, delivery fees, and similar expenses.
While the EEOC performs an important function and pursues meritorious cases, the case against CRST shows that employers can and should fight back when the EEOC brings a frivolous case. Significantly, this is not the first time a court has awarded fees against the EEOC or rejected its claims. Last year, the Tenth Circuit (which covers Colorado) slapped the EEOC with attorneys’ fees and costs in EEOC v. TriCore Reference Laboratories, No. 11-CV-2096 (10th Cir. 2012), affirmed summary judgment against the EEOC in EEOC v. The Picture People, Inc., No. 11-CV-1306 (10th Cir. 2012), and the court affirmed a district court’s decision that the EEOC’s administrative subpoena was overbroad in EEOC v. Burlington Northern Santa Fe Railroad. We also recently discussed a letter sent by nine state Attorney Generals, in which they criticized the EEOC’s lawsuits and position concerning employers’ ability to use background checks to screen employees with a criminal record. Hopefully, these losses, fee awards, and criticisms will cause the EEOC to more thoroughly evaluate which cases have merit before subjecting employers to the high cost and aggravation of defending meritless claims.
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