Justices Agree to Review if EEOC Must Pay Legal Fees

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By Kevin McGowan

Dec. 4 — Granting an interstate trucking firm's petition, the U.S. Supreme Court agreed Dec. 4 to review whether the Equal Employment Opportunity Commission should be assessed attorneys' fees when its multiple sex discrimination claims against the employer were dismissed based on the agency's failure to investigate or conciliate the claims.

Without comment, the justices agreed to review a U.S. Court of Appeals for the Eighth Circuit decision overturning a district court order that the EEOC pay $4.7 million in attorneys' fees and costs to CRST Van Expedited Inc. (245 DLR AA-1, 12/22/14).

By granting review, the court wades into a dispute over whether the EEOC can be held liable for an employer's legal fees under Title VII of the 1964 Civil Rights Act when discrimination claims are dismissed because the agency failed to satisfy its pre-lawsuit obligations under the statute.

CRST argued that a court can assess attorneys' fees if the EEOC's failure was unreasonable under relevant Supreme Court precedent. But the Justice Department countered that before awarding attorneys' fees against the EEOC, a court must find that the agency's position on the merits of the discrimination claims was groundless.

The Eighth Circuit said the district court on remand must determine whether each of some 67 individual claims pursued by the EEOC was “unreasonable” under the Supreme Court test for awarding fees against the agency. The EEOC's alleged “unreasonableness” in failing to satisfy the procedural prerequisites to a lawsuit under Title VII couldn't form the basis for an attorneys' fees award, the appeals court said.

CRST: 8th Cir. in Conflict With Others

The Eighth Circuit's reasoning conflicts directly with at least three other federal circuits, all of which have ruled the EEOC's failure to satisfy its pre-lawsuit obligations under Title VII entitles the prevailing defendant to attorneys' fees if the agency's conduct was “unreasonable” under Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 16 FEP Cases 502 (1978), CRST said in its petition for review.

That Supreme Court precedent “strongly suggests” the Eighth Circuit “has gone astray” by precluding attorneys' fees when an employer prevails based on the EEOC's unreasonable failures to investigate, find cause or conciliate discrimination claims, CRST said.

In its brief opposing review, the Justice Department said there's no disagreement among the federal circuits on the question presented. Rather, those courts concur that proving a discrimination plaintiff's case was “frivolous, unreasonable or groundless” for purposes of awarding attorneys' fees isn't possible without a judicial finding on the merits of the bias claims.

The Supreme Court's decision in Mach Mining LLC v. EEOC, 135 S.Ct. 1645, 126 FEP Cases 1521 (U.S. 2015) (82 DLR AA-1, 4/29/15) also confirms that a district court may not award attorneys' fees to a Title VII defendant based on the EEOC's failure to satisfy pre-lawsuit requirements, the Justice Department said.

Fees Available for EEOC's ‘Total Failure' to Comply

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 the EEOC failed to make a prima facie case of 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.

A divided Eighth Circuit in 2012 affirmed the district court's dismissal of the EEOC's claims (36 DLR AA-1, 2/23/12). But in its 2014 decision, the Eighth Circuit said the $4.7 million award of attorneys' 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 attorneys' fees awards to prevailing defendants if they can show the EEOC's position was “unreasonable or frivolous” within the meaning of Christiansburg, CRST said. The issue raised is whether such fee awards are available where a claim is dismissed based on the EEOC's “total failure” to comply with its pre-lawsuit obligations or if fees are precluded because the employer's victory wasn't “sufficiently on the merits,” CRST said.

The Eighth Circuit decision conflicts with rulings from the Fourth, Ninth and Eleventh circuits, all of which hold that dismissal of an EEOC lawsuit based on the agency's failure to satisfy Title VII's pre-lawsuit obligations may entitle the defending employer to legal fees, CRST said.

Even if the Eighth Circuit was correct that a decision “on the merits” is required before an employer can recover its attorneys' fees, Supreme Court precedent suggests CRST met that criteria in this case, the employer said.

Ruling Called ‘Inexplicable.'

That precedent provides that the “merits” in a Title VII case “extend beyond questions relating to whether illegal discrimination occurred” and include at least some of the prerequisites that Congress deemed vital in ensuring the EEOC didn't abuse its litigation authority, CRST said.

The Eighth Circuit's decision is “utterly inexplicable” as a matter of Title VII policy, CRST said.

Congress enacted Title VII's pre-suit requirements to prevent the EEOC “from causing unjustified costs and disruptions” to employers by “filing unfounded or unduly broad claims” and not attempting to settle before litigating them, CRST said.

“Awarding attorneys' fees to prevailing defendant based upon the EEOC's unreasonable failure to satisfy Title VII's pre-suit requirements is essential to enforcing those statutory requirements,” it said.

Paul M. Smith of Jenner & Block LLP in Washington was counsel of record for CRST.

No Circuit Conflict, DOJ Says

In its opposition brief for the EEOC, the Justice Department said the Eighth Circuit correctly ruled that a prevailing employer can't obtain attorneys' fees under Title VII based on a ruling that the EEOC failed to sufficiently investigate and conciliate because that isn't a determination on the merits of the discrimination claims.

Federal circuit courts agree that a prevailing employer must show the EEOC's claims were “frivolous, unreasonable or without foundation” on the merits before a court may order attorneys' fees against the agency, the Justice Department said. The district court in CRST's case never addressed the merits of the EEOC's sex discrimination claims regarding those claimants who were dismissed solely because the EEOC failed to sufficiently investigate and conciliate, the DOJ said.

CRST's argument that attorneys' fees must be available for the EEOC's failure to satisfy its pre-suit obligations can't be reconciled with the decision in Mach Mining, the DOJ said.

The premise underlying CRST's argument is “that courts may thoroughly review the EEOC's compliance” with pre-suit requirements including conciliation and dismiss a case if they determine the EEOC hasn't tried hard enough to settle, the DOJ said.

But Mach Mining held that courts should conduct only “bare bones review” of the EEOC's conciliation efforts so the agency could exercise “all the expansive discretion” Title VII gives it to decide how to conduct conciliation, the DOJ said. The Supreme Court in Mach Mining also clarified courts shouldn't dismiss EEOC lawsuits based on failure to conciliate, the DOJ said.

CRST's policy arguments “fail to account for Mach Mining,” the Justice Department said.

Solicitor General Donald B. Verrilli in Washington was counsel of record for the EEOC.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

For More Information 
Text of the petition for review is available at http://src.bna.com/bo3.