CRST Van Expedited, Inc. v. Equal Employment Opportunity Commission

Issues 

Can the basis for awarding attorney’s fees to a defendant arise from the Equal Employment Opportunity Commission’s failure to comply with pre-suit obligations pursuant to Title VII of the Civil Rights Act of 1964?

Oral argument: 
March 28, 2016

The Supreme Court will decide whether the basis for awarding attorney’s fees to a defendant can arise from EEOC’s failure to comply with pre-suit obligations pursuant to Title VII of the Civil Rights Act of 1964. CRST asserts that Title VII and Court precedent do not require defendants to “prevail on the merits” to be awarded attorney’s fees, and that, even if they do, CRST prevailed on the merits in this case. On the other hand, the Equal Employment Opportunity Commission (“EEOC”) contends that both Title VII and Court precedent require the party to have prevailed on the merits to receive attorney’s fees, meaning that the judgment must bar further litigation on the matter. The outcome of this case implicates the incentives for EEOC to comply with its obligations in pre-suit investigations in Title VII actions.

Questions as Framed for the Court by the Parties 

Can a dismissal of a Title VII case, based on the Equal Employment Opportunity Commission’s total failure to satisfy its pre-suit investigation, reasonable cause, and conciliation obligations, form the basis of an attorney’s fee award to the defendant under 42 U.S.C. § 2000e-5(k)?

Facts 

On December 1, 2005, Monika Starke filed a discrimination charge with the Equal Employment Opportunity Commission (“EEOC”) against her former employer CRST Van Expedited, Inc. (“CRST”), a transit and logistics company. She alleged that two CRST employees, Bob Smith and David Goodman, sexually harassed her and that CRST violated Title VII of the Civil Rights Act of 1964 (“Title VII”). After Starke submitted her charge, EEOC started an investigation of CRST, requesting information relevant to the charge. After its own internal investigation, CRST responded by issuing a statement of denial to the claims against Smith and Goodman and releasing all the requested information. In addition, CRST disclosed that two other female employees, Lori Essig and Tamara Thiel, had also filed discrimination charges against CRST. Upon discovering these facts, EEOC sent multiple requests for additional information to CRST, pressing CRST to release broad information related to the employees who worked under Goodman and Smith. On July 12, 2007, EEOC sent a Letter of Determination to CRST, stating that it had reasonable cause to believe that CRST violated Title VII by sexually discriminating against Starke and other female employees due to their gender. Because the letter offered to have a conciliation process, both the EEOC and CRST attempted to conciliate. Ultimately, the parties were unable to come to an agreement.

On September 27, 2007, EEOC brought suit against CRST in district court on behalf of Starke and other female employees in similar positions. Pursuant to Section 706 of Title VII, EEOC sought to correct the discriminatory practices and obtain a remedy for the injured employees. Approximately two years went by and EEOC was unable to identify the injured employees despite requests by the district court and CRST. The district court then issued two orders that compelled EEOC to promptly amend the class of injured employees if any of them were to no longer pursue the case and to make all employees who were part of the class available to CRST for deposition. Moreover, the district court warned EEOC that the employees in the class who were unavailable for deposition before the close of discovery would be barred from testifying and receiving relief in the case. After discovery, only 150 women were available for deposition. Using five orders, the court subsequently dismissed the claims for over half of the remaining women in the class. The court then barred EEOC from relief for the remaining class members for failing to satisfy two statutory requirements for bringing suit under Title VII, stating that EEOC failed to conduct both a reasonable investigation and a bona fide conciliation of the claims. The court then awarded court fees to CRST under 42 U.S.C. § 2000e-5(k).

EEOC appealed the awarding of attorney’s fees, among the court’s other holdings. On appeal, the court reversed and affirmed in part, holding that the attorney’s fees should not be paid by EEOC because CRST was no longer the prevailing party. CRST was no longer a prevailing party because the court had also reversed the district court's grant of summary judgment on two of EEOC's claims. CRST appealed to the U.S. Supreme Court, which granted certiorari on December 4, 2015.

Analysis 

Under Section 706(k) of Title VII, a district court may award fees to the prevailing party, although under the standard set by the Court in Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978), fees are normally only awarded to a prevailing defendant should the plaintiff’s action be found frivolous or unreasonable. CRST contends that EEOC’s suit failed this reasonableness test and, whether or not a ruling on the merits of EEOC’s case is held necessary to reach that conclusion, fees should be awarded. EEOC argues that not only was the suit reasonable, but the defendant was not a prevailing party capable of receiving an award of attorney’s fees because there was no judgment that precluded further litigation on the subject matter of the case.

MUST A PREVAILING PARTY IN A TITLE VII CASE SUCCEED ON THE MERITS TO OBTAIN AN AWARD OF ATTORNEY’S FEES?

