U.S. Supreme Court Rejects EEOC's Attorney Fee Argument

In 2007, the EEOC sued employer CRST, alleging it had allowed many women to be sexually harassed. As to each claim, the EEOC did not discharge its pre-suit duties by investigating, making a reasonable cause determination or attempting to conciliate. The district court found the EEOC's actions in this lawsuit (ex. its failure to produce nearly 100 allegedly aggrieved women for deposition) were unreasonable and imposed an unnecessary burden on the employer and the courts.

This resulted in the district court's granting the employer's motion for attorney fees and costs. The employer had alleged the EEOC did not name injured workers, but instead filed the lawsuit and then tried to determine injured workers through discovery.

On appeal, the Eighth Circuit reversed the lower court and found that the EEOC's failures did not constitute a "ruling on the merits" of the lawsuit and therefore the employer could not be awarded attorney fees. CRST appealed to the U.S. Supreme Court.

Title VII of the Civil Rights Act of 1964 provides that the court in its discretion may award the "prevailing party" to recover attorney fees. 42 U.S.C. 2000e-5(k) The meaning of "prevailing party" is the focus of the U.S. Supreme Court's ruling in EEOC v CRST Van Expedited, Inc., decided on May 19, 2016. http://www.supremecourt.gov/opinions/15pdf/14-1375_09m1.pdf.

CRST argued to the Supreme Court that the Eighth Circuit was incorrect first, because its ruling undermines the purpose of the Congressional intent as to awarding prevailing party attorney fees, and second, because CRST was successful "on the merits" because it defeated claims by showing the EEOC did not engage in pre-suit obligations: investigating, finding reasonable cause for, or attempting to conciliate any of these claims as required by the statute. 

The EEOC argued that because there was never a judgment entered against it on the merits of the allegations in the lawsuit (whether the women were sexually harassed), the employer, CRST, was not a "prevailing party." Not being a "prevailing party," the employer would not be entitled to attorney fees. This argument of the EEOC was unanimously rejected by the Supreme Court.

The U.S. Supreme Court vacated the Eighth Circuit's judgment and held that a favorable ruling on the merits is not a necessary predicate to find that a defendant is a "prevailing party" in order to recover attorney fees.

The Court stated that "Congress must have intended that a defendant could recover fees expended in frivolous, unreasonable, or groundless litigation when the case is resolved in the defendant's favor, whether on the merits or not. Imposing an on-the-merits requirement for a defendant to obtain prevailing party status would undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available."

The Supreme Court did not issue a final ruling in the case, however, because the EEOC presented a new argument for the first time on appeal, so the Court remanded the case back to the Court of Appeals for the Eighth Circuit to determine whether a preclusive judgment exists to trigger the "prevailing party" language and if the EEOC should pay $4.5 million in attorney fees to the employer. The EEOC will continue to defend against paying the employer's fees in the Eighth Circuit.

Employers should not count on receiving attorney fees from the EEOC, except in extraordinary circumstances. In most cases, employers will be responsible for the costs of their own defense.

 Via:  Hartford Help