The EEOC sued and lost, so will the defendant get its attorney's fees? The stakes involved in CRST Van Expedited, Inc. v. EEOC are simple: over $4 million in attorney's fees. The Equal Employment Opportunities Commission lost its case against CRST, and CRST wants to recover $4,004,371 in attorney's fees. The District Court said yes, the Eighth Circuit said no, and the Supreme Court will hear oral arguments on March 28. CRST has filed its opening brief on the merits, as have four pro-employer amici curiae in support of CRST. (I'll be writing more later, after the EEOC files its brief.)
The EEOC sued CRST on behalf of hundreds of individuals claiming sexual harassment in violation of Title VII. The District Court dismissed 67 of the EEOC's claims because the EEOC had failed to fulfill its statutory pre-suit duties to investigate the claims, make a reasonable cause determination, and attempt conciliation. The Eighth Circuit affirmed the dismissal, and that's no longer an issue in this case. The District Court then granted CRST an attorney's fees award of $4,004,371 against the EEOC. However, the Eighth Circuit reversed the attorney's fee award on the ground that CRST's victory was not "on the merits." EEOC v. CRST Van Expedited, Inc. (8th Cir 12/22/2014).
Under the "American Rule," litigants generally pay their own attorney's fees – whether they win or lose. As the Supreme Court put it last June in Baker Botts v. ASARCO, LLC:
“Our basic point of reference when considering the award of attorney’s fees is the bedrock principle known as the American Rule: Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.”
Title VII Section 706(k) contains an exception to the American Rule, saying that
"the court, in its discretion, may allow the prevailing party … a reasonable attorney’s fee … as part of the costs …."
This statutory language tracks the language of 42 USC §1988, which is used in many civil rights cases.
For a defendant to be entitled to attorney's fees there is more involved than simply winning the case. The Supreme Court has said that in order for a defendant to recover attorney's fees under Section 706(k), the plaintiff's (here the EEOC's) case must have been "frivolous, unreasonable, or without foundation." Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978).
The Eighth Circuit, however, did not even reach the factors set out in Christiansburg because of its finding that CRST was not a "prevailing party." For the Eighth Circuit, in order for a defendant to be a prevailing party – and thus eligible for an award of attorney's fees – there must have been a ruling "on the merits" of the case. The reason for this is simple. You cannot analyze the Christiansburg "frivolous, unreasonable, or without foundation" factors unless there has been a judicial determination as to the sex discrimination claim itself.
To decide whether CRST won on the merits, the Eighth Circuit considered whether the EEOC's pre-suit obligations fit within one of three categories: (1) a restriction on subject matter jurisdiction, (2) a non-jurisdictional precondition to filing suit, or (3) an element of the EEOC's claim. The EEOC and CRST both agreed that jurisdictional facts were not involved here. The Eighth Circuit concluded that the EEOC's pre-suit obligations were simply preconditions to filing suit and not an element of the EEOC's claim or cause of action, so the judicial dismissal was not "on the merits." On that reasoning, CRST was not even granted the status of a "prevailing party."
CRST's opening brief contains two core arguments:
- Nothing in Section 706(k) or in Christiansburg requires a defendant to prevail "on the merits" in order to be awarded attorney's fees, and such a requirement would undermine the policy of Section 706(k).
- In any event, CRST did prevail on the merits.
CRST's primary argument is that the Eighth Circuit invented a new hurdle that is not supported by the text of the statute or by anything the Supreme Court has said. The statute already requires that one be a "prevailing party," and the Supreme Court has added the rule that defendants get attorney's fees only if the plaintiff's case was "frivolous, unreasonable, or without foundation," but the Eighth Circuit has added that the defendant must have prevailed "on the merits." Although plaintiffs must obtain relief on the merits, that can't logically be applied to defendants because they have no claims and seek no relief. Christiansburg protects plaintiffs by allowing defendants to obtain attorney's fees awards only when the plaintiff was unreasonable. The decision to litigate can be unreasonable for a number non-merits reasons, such as time-bars or mootness. Denying fees in such cases would frustrate Congress' policy that plaintiffs who impose unnecessary and unreasonable litigation on defendants should bear the cost.
CRST's next argument is that it actually did win on the merits. The EEOC's pre-suit requirements are a part of the EEOC's cause of action. They are similar to other Title VII conditions that the Supreme Court has already recognized as part of a plaintiff's cause of action, such as the limitation of a private right of action to plaintiffs who are "aggrieved" and the numerosity requirement for a covered “employer.”
Both CRST and some amici are spilling a lot of ink to persuade the Court that the EEOC has been overreaching in its litigation. In the current case the EEOC brought suit on behalf of one individual and a class of similarly situated female employees. EEOC didn't know how many women would be in the class, and used discovery to find them, and eventually named 270 women who allegedly had been sexually harassed. Many of these were dropped because they didn't show for depositions or for other reasons, leaving 154. CRST deposed all 154. Another 87 were removed on summary judgment, leaving 67. As for the remaining 67, the District Court dismissed the EEOC's claims after the EEOC admitted that it did not investigate, find reasonable cause, or attempt to conciliate any of those 67 individual claims. So the point being made is that the EEOC's overall litigation strategy and tactics are out of line, and awarding attorney's fees will deter such conduct in the future.
My view: CRST's argument should be elegantly simple: (1) CRST was the prevailing party because it obtained a final judgment in its favor, and that judgment is res judicata as to the 67 claims. So the inquiry immediately shifts to whether the EEOC was unreasonable when it initiated and continued litigation without first investigating the claims, making a reasonable cause determination, and attempting conciliation. The EEOC was automatically (per se, if you will) unreasonable because its duties are clearly specified in the statute. (2) This case is a good opportunity to remind all Circuit Courts that they should not be in the business of adding things to Congressional statutes – things like "prevailing party" means a party that prevails "on the merits."
[For a list of current employment law cases, see Supreme Court Watch.]