CRST maintains that a ruling on the merits is an unnecessary step toward determining the prevailing party under Christianburg and is inconsistent with the plain meaning of Section 706(k). While acknowledging that plaintiffs cannot acquire prevailing party status without garnering some relief in their favor on the merits, CRST contends that a defendant can become a prevailing party by acquiring a dismissal with prejudice, even on non-merits grounds. CRST, moreover, contends that Section 706(k) has no restrictions on which prevailing parties can be awarded fees, and that a district court’s discretion is only controlled by the equitable considerations espoused in Christianburg. Specifically, CRST claims that the Court in Christianburg deliberately did not limit the scope of the awards available to defendants in Title VII cases because of the often disproportionate power relationship between the federal government as the plaintiff and the small- and mid-sized employers that are often the defendants.

In contrast, EEOC argues that the relevant consideration is the two-part test that the Court adopted in Buckhannon Bd. & Care Home, Inc. v. West Va. Dep’t of Health & Human Res., 532 U.S. 598 (2001). In Buckhannon, the Court held that the status of a prevailing party required (1) a “material alteration” in the parties’ legal relationship, and (2) a judicial decision reflecting such change. EEOC asserts that this “material alteration” cannot be derived from any dismissal of a case that leaves the door open to future litigation on the same issue. In addition, EEOC notes that mere procedural grounds for dismissal are inadequate whether the party is a plaintiff or a defendant. Indeed, EEOC notes that the prevailing party must obtain a judgment that proscribes further litigation on the matter. As this relates to the pre-suit requirements of a Title VII case, EEOC contends that dismissal on the grounds that the aforementioned requirements have not been met does not constitute a material change, and the proper remedy under Mach Mining, LLC v. EEOC, 575 U.S. __ (2015), is a stay of the litigation rather than dismissal. Finally, EEOC argues that the lower court’s dismissal of its case was not with prejudice attached to foreclose future litigation, whether under Rule 41(b) of Federal Rules of Civil Procedure, for involuntary dismissal, or otherwise.

IF A DETERMINATION ON THE MERITS IS NECESSARY, CAN CRST STILL RECOVER ATTORNEY’S FEES?

If a decision on the merits is required under Section 706(k), CRST asserts that the pre-suit requirements necessary for a Title VII claim are elements of the cause of action and failure to meet them constitutes grounds for awarding attorney’s fees. Since the pre-suit requirements are an element of the claim and not merely procedural, CRST contends that a dismissal for failing to meet them is a decision on the merits and thus would qualify the defendant as a prevailing party. Although the pre-suit requirements do not establish whether the allegations are true, CRST points to Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), in which the Court held that the number-of-employees requirement of Title VII was a substantive requirement of the claim, to illustrate that such requirements are nevertheless substantive elements of the cause of action. Even if the pre-suit requirements are not elements of the claim, CRST argues that the statutory language of Title VII renders the pre-suit requirements mandatory and thus an issue on the merits. CRST draws a parallel to Hallstrom v. Tillamook County, 493 U.S. 20 (1989), in which the Court held that a sixty-day notice-and-delay requirement for citizen suits was a mandatory condition to bring suit rather than an optional one. According to CRST, such administrative requirements serve a substantive goal in preventing unnecessary lawsuits.

EEOC contends that a focus on whether the relevant grounds were on the merits is misguided because the relevant test for identifying a prevailing party in Buckhannon renders such a concern irrelevant. EEOC asserts that because a dismissal for a failure to satisfy pre-suit requirements would not have preclusive effects, a key component of the test in Buckhannon, it cannot be held as a factor in determining the prevailing party. EEOC argues that because the mandatory requirement in Hallstrom similarly did not preclude further litigation on the issue, it is also not applicable to the Buckhannon test. As far as Arbaugh is concerned, EEOC distinguishes the Title VII pre-suit requirements as procedural requirements that must be undertaken before a suit is filed, whereas the number-of-employees requirement in Arbaugh was an element of the cause of action because it established whether the employer was subject to Title VII.

REASONABLENESS TEST FOR TITLE VII LITIGATION

Notwithstanding whether a decision on the merits is required, CRST claims that a failure to meet the reasonableness standard in Christianburg can be a ground in and of itself for awarding attorney’s fees. Citing examples in which attorney’s fees were awarded for cases that ended prematurely due to Eleventh Amendment immunity, statutory time bars on litigation, and issue preclusion, CRST maintains that a decision on the merits is not necessary if the decision to litigate is unreasonable under Christianburg. CRST points to Christianburg itself, in which the Court refused to award defendant attorney’s fees because the underlying basis of EEOC’s case was reasonable, to assert that the reasonableness standard is separate from any consideration of the claim’s merits. CRST also argues that a defendant need not be cleared of the discrimination charge alleged in a Title VII claim to be awarded attorney’s fees. In addition, CRST contends that the merits of the charges have no bearing on the reasonableness with which the EEOC used its investigatory powers and brought the claim.

