250px-US-CourtOfAppeals-10thCircuit-Seal.pngBy Christopher DeGroff and Gerald L. Maatman, Jr.

This past week the Tenth Circuit affirmed another fee sanction against the EEOC, and struck down the EEOC’s attempt to litigate questionable (at best) issues under the Americans With Disabilities Act in EEOC v. TriCore Reference Laboratories, No. 11-CV-2096 (10th Cir. 2012). The Tenth Circuit affirmed the U.S. District Court for the District of New Mexico’s grant of summary judgment to the employer, TriCore, and dismissed the EEOC’s lawsuit. The three-judge panel also affirmed the District Court’s grant of $140,571.62 in attorneys’ fees against the Commission. Perhaps most significant, the Tenth Circuit ordered the EEOC to pay additional attorneys’ fees for the Commission’s unfounded appeal.

The Tenth Circuit’s decision joins a substantial and growing line of case law authority reflecting judicial intolerance for hardline litigation tactics by the EEOC. Just a month earlier, the Tenth Circuit dismissed a similar lawsuit where the EEOC asserted that the defendant discriminated against its employee in violation of the ADA. See EEOC v. The Picture People, Inc., No. 11-CV-1306 (10th Cir. 2012), discussed here and here.

Background Of The Case

In EEOC v. TriCore, an employee, Wagoner-Alison, has surgery on her foot and ankle and took leave under the FMLA to recover. Id. at 3. Wagoner-Alison exhausted her FMLA leave, and TriCore granted her additional time off to comply with her doctor’s orders. Id. at 4. Her doctor indicated that once Wagoner-Alison returned to work, she would have certain restrictions – including keeping her foot elevated. Id. at 4. Upon Wagoner-Alison’s return to work, she could not perform the essential functions of her job. Although not required by under the ADA, TriCore assigned Wagoner-Alison a new set of duties – essentially creating a job for her. Id. During Wagoner-Alison’s thirty-day trial period, she made “many errors that threatened patient safety[.]” TriCore coached her about the errors and after she did not improve, it placed Wagoner-Alison on unpaid leave for three weeks. At that point, TriCore encouraged Wagoner-Alison to apply for other internal positions with the company. Id. However, she did not do so. Rather, Wagoner-Alison applied – and received – Social Security disability benefits. TriCore later fired Wagoner-Alison.

The EEOC sued and claimed that TriCore failed to reasonably accommodate Wagoner-Alison’s disability and ultimately terminated her based on her disability in violation of the ADA. TriCore moved for summary judgment, arguing that Wagoner-Alison could not perform the essential functions of her job, with or without accommodation. Id. at 5. The District Court granted TriCore’s motion, finding the EEOC offered nothing to refute TriCore’s evidence demonstrating it provided reasonable accommodations to the employee and that her poor performance was a legitimate, nondiscriminatory reason for her termination.

TriCore filed a motion for an “Order Deeming the EEOC’s Claims as Frivolous, Unreasonable, or Without Foundation.” Faulting the EEOC’s continued litigation, despite having received notice and evidence from TriCore that the Commission’s claims were meritless, the District Court granted TriCore’s motion. Subsequently, TriCore filed a Motion for Attorneys Fees totalling $140,571.62, which the District Court granted – and about which we previously blogged about here.

On appeal, the EEOC argued that the District Court abused its discretion in granting attorneys’ fees to TriCore because neither the EEOC’s “termination claim nor its accommodation claim were frivolous at any point in the proceedings.” Id. at 11.

Basis Of The Tenth Circuit’s Ruling

Noting that the EEOC continued to litigate its claims “after it became clear that there were no grounds upon which to proceed[,]” the Tenth Circuit affirmed the District Court’s award of attorneys’ fees to TriCore. The Tenth Circuit reasoned that the EEOC ignored clear signs that it should have stopped pursuing its ADA claims. The Tenth Circuit explained that through discovery, Wagoner-Alison and the EEOC admitted that she could not stand or walk – both of which are essential functions of her job. TriCore even sent a letter to the EEOC explaining why its claims were factually insufficient and notifying the EEOC that it “would file a motion for summary judgment and would ask for attorney’s fees if the EEOC did not dismiss the lawsuit.” Id. at 12-13. Based on those key facts, the Tenth Circuit affirmed the District Court’s award of $140,571.62 in fees and costs.

The Tenth Circuit also held that under Fed. R. App. P. 38, the Court “may award damages and costs if an appeal is frivolous.” Id. at 13. The Tenth Circuit hung its hat on TriCore’s argument that the EEOC’s appeal was frivolous because it did “not even argue that the district court erred in determining the EEOC failed to establish a prima facie case of ADA discrimination.” Id. at 13. Agreeing with TriCore, the Tenth Circuit remanded the case to the District Court for a determination of additional attorneys’ fees.

Implications For Employers

The ruling in EEOC v. TriCore joins a growing number of cases that suggest a growing intolerance for the EEOC’s unfounded litigation tactics. On our blog, we have tracked awards of defense fees in litigation with the EEOC. For example, in EEOC v. Peoplemark, Inc., No. 08-CV-907 (W.D. Mich. Mar. 31, 2011), the Court awarded the employer $219,350.17 in attorneys’ fees for the EEOC’s questionable litigation tactics (discussed here). More recently, in EEOC o/b/o Serrano, et al. v. Cintas Corp., No. 04-CV-40132, 2012 U.S. Dist. LEXIS 86228 (E.D. Mich. Aug. 4, 2011), the Court ordered the EEOC to pay over $2.6 million in fees and costs (discussed here). The Court relied on the ruling in EEOC v. CRST Van Expedited, Inc., 257 F.R.D. 513 (N.D. Iowa 2012), rev’d and remanded, 679 F.3d (8th Cir. 2012), where the court entertained motions for $4.5 million in attorneys’ fees (discussed here, here, and here). Employers should add EEOC v. TriCore to the list of decisions that hold the Commission liable for what at least this Court called “frivolous” and “unfounded” litigation tactics.

Readers can also find this post on our new EEOC Countdown Blog here.