We all know that the EEOC’s job is to ensure equal opportunity in the employment arena. The EEOC understandably takes its job seriously. However, in light of: a) its recent position that sex discrimination under Title VII includes discrimination based on sexual orientation and gender identity (Click here for review.); b) its attempts to strike down previously accepted provisions in severance agreements (Click here for more on that); and c) its filing of claims against some employers without making adequate attempts at settlement, (more on that here and here) many employers are feeling increasingly vulnerable. What’s more, the legal fees alone often far exceed the settlement or judgment amount, if any. Should an employer have to pay such astronomical legal fees even when it theoretically “wins” the case? Maybe not. Two weeks ago the US Supreme Court issued a unanimous ruling that may make it easier for some employers to recoup their legal fees. If you’re interested, join The EmpLAWyerologist after the jump to learn more…
If you’re wondering, the case is CRST Van Expedited, Inc. v. EEOC, 578 U.S. ___ (2016). It all started with one woman employed as a driver, who alleged that two male drivers sexually harassed her during her 28-day over-the-road training trip. The female driver filed an EEOC charge. The EEOC conducted a lengthy investigation and tried unsuccessfully to reach a settlement with CRST, and so it sued on behalf of the female driver and other allegedly similarly situated female employees. The EEOC claimed that during the discovery phase of the litigation it found more than 250 other female CRST employees that had also been sexually harassed.
This case has a years-long procedural history. I promise not to bore you with all the details. Suffice it to say that eventually the United States District Court in the Northern District of Iowa ended up dismissing all of the EEOC’s claims for various reasons such as expiration of the statute of limitations, failure to conciliate, failure by some employees to complain in a timely manner and many other reasons. No court ever reached the underlying issues of any of the claims. Once all the claims were dismissed, CRST filed a motion for attorneys’ fees. Under Title VII, a prevailing defendant may recoup its legal fees if it can show that the plaintiff’s claim was frivolous, unreasonable or groundless litigation. The US District Court granted CRST’s motion and awarded a whopping $4 million in attorneys’ fees. Naturally the EEOC appealed.
Aside from not wanting to pay $4 million in legal fees (who would?) what legal reasons did the EEOC advance in its appeal? Basically, the EEOC argued that CRST was not a prevailing party because there was no decision on any of the underlying issues, as the cases were essentially dismissed on technicalities. The 8th Circuit Court of Appeals agreed with the EEOC, and then CRST appealed to the US Supreme Court. The SCOTUS reversed the 8th Circuit’s decision, reasoning that requiring a win “on the merits” defies common sense. If a defendant successfully deflects a plaintiff’s claim, then it prevails, regardless of the specific reason for a court’s ruling. The Court also cited the congressional intent behind Title VII’s fee-shifting provisions, to support its holding that a party can prevail, even in cases that are dismissed — or, in a plaintiff’s case, where a judgment is awarded–for technical reasons as opposed to those where a decision is reached on the underlying issues.
Now, before anyone gets excited, there is still one piece that is not quite resolved. (There’s often a “but” that follows promising news, isn’t there?) The EEOC raised another argument, that a defendant must obtain a “preclusive judgment” before it can be a prevailing party. What in the world is that, and what is the difference between that and a ruling on underlying issues (referred to in legalese as a “judgment on the merits”)? A preclusive judgment, also known as a final judgment, means that it is not subject to further appeal. So, for example, a trial court may dismiss a claim. If the claim is or still can be appealed the judgment is not preclusive or final. If, however, the trial court dismisses a claim and the time to appeal expires, then the dismissal becomes a final or preclusive judgment. As long as the case cannot be subject to further appeal the judgment becomes preclusive or final.
OK, fine, but what did the US Supreme Court do with this argument then? It remanded it to the 8th Circuit for further proceedings. Why? The EEOC only raised that argument late in the appeal process, and therefore did not allow for adequate time for the parties to submit briefs on the issue. The 8th Circuit will now have to decide that issue, and the losing party will probably appeal that issue to the US Supreme Court. ,
So, what does all this mean? The good news is that employers who obtain a favorable ruling in Title VII cases,can get attorneys’ fees– if they can show that the claim was frivolous, groundless or unreasonable. Favorable rulings include dismissals based on procedural issues and not the actual underlying issues of the case. The second argument raised by the EEOC would, at worst, push off that award to a later time. An employer might have to wait until the ruling in question could not be subject to any further appeal before it could request attorneys’ fees. If that ends up being the case, however, and if a prevailing employer can show that the EEOC/employee’s case was frivolous, unreasonable or groundless it would still ultimately be allowed to request attorneys’ fees –and might well get them. Either way, this seems to be some encouraging news for employers. (That will happen every now and again :-).
As always, The EmpLAWyerologist will be back, same time next week to discuss other issues of interest to employers. Great chatting with you!
Disclaimer: Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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