By Gerald L Maatman Jr. and Howard M. Wexler

In a highly anticipated decision issued yesterday in one of the EEOC’s most high profile cases, Chief Judge Linda R. Reade of the U.S. District Court for the Northern District of Iowa ordered the EEOC to pay $4,694,442.14 in attorneys’ fees, expenses, and costs in the case of EEOC v. CRST Van Expedited, Inc., Case No. 07-CV-95, 2013 U.S. Dist. LEXIS 107822 (N.D. Iowa Aug. 1, 2013). As we blogged in the past about this litigation, the District Court previously entered a fee award against the EEOC in 2010 totaling $4,560.281.11, however, this award was reversed without prejudice by the U. S. Court of Appeal for the Eighth Circuit, which remanded the case back to the District Court. See EEOC v. CRST Van Expedited, Inc., 679 F.3d 657 (8th Cir. 2012).

In yesterday’s decision, the Court found that CRST was in fact a prevailing party, and thus, entitled to recover attorneys’ fees under 42 U.S.C. § 2000e-5(k). In so ruling, Judge Reade flatly dismissed the EEOC’s argument that because CRST did not “prevail” as to the claim it brought on behalf of the Charging Party (the parties settled the Charging Party’s claim after the Eighth Circuit’s remand order) CRST could not, as a matter of law, be considered a “prevailing party.”  Judge Reade summarized the EEOC’s argument in this regard as being “as long as it names one individual in a complaint and succeeds as to that individual, it can include as many frivolously allegations in wishes in a complaint using vague language and a class of similarly situated individuals without ever being liable for a defendant’s attorney’s fees.” Judge Reade rejected this argument and held that “such a result clearly contravenes the congressional policy behind allowing prevailing parties to recover fees in Title VII.” 

As the Court found that CRST was the prevailing party as to the EEOC’s pattern-or-practice claim and 153 of the EEOC’s individual claims, it next had to decide whether these claims in which CRST prevailed were frivolous, unreasonable or groundless, thus entitling CRST to recover attorneys’ fees. Judge Reade held that the EEOC’s conduct was in fact “frivolous, unreasonable or groundless” given its blatant failure to exhaust Title VII’s administrative prerequisites, including its failure to investigate and conciliate prior to bringing suit. Additionally, Judge Reade found that the EEOC’s pattern-or-practice claim was unreasonable as it presented only anecdotal evidence in support of its claim and failed to present any expert evidence, statistics, or legal authority in support of its systemic claims.

Given the finding that the EEOC’s pattern-or-practice claim and 153 of its individual claims were unreasonable or groundless, the Court found that CRST was entitled to recover its reasonable attorneys’ fees and expenses. In determining the fee award, the Court ruled that CRST was entitled to recover an additional $465,230.47 incurred during the EEOC’s appeal of its 2010 decision to the Eighth Circuit given that CRST would not have incurred these appellate fees “but for the EEOC’s unreasonable or groundless claims.”

Implications For Employers

This is a significant if not stunning decision. It is believed to be the largest fee sanction award against the EEOC in its history.

The ruling represents yet another powerful broad-side to attack the EEOC’s systemic litigation tactics and provides employers with more ammunition with which to challenge unreasonable and groundless claims by the EEOC. Particularly important for employers is the Court’s rejection of the EEOC’s argument that as long as it names one individual in a complaint and succeeds as to that individual, regardless of the frivolousness or unreasonableness of the remainder of its claim, an employer cannot be deemed a “prevailing party” entitled to recover its fees. 

Given the magnitude of this decision, it is possible the EEOC will once again seek reprieve from the Eighth Circuit, and we will keep you posted with any further updates regarding this groundbreaking case.

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