United States: "We Don't Want To Pay $4.7 Million" – EEOC Files Its Supreme Court Brief In CRST Fee Sanction Case

As we recently blogged here, EEOC v. CRST Van Expedited, Inc. is an important case on the Supreme Court's docket that employers absolutely need to monitor.  At issue is whether attorneys' fees are appropriate in instances where the EEOC failed to satisfy its pre-suit investigation duties under Title VII, but the employer was not 100% victorious "on the merits."

We have been tracking developments in this litigation ( here, here, here, here, here, here, here, and here) since its filing.  Earlier this month, we blogged about CRST's submission of its merits brief to the SCOTUS on January 19, 2016, as well as several amici briefs ( here, here, here and here) filed in support of CRST.  On February 24, 2016, the EEOC filed its brief with the Supreme Court.

The Context And The Stakes

As we previously reported, on September 27, 2007, the EEOC filed a single count complaint against CRST under Section 706(f) of Title VII on behalf of a female driver and a class of "similarly situated" but unidentified female employees of CRST.  Petit. Br., at 10.  The U.S. District Court for the Northern District of Iowa noted that in the course of discovery, "it became clear that the EEOC did not know how many allegedly aggrieved persons on whose behalf it was seeking relief," and that "the EEOC was using discovery to find them."  Id. at 11.  CRST successfully moved the District Court for the dismissal of Title VII claims for sexual harassment brought by the EEOC on behalf of several hundred female truckers, after demonstrating that EEOC did not conduct any investigation of the specific allegations of the allegedly aggrieved persons for whom it sought relief at trial before filing the Complaint – let alone issue a reasonable cause determination as to those allegations or conciliate them.

After securing the dismissals and settling the claims of the original charging party, CRST moved for an award of attorneys' fees and costs.  The District Court granted the motion 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 upon both CRST and the District Court.  Id. at 18.

The fee sanction was the largest ever imposed against the Commission.

However, 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.  Id. at 20.  Further, the Eighth Circuit found that that 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."  Id. at 21.  The Eighth Circuit also held that CRST could not satisfy the standard of Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978), 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."  Id. (internal quotation omitted). The Eighth Circuit instructed the District Court on remand to assess each claim for which it granted summary judgment for CRST on the merits and explain why it deemed that particular claim to be frivolous, groundless, or unreasonable.

Following the Eighth Circuit's decision, CRST petitioned for a rehearing en banc, which was denied on February 20, 2015.  Thereafter, CRST petitioned the U.S. Supreme Court for certiorari, which was granted on December 4, 2015.

In its merits brief, CRST asserts two arguments as to why the Eighth Circuit's decision was improper: (1) 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 Garment, and severely undermines the policy of Section 706(k); and (2) even if Congress intended Section 706(k) to limit defendants' fee awards to cases decided "on the merits" (which it claims Congress did not do), this case would still qualify under that standard since CRST was successful on the merits.  Id. at 23-25.

The EEOC's Brief

In its merits brief, the EEOC asserts that a district court's finding that the EEOC failed to satisfy Title VII's administrative preconditions to filing a lawsuit does not authorize an award of attorneys' fees under 42 U.S.C. 2000e-5(k) because it does not make the defendant a "prevailing party." Resp. Br., at 21-22.  According to the Commission, to be a prevailing party, a defendant must at minimum obtain a judgment barring further litigation on the Commission 's claim; absent such a judgment, the legal relationship between the parties remains materially unchanged because the plaintiff is free to refile.  Id. at 21.

As has become a common page in the EEOC's playbook when its satisfaction of its jurisdictional requirements under Title VII is challenged by an employer, the EEOC expansively argues that under Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1656 (2015), the proper remedy for a district court finding that the EEOC failed to satisfy Title VII's administrative pre-conditions to a suit is a stay, not a dismissal, and that under Costello v. United States, 365 U.S. 265, 284-288 (1961), such a dismissal does not preclude the EEOC from returning to court after the pre-condition has been met.  Id.  Under this logic, the EEOC urges the Supreme Court to conclude that dismissal does not constitute the sort of material alteration of the parties' legal relationship required to confer prevailing party status.  Id. at 21-22.

The EEOC also argues a procedural point — that CRST incorrectly asserts that the dismissal of the relevant claims in this case had the requisite effect of being "with prejudice," a characterization that notably did not appear in CRST's petition for a writ of certiorari.  Id. at 22.  The EEOC notes the District Court's original dismissal was not "with prejudice," and that after the Eighth Circuit remanded two other claims for further proceedings and the Commission withdrew one of them, the parties settled the Commission's final claim and agreed to dismiss the case "with prejudice."  Id.  The EEOC argues that the agreed-upon 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.  Id.

The EEOC further argues that CRST's policy argument regarding the need for fee awards to encourage the Commission to adhere to its pre-suit duties under Title VII is misplaced.  Id.  In this respect, the EEOC contends that CRST should have identified and raised earlier in the litigation any allegations that the EEOC failed to satisfy its pre-suit obligations.  As a result of waiting over 18 months into the litigation to raise such issues, CRST is itself responsible for incurring substantial attorneys' fees.  Id. at 23.

In its second argument, the EEOC contends that the award of attorneys' fees and costs in this litigation was improper because the Commission's suit was not "frivolous, unreasonable, or groundless" under Christiansburg Garment.  Resp. Br., at 21-23.

Again, the EEOC raises Mach Mining as a shield, asserting that the District Court's finding was improper insofar as it determined 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.  Here, the EEOC cites Mach Mining, 135 S. Ct. at 1656, as support for the proposition that the EEOC may satisfy its conciliation obligations by identifying the "class of employees" for which it seeks relief.  Id.  The EEOC posits that "[u]nder the Eighth Circuit's merits decision in this case, no court of appeals had held that the EEOC is required to identify all claimants during its investigation and individually conciliate their claims, and several courts of appeals such as the 9th Circuit had expressly recognized that the EEOC is 'not required to provide documentation of individual attempts to conciliate on behalf of each potential claimant.'"  Id. at 51 (citing EEOC v. Bruno's Rest., 13 F.3d 285, 289 (9th Cir. 1993)). In the absence of such authority, the EEOC asserts there is no basis to conclude its position was frivolous, unreasonable, or groundless.  Id. at 52.

In sum, the EEOC makes some bold arguments. In so doing, the Commission is angling to secure further Supreme Court precedent to assist in its prosecution of systemic enforcement litigation.

What's Next

The Supreme Court is set to hear oral arguments on March 28, 2016.  With Supreme Court Justice Antonin Scalia's recent passing, it is likely the case may be decided before the vacancy on the Supreme Court is filled.  A 4 – 4 vote would leave the Eighth Circuit decision intact and allow the EEOC to escape meaningful accountability for failure to satisfy its jurisdictional requirements under Title VII.  Further, a 4 – 4 vote may leave other appellate courts across the country without Supreme Court guidance on the EEOC's latest effort to expand Mach Mining as a protective shield. Stay tuned, as we promise to keep our loyal blog readers updated.

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

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Gerald L. Maatman Jr.
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