EEOC Hit Hard with Legal Fees Ruling

A district court judge from the Eighth Circuit has ordered the Equal Employment Opportunity Commission (EEOC) to pay a trucking company in excess of $4.7 million in costs and legal fees in the wake of sexual harassment litigation that started in 2010. EEOC v. CRST Van Expedited, Inc. (N.D. Iowa 2013). Courts have authority to award legal fees to the prevailing party when claims are deemed “unreasonable or groundless” under applicable standards.

The EEOC chose to litigate the claims as a pattern-or-practice lawsuit that at one point included a projected class of 270 claimants alleged to have experienced sexual harassment or sex discrimination while working for CRST. The EEOC found itself in hot water because the district court, and the Eighth Circuit court on appeal, ruled that the EEOC failed to comply with Title VII by litigating the case without first investigating the claims of class members or attempting conciliation with the employer. This ruling affirms the mandate that the EEOC pursue administrative resolution, which includes investigation, before suing employers. When the suit involves alleged systemic discrimination under a pattern-or-practice theory, that obligation extends to each individual claimant’s allegations.

CRST paid $50,000 to settle the case on behalf of the initial claimant on the sexual harassment EEOC charge. CRST was not ruled the prevailing party on the EEOC’s claim on behalf of that individual or 98 other claimants dismissed by the court as part of discovery sanctions against the EEOC. Regardless, the court applied the available fee-shifting provisions to 153 of the original claimants. While this decision will likely promote caution within the EEOC’s increasingly aggressive litigation units, employers should remain wary of the EEOC’s strategic enforcement plan and its focus on systemic discrimination in employment.