EEOC Gets $4.7 Million Fee Bill Scrapped, Court Says Conciliation Ruling Not on Merits

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By Chris Opfer

Dec. 22 — A federal appeals court Dec. 22 reversed an order that the Equal Employment Opportunity Commission pay $4.7 million in attorneys' fees and costs incurred by CRST Van Expedited Inc. in defending class action sexual harassment claims, the latest chapter in a long-running case that has served as a lighting rod for the commission's critics.

The claims, alleging that the company violated Title VII of the 1964 Civil Rights Act by subjecting female drivers to harassment during new driver training programs, were whittled down from 157 to one—which was ultimately settled for $50,000—over the course of nearly six years of litigation. The U.S. Court of Appeals for the Eighth Circuit in 2012 affirmed summary judgment for CRST on claims related to 67 drivers, finding that the EEOC didn't properly attempt to conciliate them before bringing suit.

This time around, the appeals court scrapped a district court's fees award to CRST, holding that it didn't qualify as the prevailing party with respect to claims that EEOC didn't try to conciliate. Judge Lavenski R. Smith wrote that conciliation is a nonjurisdictional, pre-suit requirement, not an element of a sexual harassment claim. As such, Smith said the dismissal didn't qualify as a judgment on the merits of the claims, for which fees and costs could be awarded.

The court remanded the fees award with respect to the remaining claims, which were resolved in favor of CRST on various grounds at the summary judgment stage. Smith said the lower court must consider whether each individual claim was sufficiently “frivolous, unreasonable, or groundless” to warrant an award and to determine the precise fees and costs incurred in defending those claims.

“While we recognize that it is an arduous task, the Christiansburg standard requires the district court to make findings as to why a particular claim was frivolous, unreasonable, or groundless,” Smith wrote, referring to the U.S. Supreme Court's ruling in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 16 FEP Cases 502 (1978). “Here, the district court did not make these particularized findings.”

Judges William J. Riley and Jane Kelly joined in the decision.

Congress, High Court Eye Conciliation Requirement

The decision comes as both Congress and the Supreme Court are poised to review the EEOC's conciliation obligation.

The previous Eighth Circuit ruling and the lower court's fees award have been cited by Republican lawmakers as the byproduct of what they characterize as the agency's overly aggressive pursuit of high-profile cases and a rush to sue before making the required attempts to resolve the matters. Congress is expected to ramp up its oversight of the commission when Republicans take control of both chambers next year.

Meanwhile, the Supreme Court in June agreed to consider a 2013 ruling in which the Seventh Circuit held that the EEOC's conciliation efforts aren't subject to judicial review (Mach Mining, LLC v. EEOC, U.S., No. 13-1019). A number of employers have defended discrimination claims by arguing that the commission didn't adequately attempt to conciliate them prior to bringing suit, following the Eighth Circuit's decision affirming summary judgment for CRST on the same grounds.

Responding to the Eighth Circuit's fees decision, EEOC General Counsel P. David Lopez told Bloomberg BNA via e-mail Dec. 22, “The appellate court's careful analysis reinforces long-standing principles of law, and the decision emphasizes that fees cannot be awarded against the EEOC absent particularized determinations that the claims pursued by the EEOC were frivolous.”

“To us, that is a principle of absolutely critical importance, and we understand the court's decision to turn upon that principle,” Lopez said. He also noted that “further proceedings lie ahead.”

Counsel for CRST didn't respond to Bloomberg BNA's Dec. 22 request for comment.

Most Claims Failed

The EEOC originally sued CRST in September 2007, alleging claims on behalf of former driver Monika Starke and a class of similarly situated female employees.

The agency alleged in an amended complaint that the drivers were subjected to “unwelcome sexual conduct, other unwelcome physical touching, propositions for sex, and sexual comments from their lead drivers or team drivers” while participating in training programs. The EEOC further claimed that CRST was aware of the harassment and failed to take appropriate steps to prevent and correct it.

The U.S. District Court for the Northern District of Iowa eventually granted summary judgment to CRST on more than one-third of the claims, finding that the EEOC didn't meet its obligation to try to conciliate each of the individual class members' claims. That decision was affirmed twice on appeal.

The lower court also granted summary judgment to CRST on any claims alleging that the company had engaged in a pattern or practice of discrimination, as well as on a number of claims that the court said were barred by the statute of limitations, were subject to judicial estoppel or concerned claims by workers who didn't report the alleged harassment, didn't experience severe or pervasive harassment or otherwise weren't subjected to actionable harassment. The parties settled the single remaining claim—Starke's—for $50,000.

The district court later granted the company's motion for attorneys' fees, costs and related expenses, ordering the EEOC to pay CRST $4.7 million.

Conciliation Is Pre-Suit Obligation

Reversing the decision on appeal, the Eighth Circuit held that CRST wasn't entitled to recover fees and costs incurred in defending the claims that the EEOC didn't properly conciliate because the summary judgment decision on those claims wasn't a ruling on the merits. Smith said conciliation was a pre-suit requirement, rather than an element of the harassment claims.

The court distinguished the claims from those at issue in Arbaugh v. Y & H Corp., 546 U.S. 500, 97 FEP Cases 737 (2006), a case in which the Supreme Court held that Title VII's numerosity requirement—that an employer must have 15 or more workers in order to be liable under the law—is an element of a discrimination claim. Unlike proving numerosity, Smith said, Title VII makes clear that the EEOC is required to attempt conciliation before filing suit.

“[I]n contrast to the Title VII numerosity requirement at issue in Arbaugh, the EEOC's Title VII presuit obligations do not distinguish which employers are subject to Title VII or whether an employer has violated Title VII,” Smith wrote. “Instead, the EEOC's compliance with its presuit obligations provides employers an opportunity to resolve the dispute in lieu of litigation.”

The court also said any fees and costs related to the pattern-or-practice claims weren't recoverable because the EEOC didn't actually allege that CRST engaged in a pattern or practice of sexual harassment against the female drivers. The Eighth Circuit found in an earlier appeal that the district court “assumed without deciding” that the EEOC had brought such a claim after CRST filed a motion for summary judgment on it.

Turning to the remaining claims that were disposed of on summary judgment, Smith said the district court should review each of the claims individually to determine whether they meet the standard for a fees award. While such an award is generally available to a prevailing plaintiff in a Title VII case, the court said a defendant is entitled to the award only “in the very narrow circumstances” in which the claims are “frivolous, unreasonable, or groundless.” In addition, the defendant's recovery is also limited to those fees and costs that wouldn't have been incurred but for the offending claims, according to the court.

“In applying these criteria, the district court must resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation,” Smith wrote, quoting Christiansburg. “This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success.”

Ann M. Henry, Jean P. Kamp and Jeanne B. Szromba of the EEOC's Chicago office represented the commission, along with Susan R. Oxford and Nicholas J. Pladson in Washington, D.C., and Brian C. Tyndall in Milwaukee. Richard P. Campbell, James T. Malysiak and Robert T. Markowski of Jenner & Block in Chicago were among the attorneys representing CRST.

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

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

Text of the opinion is available at http://www.bloomberglaw.com/public/document/EEOC_v_CRST_Van_Expedited_Inc_Docket_No_1303159_8th_Cir_Oct_01_20.