Do employers deserve fees when EEOC missteps? Justices will decide.

December 7, 2015

A truck driver named Monika Starke gave the Equal Employment Opportunity Commission a very distressing account of her on-the-road training at CRST Expedited. According to Starke’s 2005 EEOC complaint, she was sexually harassed and abused during the 28 days she rode with two different lead drivers. One of them, she said, forced her to have sex under the threat of issuing her a failing evaluation.

When the government investigated Starke’s allegations, it concluded that she was not the only female driver at CRST to have experienced sex discrimination. The EEOC talked to the trucking company in 2007 about settling with a class of female drivers, but when negotiations failed, the government brought a class action against CRST in 2007. Ultimately, the EEOC alleged that CRST discriminated against no fewer than 270 women drivers.

CRST defeated the class action resoundingly. First, the trucking company’s lawyers at Jenner & Block and Simmons Perrine Moyer & Bergman won the dismissal of claims by 99 plaintiffs who did not appear for depositions. The government voluntarily tossed claims by 18 additional drivers. The trial court then concluded CRST’s enforcement of its written policies precluded the EEOC’s allegations of a pattern or practice of sex discrimination. CRST won summary judgment against the EEOC on claims by 87 drivers. The last batch of 67 claims was dismissed after the trial judge, U.S. District Judge Linda Reade of Cedar Rapids, Iowa, found that the EEOC hadn’t met the pre-suit investigation and negotiation requirements for Title VII civil rights cases. CRST ended up settling Monika Starke’s allegations for $50,000 to end the litigation.

CRST moved to recover nearly $9 million in fees and costs from the EEOC, citing Title VII’s provision permitting winners in civil rights cases to seek attorneys’ fees from the other side. Judge Reade eventually awarded the company about $4.2 million in fees and $500,000 in expenses, finding that the EEOC’s failure to investigate the last 67 dismissed claims constituted “frivolous, unreasonable or groundless” litigation under the civil-rights fee-shifting standard the U.S. Supreme Court established in the 1978 case Christianburg Garment v. EEOC. The fee award was one of the largest ever assessed against the EEOC.

The EEOC argued on appeal that it had actually prevailed in the litigation because CRST settled Starke’s claims, but that wasn’t why the 8th U.S. Circuit Court of Appeals overturned the fee ruling. The appeals court said last December that CRST was not entitled to recover its attorneys’ fees because it did not win on the merits: The EEOC claims were tossed because the government failed to satisfy pre-suit procedural requirements, the appeals court said, so CRST was not the prevailing party for the purposes of Title VII’s fee-shifting rules.

On Friday, as my Reuters colleague Robert Iafolla reported, the Supreme Court granted CRST’s petition for Supreme Court review of the 8th Circuit holding. I’m hoping, as a matter of policy, that the justices end up siding with CRST.

Like all right-thinking people, I abhor illegal discrimination and wholeheartedly support rigorous enforcement of Title VII. I’m all for the EEOC’s strategic enforcement plan of rooting out employers’ systemic discrimination against a protected group. But the corollary of the EEOC’s great power has to be accountability. It doesn’t make sense to penalize defendants like CRST for so efficiently demonstrating the shortcomings of an EEOC class action that they end the case on pre-trial motions.

By any reasonable definition, the company prevailed in the litigation. And in three other federal circuits, CRST’s counsel at Jenner & Block pointed out in the company’s cert petition, it would have been awarded fees for proving the EEOC’s failure to meet pre-suit obligations. But more importantly, the trucking company argued, “The decision below is utterly inexplicable as a matter of statutory policy. Congress enacted Title VII’s pre-suit requirements to prevent the EEOC from causing unjustified costs and disruption to an employer by filing unfounded or unduly broad claims and not attempting in good faith to settle such claims before litigating them. Awarding attorney’s fees to the prevailing defendant based upon the EEOC’s unreasonable failure to satisfy Title VII’s pre-suit requirements is essential to enforcing those statutory requirements.”

The government’s brief opposing Supreme Court review advanced technical arguments about why the justices’ April 2015 opinion in Mach Mining v. EEOC undermines circuit holdings that dismissals based on pre-suit requirements entitle defendants to fee-shifting. The Mach Mining decision, according to the government, said trial courts have overplayed the EEOC’s pre-suit obligation to investigate and negotiate before bringing a class action. The CRST case might not even have been tossed under the Mach Mining standard, the EEOC said.

Only one amicus brief, by a small business trade group and the Equal Employment Advisory Council, backed CRST’s cert petition. (I suspect more amici will surface – on both sides – in merits briefing.) The business groups obviously want to discourage discrimination class actions, but by highlighting the government’s stepped-up enforcement of Title VII, they make a good argument: Fee-shifting in quickly dismissed cases incentivizes the government to conduct thorough investigations and bring only strong claims.

In the long run, the EEOC won’t curtail illegal discrimination by asserting unfounded allegations against employers. Effective enforcement comes from strong cases.

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