By Christopher DeGroff and Gerald L. Maatman, Jr.

One of our top five most intriguing cases of 2010 – EEOC o/b/o Serrano, et al v. Cintas Corp., 2010 U.S. Dist. LEXIS 18130 (E.D. Mich. Mar. 2, 2010) – heated up again last week by virtue of a decision by Judge Sean Cox from the U.S. District Court for the Eastern District of Michigan to award the Cintas Corporation $2,638,443 in fees and costs. The ruling is a resounding defeat for the EEOC’s systemic litigation program.

In earlier proceedings in EEOC o/b/o Serrano, the EEOC refused to identify the women it represented in a gender discrimination case, claiming they should only be identified in a later phase of the case. The Court disagreed, noting that “Defendant quite reasonably seeks to focus its attention upon the specific women on whose behalf the EEOC intends to seek damages. The information is relevant to the issues in controversy … and the EEOC has no principled reason to withhold it.” The Court relied on and reinforced the explosive ruling in EEOC v. CRST Van Expedited, Inc. 257 F.R.D. 513 (N.D. Iowa 2010), in which the EEOC similarly stonewalled the company in explaining who it sought to represent; that tactic ultimately resulted in the Court entertaining motions for a $4.5 million in that Iowa case. 

After the Court in EEOC o/b/o Serrano, et al v. Cintas Corp. dismissed the litigation brought by the EEOC, the defendant sought costs of $1,097,918.37 and attorneys’ fees of $4,595,432.89. After extensive briefing, the Court gave the fee and costs award a significant haircut, but still left the EEOC owing over $2.6 million in fees and costs (link to decision here).

Overall Attorneys Fees Reduced
The amount of attorneys’ fees is where the Court made its most significant cuts. Cintas sought just under $4.6 million in fees in this case, and $2.5 million of that was for fees it accumulated between the time the case was filed by the private plaintiffs to the date those private plaintiffs moved for (and lost) class certification. Cintas asked the Court to award it 33% of those fees. The Court was not persuaded by the employer’s backup for the fees for this phase of the case, as it was not able to connect the employer’s fees to EEOC-related litigation (the EEOC was only marginally involved in the case at that point), holding that the 33% factor was largely arbitrary. Thus, the Court rejected all pre-certification fees altogether. Id. at 10.

Cintas also sought over $3 million in fees accumulated after certification was denied – the time frame where the EEOC truly stepped in and took over the case. Here, the Court was more generous, agreeing that Cintas had met its burden showing that it was entitled to these fees, noting that the time spent by the 10-attorney defense team were reasonable and that “there is no dispute that Cintas [was] the prevailing party.” Id. at 11. The Court, however, reduced the demand to only that time related to defending the EEOC claims, and then cut an additional 10% because the employer’s fee records had some confusing entries and block-billing. The Court awarded fees of  $1,905,387.

Costs Awarded But Reduced
For many of the same reasons as the reduced award of fees, the Court denied pre-certification costs, and individual categories of expenses like computer legal research and travel costs were cut. Cintas was successful, however, in recouping $335,607 in expert witness fees necessary to rebut the EEOC’s expert – the largest cost line item. In all, the Court awarded Cintas over $730,000 in costs related to its defense of the EEOC’s claims.

Individual Plaintiffs Not Responsible For Costs
As an interesting footnote, the Clerk had also arguably included the former individual plaintiffs as being on the hook for the litigation costs when it taxed the costs. The Court addressed this issue, noting that all of the parties understood that Cintas was seeking fees and costs only from the EEOC. The Court gave the individual plaintiffs a pass on the hefty costs award.

The ruling in EEOC o/b/o Serrano, et al v. Cintas Corp. is yet another in a recent series of set-backs for the EEOC’s systemic litigation program. Employers facing systemic EEOC cases that ultimately go nowhere will obviously applaud this fee and cost award (even if it was half of the sought-after loaf). EEOC-initiated pattern or practice cases are incredibly time consuming and expensive, and even more problematic when grafted to private-plaintiff class actions like those faced by Cintas. The good news is, based on cases like EEOC o/b/o Serrano, et al v. Cintas Corp., employers have ammunition to make the government think twice about bringing and/or continuing to prosecute facially meritless claims.