moneyBy Gerald L. Maatman, Jr., Christina M. Janice, and Alex W. Karasik

Yesterday the U.S. Supreme Court heard oral arguments in EEOC v. CRST Van Expedited, Inc.

Involving the largest fee sanction award ever levied against the EEOC – nearly $4.7 million –  EEOC v. CRST Van Expedited, Inc. may be one of the most important cases on EEOC litigation issues in years.  The stakes are high for employers and the EEOC alike.

At issue in this case is whether and under what circumstances an employer can recover attorneys’ fees from the EEOC where the EEOC fails to satisfy its pre-suit investigation duties under Title VII.  Here is our analysis of the course of the arguments (a copy of the hearing transcript is here).

A Thumbnail Sketch Of The Key Facts Of The Case

Section 706(k) authorizes district courts to award attorneys’ fees to the “prevailing party” in a Title VII case.  In relevant part, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978), held that fee awards to a prevailing defendant are permissible only if the plaintiff’s lawsuit was “frivolous, unreasonable, or without foundation.”

After CRST successfully obtained the dismissal of the EEOC’s Title VII claims for sexual harassment, the District Court granted CRST’s motion for an award of attorneys’ fees and costs and directed the EEOC to pay CRST nearly $4.7 million, finding that the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unnecessary burden on both CRST and the District Court.

On the EEOC’s appeal, the Eighth Circuit reversed and held that the District Court “did not make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim” and remanded these claims to the District Court to make such individualized determinations.  Further, the Eighth Circuit found that the District Court’s dismissal of 67 claims based on the EEOC’s failure to satisfy Title VII’s pre-suit obligations “[did] not constitute a ruling on the merits,” and that “[t]herefore, CRST is not a prevailing party as to these claims.”  The Eighth Circuit also held that CRST could not satisfy the Christianburg standard for the same reason: “[P]roof that a plaintiff’s case is frivolous, unreasonable, or groundless is not possible without a judicial determination of the plaintiff’s case on the merits.”  Thereafter, following CRST’s petition for certiorari, the SCOTUS accepted the case for review.

The Employer’s Position

In its briefing, CRST asserted two arguments as to why the Eighth Circuit’s decision was improper.  First, CRST argued that the Eighth Circuit’s rule that a prevailing defendant may recover fees only when a case is decided “on the merits” has no basis in the statute, conflicts with Christiansburg, and severely undermines the policy of Section 706(k).

Second, CRST posited that even if the “on the merits” standard applied, CRST was successful on the merits when it defeated certain claims by demonstrating that the EEOC did not investigate, find reasonable cause for, or attempt to conciliate any of these claims as required by the statute. Accordingly, CRST asserted that the precedent created by the Eighth Circuit’s decision would allow the EEOC to entirely abandon its pre-suit responsibilities with impunity, which would lead to one-sided and inefficient conciliations.

Following the briefs submitted by the EEOC, which clearly abandoned its argument that the Eighth Circuit’s rule that a resolution “on the merits” is a precondition for a fee award, CRST’s reply briefing requested that the SCOTUS abrogate the Eighth Circuit’s rule as being without any foundation under Title VII.  CRST also attacked the EEOC’s newly asserted theory that attorneys’ fees were unwarranted because only preclusive judgments in favor of defendants support “prevailing party” status.  CRST argued that because the EEOC did not raise this “prevailing party” argument at any time during the last six years of litigation, the argument had been waived.  CRST also asserted that the only substantive issue properly before the SCOTUS was whether the EEOC’s pre-suit conduct rendered its lawsuit “frivolous, unreasonable, or groundless” under Christianburg, and that the District Court acted within its discretion when it found that the EEOC abandoned its Title VII obligations.

The Government’s Position

Having abandoned its contention that only a dismissal “on the merits” may be the subject of an attorney fee award, the EEOC argued that the District Court’s finding that the EEOC failed to satisfy Title VII’s administrative preconditions to filing a lawsuit did not authorize an award of attorneys’ fees under 42 U.S.C. 2000e-5(k), because such a dismissal does not make the defendant a “prevailing party.”