EEOC concurs that the Christianburg reasonableness test is relevant insofar as it dictates when to award attorney’s fees but also argues that because EEOC’s underlying case was reasonable, an award for merely failing to satisfy the Title VII pre-suit requirements would be inappropriate. EEOC points to Mach Mining, in which EEOC sued on behalf of a class of women who had applied for mining jobs, to indicate that certifying a class does not require an in-depth examination of each individual member of the class to be reasonable. EEOC contends that, at the very least, its understanding of the pre-suit requirements as set out by Mach Mining was not so unreasonable as to fall afoul of Christianburg. EEOC also notes that CRST did not challenge EEOC’s compliance with its pre-suit requirements until the district court prompted it to do so over a year-and-a-half into litigation. EEOC argues that the defendant’s failure to challenge its compliance sooner is a sign of the reasonableness of the case, as was the vigorous support of one of the panel judges on the appeals court.

Discussion 

The Supreme Court will decide whether EEOC’s failure to comply with pre-suit obligations pursuant to Title VII can form the basis for awarding attorney’s fees to the defendant. The decision could impact fee-shifting laws generally and could influence EEOC's compliance with its pre-suit obligation to investigate Title VII actions and prevent EEOC from bringing frivolous lawsuits.

EFFECTS UPON OTHER FEE-SHIFTING LAWS VS. LIMITED LITIGATION

According to Americans for Forfeiture Reform (“AFR”), arguing in support of CRST, affirming the decision below would implicate fee award determinations for not just attorney fees pursuant to Title VII but for other fee-shifting laws as well. AFR claims that the Court’s decision in this case will impact fee-shifting provisions of laws that are determined by which party prevails. According to AFR, lower courts throughout the country will use the Court's ruling in this case to determine how to award fees under other statutes. AFR argues that, by reversing the decision below, the Court may prevent the federal government from passing on the costs of frivolous litigation toward private defendants.

EEOC contends that it does not aggressively resort to frivolous litigation. . EEOC claims that, in 2015, it found reasonable cause in 3,239 cases out of “more than 89,000 charges” regarding the violation of, among other anti-discrimination statutes, Title VII. Among those cases, the EEOC successfully conciliated 1,432 cases and brought suit 142 times, which is approximately four percent of the 3,239 cases where reasonable cause was found. Thus, according to EEOC, the data from 2015 demonstrates that EEOC is not litigious and frivolous with its lawsuits.

CORRECTING BAD HABITS VS. JUSTIFIED PROCEDURE

According to Bass Pro Shops Outdoor World, LLC and Tracker Marine Retail, LLC (“Bass Pro”), arguing in support of CRST, if the Court affirms the decision, it will weaken the incentives for EEOC to correct its habitual failures in pre-suit investigations. Because EEOC is litigious, according to Bass Pro, the Court should reverse the decision below to protect defendants from frivolous litigation. Moreover, the Equal Employment Advisory Council (“EEAC”) and the National Federation of Independent Business (“NFIB”) argue, in support of CRST, that applying EEOC’s understanding of Title VII would prevent defendants from challenging EEOC compliance of its pre-suit obligations. Because of this limitation, EEAC and NFIB argue that EEOC will be able to aggregate claims during discovery, instead of proceeding with proper administrative investigation, and compel an innocent private defendant to pay the costs.

EEOC contends that the effect of fee awards is marginal in terms of incentivizing conciliation and compliance with pre-suit obligations. EEOC also argues that it has strong incentives to not pursue litigation and that EEOC tends to resolve claims through conciliation and other administrative procedures. Moreover, EEOC asserts that it does not abuse the discovery process because it has broad administrative powers and can gain access to relevant records without pursuing litigation. In addition, EEOC asserts that defendants will have little trouble in identifying problems with EEOC compliance of pre-suit obligations, which enables defendants to obtain immediate relief and avoid substantial costs. CRST’s litigation costs, according to the EEOC, were substantially borne by CRST’s decisions rather than EEOC’s failures, demonstrating that this case is not typical of the cost related to disputes over EEOC’s compliance with its pre-suit obligations.

Conclusion 

This case will determine the standard under which a defendant in a Title VII claim can be awarded attorney’s fees when EEOC fails to satisfy its pre-suit requirements. CRST asserts that in such circumstances, the standard for awarding fees is independent of a consideration on the merits of the case and should be considered primarily under the reasonableness test put forth by the Court in Christianburg. On the other side, EEOC posits that pre-suit requirements cannot constitute an element of the claim upon which to award fees, as the Buckhannon test for identifying the prevailing party in the case turns on a material change in the parties’ legal relationship separate from any such consideration. The Court’s ruling could impact the incentives for the EEOC to bring discrimination cases under Title VII and the remedies available to businesses that have been subject to unreasonable litigation from EEOC.

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Acknowledgments 

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