In May of 2016, the United States Supreme Court issued a favorable ruling for employers which opens the door for employers being reimbursed for attorneys’ fees incurred in defending against meritless discrimination cases.
The case is CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1644 (2016).
Here are the facts:
CRST, a trucking company using a system under which two employees share driving duties on a single truck, requires its drivers to graduate from the company’s training program before becoming a certified driver. In 2005, new driver Monika Starke filed a charge with the Equal Employment Opportunity Commission (EEOC), alleging that she was sexually harassed by two male trainers during the road-trip portion of her training.
Following the procedures set out in Title VII of the Civil Rights Act of 1964, the EEOC informed CRST about the charge and investigated the allegation, ultimately informing CRST that it had found reasonable cause to believe that CRST subjected Starke and “a class of employees and prospective employees to sexual harassment” and offering to conciliate.
In 2007, having determined that conciliation had failed, the EEOC, in its own name, filed suit against CRST under Title VII. During discovery, the EEOC identified over 250 allegedly aggrieved women. The District Court, however, dismissed all of the claims, including those on behalf of 67 women, which, the court found, were barred on the ground that the EEOC had not adequately investigated or attempted to conciliate its claims on their behalf before filing suit.
The District Court then dismissed the suit, held that CRST was a prevailing party, and invited CRST to apply for attorney’s fees. Accepting that invitation, CRST filed a fee petition and the District Court awarded the company over $4 million.
Thereupon, the EEOC dutifully appealed.
On appeal, the Eighth Circuit reversed the dismissal of only two claims—on behalf of Starke and one other employee—but that led it to vacate, without prejudice, the attorneys’ fees award.
On remand, the EEOC settled the claim on behalf of Starke and withdrew the other. CRST again sought attorneys’ fees, and the District Court again awarded it more than $4 million in fees, finding that CRST had prevailed on the claims for over 150 of the allegedly aggrieved women, including the 67 claims dismissed because of the EEOC’s failure to satisfy its pre-suit requirements.
The EEOC appealed again.
The Eighth Circuit reversed and remanded once more. It held that a Title VII defendant (the employer, in this case) can be a “prevailing party” only by obtaining a “ruling on the merits,” and that the District Court’s dismissal of the claims was not a ruling on the merits.
CRST appealed to the Supreme Court of the United States.
The Supreme Court held that, for purposes of Title VII discrimination suits, a defendant does not need to obtain a favorable judgment on the merits in order to be deemed a prevailing party and thereby entitled to attorneys’ fees. The Supreme Court left it to the Eighth Circuit to determine whether an award of attorneys’ fees was appropriate in this specific case.
- This entire situation, which has been ongoing for 10 years (and is still unresolved) and has caused CRST to expend over $4 million out-of-pocket in attorneys’ fees, stemmed from a rudimentary Charge of Discrimination filed by an employee. It is certainly possible that if this matter was handled differently at the investigation stage, this matter could have been resolved prior to a lawsuit ever being filed. The takeaway here is that when the EEOC is conducting an investigation, it is critical that an employer retain competent legal representation well versed in employment law in order to protect the company at the early stage and, thus, engage in the activities necessary to extinguish the matter as soon as possible.
- As a follow-up on the above takeaway, this case further demonstrates that the EEOC is continuing to be extremely aggressive in investigating and prosecuting claims of discrimination. We have seen this trend for many years, and this case further shows that there is no indication of the EEOC changing course.
- The Courts have been trending towards opening the door to allowing employers to recover attorneys’ fees in defending against frivolous lawsuits. This case, while still not fully resolved, furthers that trend and may ultimately serve to be a powerful tool for employers in fighting back against the seemingly endless stream of meritless cases.
If you are in need of effective litigation representation, contact the employment attorneys at Luchansky Millman today.