On December 22, 2014, the U.S. Court of Appeals for the Eighth Circuit issued yet another decision in EEOC v. CRST Van Expedited, Inc., No. 13-3159, 2014 U.S. App. LEXIS 24130 (8th Cir. Dec. 22, 2014). This time, the Eighth Circuit reversed and remanded the district court’s previous order directing the EEOC to pay more nearly $4.7 million in attorneys’ fees. (We have blogged on the prior rulings in this litigation; read about the district court’s order here.)
In doing so, the Eighth Circuit narrowed the potential fees available to CRST for the EEOC’s litigation abuses. Most notably, it held that, because the district court’s dismissal of 67 claims for failure to investigate or conciliate “does not constitute a ruling on the merits,” CRST is not entitled to an award of attorneys’ fees on those claims. Id. at *26-27. The Eighth Circuit remanded the case to the district court and directed it to make findings as to why any of the remaining individual claims were frivolous, unreasonable, or groundless.
The Eighth Circuit effectively raised the bar for employers seeking to recover attorneys’ fees expended as a result of groundless claims brought by the EEOC. Whereas it found that employers can seek fees for partial victories, it held that they must demonstrate why each particular claim is frivolous, unreasonable, or groundless, and that the work for which they seek fees related exclusively to the meritless claims.
The EEOC brought suit against CRST alleging that the company subjected Monika Starke and a class of similarly-situated female employees to a hostile work environment in violation of Title VII of the Civil Rights Act. Id. at *2.
After more than a year of discovery, in October 2008, the EEOC identified 270 allegedly aggrieved female employees. The district court ordered the EEOC to make all women on whose behalf it sought relief available for deposition. Id. at *3. The EEOC failed to so do, and the district court barred the EEOC from pursing relief for 99 individuals. Id.
Thereafter, CRST filed various motions for summary judgment. First, although the EEOC did not explicitly assert a pattern or practice claim in its complaint, it repeatedly referred to such a theory in its papers and the district court found insufficient evidence to support such a claim. Id. at *4. Second, the district court found that the applicable statute of limitations barred relief for 9 individuals and that 3 were judicially estopped from prosecuting their claims. Id. at *5. Third, the district court granted summary judgment on the claims of 75 individuals, finding that they otherwise failed on the merits. Id. at *5-7.
Further, the district court barred the EEOC from seeking relief for the remaining 67 women because it failed to meet statutory conditions precedent to instituting suit, namely, the EEOC failed to conduct a reasonable investigation and bona fide conciliation of the claims. Id. at *7-8. CRST filed a bill of costs and moved for an award of attorneys’ fees pursuant to 42 U.S.C. § 2000e-5(k). The district court awarded a total of $4,560,285. Id. at *8.
CRST appealed the dismissal of its claims as to 107 women, as well as the district court’s award of attorneys’ fees. The Eighth Circuit reversed the district court’s order with respect to the claims of 2 individuals and vacated without prejudice the award of attorneys’ fees because, in light of the court’s rulings, CRST was no longer necessarily a “prevailing” defendant. Id. at *9.
On remand, the EEOC withdrew its claims as to one of the 2 remaining claimants (Jones) and settled the other (Starke) for $50,000. Id. at *10. CRST subsequently renewed its motion for attorneys’ fees. The district court found that CRST was the prevailing party as to the EEOC’s pattern or practice claims and 153 of the EEOC’s individual claims, and awarded nearly $4.7 million in attorneys’ fees, expenses, and costs. Id. at *13-14.
The Eighth Circuit’s Opinion
On further appeal, the EEOC argued that the district court erred in awarding attorneys’ fees, expenses, and costs to CRST.
First, the EEOC argued that the district court erred in finding CRST the prevailing party. It contended the EEOC brought only one “claim” against CRST – that CRST violated Title VII by failing to prevent and remedy sexual harassment of its female trainees and drivers – and the EEOC prevailed on this claim when it obtained a settlement for one claimant.
The Eighth Circuit agreed with the district court and CRST that the EEOC had alleged more than one claim. Although the EEOC did not initially specify the number of individuals on whose behalf it sought relief, “the face of the Complaint” did not allege that CRST was engaged in a pattern or practice and shows that the EEOC sought relief on behalf of at least two women. Id. at *19.
Second, the EEOC argued that the district court’s dismissal of 67 claims for failure to satisfy Title VII’s pre-suit obligations did not constitute a ruling on the merits, and therefore, CRST could not be a “prevailing party” with respect to those claims. Id. at *20.
The Eighth Circuit agreed that the EEOC’s pre-suit obligations constitute “nonjurisdictional preconditions that are not elements of the claim.” Id. at *25. The Eighth Circuit held that, therefore, the district court’s dismissal of 67 claims for failure to investigate or conciliate “does not constitute a ruling on the merits,” and CRST is not entitled to an award of attorneys’ fees on those claims. Id. at *26-27.
Third, having determined that CRST may not recover fees for any purported pattern or practice claim, or for claims that the district court dismissed for failure to satisfy its pre-suit obligations, the Eighth Circuit considered whether CRST was entitled to an award of fees based on the district court’s dispositive rulings.
The Eighth Circuit noted that the district court did not discuss specific claimants, choosing instead to make a universal finding that all of the EEOC’s claims were without foundation. Id. at *32. While the Eighth Circuit recognized that it is “an arduous task,” it found that the district court must make findings as to why each particular claim was “frivolous, unreasonable, or groundless.” Id. at *33.
The Eighth Circuit remanded the case back to the district court again. Because CRST did not prevail on at least one claim (Stark), the Court directed that, on remand, if the district court finds that a frivolous claim exists, it must determine what fees, if any, CRST “expended solely because of the frivolous allegations.” Id.
Implications For Employers
With its latest decision in the EEOC v. CRST saga, the Eighth Circuit may have, in effect, made it more difficult for employers to recover fees as a result of EEOC litigation abuses. Whereas the Eighth Circuit reaffirmed the view that an employer can recover fees short of a complete victory, it found that a district court must make specific findings as to why each particular claim is frivolous, unreasonable, or groundless, and must determine what fees, if any, were expended solely because of the meritless allegations. We expect the defense to explore further appellate options (for a rehearing en banc, or possible Supreme Court review) and/or to attempt to make such showings in the district court and, depending on the magnitude of the resulting order, that the case once again might end up before the Eighth Circuit. We will keep you posted.
Readers can also find this post on our EEOC Countdown blog here.