The EEOC further noted the District Court’s original dismissal was not “with prejudice,” and that the later agreed-upon “with prejudice” dismissal did not and could not modify the District Court’s earlier dismissal of the claims at issue here, which had already been affirmed by the Eighth Circuit.

Further, the EEOC also contended that the award of attorneys’ fees and costs in this litigation was improper because the Commission’s suit was not “frivolous, unreasonable, or groundless.”  Citing Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1656 (2015), which has become routine practice for the Government, the EEOC asserted that the District Court improperly found that the EEOC failed to satisfy its pre-suit obligations because it did not separately investigate, make a reasonable-cause determination, and conciliate with respect to each individual woman for whom it ultimately sought relief.

The SCOTUS Oral Argument

While both sides endured their fair share of questioning from the Justices at yesterday’s hearing, the questioning put to the Government was noticeably pointed and plentiful.

If a questioning scorecard is indicative of the issues, it broke out this way by our rough tally:

Questions To CRST – 46 in the opening argument and 5 questions in the rebuttal argument [questions by Justice – Kagan (16), Ginsburg (14), Sotomayor (13), Kennedy (6), Breyer (3), and Alito (0)]

Questions To The EEOC – 72 in the opposition argument [questions by Justice – Breyer (25), Roberts (21), Alito (9), Kagan (6), Kennedy (6), Sotomayor (4), and Ginsburg (1)]

The EEOC was noticeably pressed about why it should not be held responsible for bringing the lawsuit that was later dismissed.  Moments into the EEOC’s argument, Justice Alito asked “In your brief in opposition, you argued that the Eighth Circuit was correct; did you not?”  After admitting it did so, Justices Alito and Breyer followed up by asking if the EEOC had abandoned its positon.  After several attempts to dance around the question, the Government finally admitted to abandoning the Eighth Circuit’s view regarding the necessity of a disposition on the merits.  Justice Breyer then continued to hammer the Government, asking “So if they won, why isn’t that the end of it?  It says judgment — it says … the case is dismissed with prejudice.  Therefore, they won.  So why aren’t they the prevailing party?”  The EEOC’s responses hardly pleased the questioning Justice.

After constant grilling from several Justices, Justice Kennedy finally summarized the Government’s position in a question where his tone was certainly revealing: “your position that no matter how unreasonable the plaintiff has been, no matter how costly it’s been, no matter how long it’s taken, that you cannot award fees unless …  the case is dismissed, and the judge says you’re barred from bringing this claim in this suit, no fees; that’s your position.”  Not surprisingly, given its recent attitude that it can abandon the pre-suit Title VII obligations and seemingly litigate with impunity, the EEOC responded “that’s correct.”  The Government also asserted that the notion of “prevailing party” was a term of art.  As was the case with most of the Government’s responses, the Justices were left with more questions than answers.

In sum, the SCOTUS hardly seemed convinced by the Government’s ever-evolving arguments.  Justice Sotomayor did float the idea of the case being remanded to the Eighth Circuit.  But perhaps most tellingly, in light of the Government’s persistent use of Mach Mining as a crutch to avoid judicial scrutiny, Chief Justice Roberts posited the notion that conciliation without the threat of fees would not necessarily incentivize the EEOC to abide by Title VII obligations, “But if they were subject to fees because they ignored their duty to conciliate, it seems to me that might give them some incentive to get it right the first time.”

What’s Next

A future SCOTUS ruling should provide guidance regarding whether and under what circumstances an employer can recover attorneys’ fees from the EEOC when the EEOC fails to satisfy its pre-suit investigation duties under Title VII.

Reading the tea leaves at the Supreme Court, the Government offered little justification for its pre-suit conduct (or lack thereof).  The Supreme Court clearly seemed concerned with the Government’s abandonment of its duties, and while the Supreme Court may not go so far as to uphold the District Court’s award of attorneys’ fees to CRST, it would not be surprising to see a ruling that reflects the Supreme Court’s concerns about the EEOC’s pre-suit conduct.  We expect a decision within the next few months so stay tuned.

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