CRST Van Expedited (CRST) hired Monika Starke as a truck driver. CRST operated a system under which two employees would drive a single truck. CRST's drivers were required to graduate from a CRST training program before becoming certified as a driver. Part of that training program involves a 28-day road trip with a veteran driver. Starke alleged that two male trainers sexually harassed her during the road trip portion of her training. The Equal Employment Opportunity Commission (EEOC) investigated the charge and found reasonable cause to believe that CRST had subjected Starke to sexual harassment. During the investigation, the EEOC also discovered that other women had filed formal charges against CRST with the EEOC. The EEOC determined that Starke and other female CRST drivers had been subjected to sexual harassment. After a failed attempt at settlement, the EEOC sued CRST under Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination. During discovery, the EEOC identified over 250 allegedly aggrieved women.

The District Court dismissed the claims, finding that the EEOC had not adequately investigated or attempted to settle the claims on behalf of the other aggrieved women, a requirement for the EEOC to be able to file a lawsuit on behalf of aggrieved persons. The District Court dismissed the suit and identified CRST as the prevailing party. CRST filed a motion for attorney's fees, which was granted for over four million dollars. The Eighth Circuit U.S. Court of Appeals reversed the dismissal of Starke's claims and those of one other employee. As a result of this reversal, the court vacated the attorney's fee award. The EEOC then settled the claim on behalf of Starke and withdrew the claim of the other employee. CRST again sought and was awarded attorney's fees as the prevailing party. The EEOC again appealed and the Court of Appeals reversed and remanded the case, holding that, to be a prevailing party under Title VII, a defendant must obtain a ruling on the merits, which does not include a court's dismissal of claims. The United States Supreme Court then agreed to hear the case.

Under Title VII, a federal trial court may award attorney's fees to the prevailing party. The Supreme Court analyzed case law interpreting the phrase "prevailing party" under various statutes and determined that a "judicially sanctioned change in the legal relationship of the parties" can make a plaintiff a prevailing party. However, the Court had never set forth in detail how courts should determine whether a defendant has prevailed under Title VII. The Supreme Court had previously held that district courts may award attorney's fees to defendants only when the defendant is a prevailing party and the plaintiff's claim was frivolous, unreasonable or groundless, but did not instruct courts how to determine whether the defendant was the prevailing party.

The Court compared the goals of plaintiffs and defendants in lawsuits to determine when a defendant might be the prevailing party. Whereas a plaintiff seeks some type of "material alteration" in the legal relationship between itself and a defendant, a defendant has the opposite goal: the defendant seeks to prevent the alteration the plaintiff seeks. In that sense, a defendant has achieved its objective if the plaintiff is unsuccessful, regardless of whether this occurs through a judgment on the merits.

The Court determined that, since defendants can recover fees on a plaintiff's frivolous, unreasonable or groundless claim, it logically followed that Congress intended a defendant to be able to recover fees in such cases regardless of whether the case was resolved on the merits.

The Court applied the reasoning behind its 1983 decision in Christiansburg Garment Co. v. EEOC (1983) 434 U.S. 412, which discussed the deterrent effect of having a fee-shifting provision. In Christiansburg, the defendant requested attorney's fees after the District Court rejected the plaintiff's claim on a non-merit basis. The Court in CRST noted that in Christiansburg the Court had not mentioned that the disposition was based on a non-merit reason. This, the Court stated, suggested that the inquiry about entitlement to fees had ended.

The Court explained that the fact a case is dismissed on a non-merit basis does not mean it was not frivolous, unreasonable or groundless. In fact, a claim can be frivolous, unreasonable or groundless, but still dismissed because of a non-merit reason, such as a bar by sovereign immunity.

Note:

This case clarifies that there is no requirement a case be resolved on the merits in order for a defendant to be able to recover fees. For example, if a defendant wins a lawsuit on a basis other than its merits, such as dismissal because of a failure to comply with pre-requisites to suit, the defendant could still obtain fees. However, the requirement that the case be frivolous, unreasonable or groundless still applies. That will require a showing by defendant, so defendants should not assume they will recover fees just because a case is dismissed.

CRST Van Expedited, Inc. v. E.E.O.C. (2016) 136 S.Ct. 1642.