Title VII of the Civil Rights Act of 1964 (Title VII) authorizes the award of attorneys’ fees to a party who prevails in a discrimination or retaliation claim brought under that statute. Although this fee shifting provision applies to both employee plaintiffs and employer defendants, courts routinely award fees to prevailing plaintiffs but have interpreted this provision to allow prevailing defendants to recover fees only in the rare case where the plaintiff’s claim was frivolous or unreasonable. Last week, in a helpful decision for employers, the U.S. Supreme Court clarified that a defendant-employer does not necessarily need to prevail “on the merits” of a discrimination lawsuit to be entitled to fees.

In CRST Van Expedited, Inc. v. EEOC, the Court was asked whether a defendant needed to win a favorable ruling on the merits of the claim in order to be considered a prevailing party. In a unanimous opinion, the Court said no, reversing the decision of the Eighth Circuit Court of Appeals.

The Court’s decision is the latest skirmish in a long-running battle between the EEOC and CRST, a trucking company. In 2005 a female truck driver for CRST, Monika Starke, filed an EEOC charge alleging sexual harassment. In 2007 the EEOC filed suit on behalf of Starke and other similarly-situated employees.

During discovery the EEOC claimed that over 250 women had been subjected to unlawful harassment. However, the claims of all but 67 of the women were dismissed from the lawsuit during discovery for various reasons. The district court then dismissed the claims of the remaining 67 women and, because the EEOC had failed to investigate their claims before filing suit, found the EEOC’s actions had been unreasonable. The district court also awarded CSRT more than $4 million in attorneys’ fees, as a prevailing party. The Eighth Circuit affirmed the dismissal of the EEOC’s claims on behalf of the 67 women, but reversed the award of attorneys’ fees because it reinstated the claims of Starke and one other employee.

After Starke’s claim was settled and the claim of the other employee dismissed, the district court again awarded CRST attorneys’ fees. On appeal, that Eighth Circuit again reversed, finding that Title VII only allows the recovery of fees if a defendant prevails on the merits of the underlying lawsuit. The Eighth Circuit held that the district court’s dismissal based on the EEOC’s failure to satisfy its pre-suit requirements was not a victory “on the merits,” but rather, was on procedural grounds, and the district court had not definitively ruled that no unlawful discrimination or harassment had occurred.

In reversing the decision of the Eighth Circuit, the Court reasoned that neither the text of Title VII nor Congress’ goal in allowing defendants to recover fees in limited circumstances supported the conclusion that a defendant must “win on the merits” to recover fees. The text of the statute allows an award of fees to a “prevailing party,” regardless of the reason the party prevailed. Also, Congressional policy, the Court noted, was to deter frivolous Title VII lawsuits which a defendant has won, regardless of the reason for the victory. Imposing an “on the merits” requirement, the Court found, would “undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available,” such as those defendants who win on procedural grounds. The Court also noted that it was “common sense” that a defendant could win even if it did not win on the merits, because one way or another, the “plaintiff’s challenge is rebuffed.”

The Court refused to rule on the ultimate issue of whether CRST was in fact entitled to fees, and the appropriate amount of any fees. Instead, the court remanded the case to the Eighth Circuit to determine whether the EEOC’s position was unreasonable. The Court’s decision to punt on this ultimate issue appears to be in line with its recent pattern of “minimalist” rulings in light of the vacancy created by Justice Scalia’s death. Notably, however, the decision was unanimous in favor of CRST.

This decision is certainly a victory for employers in that the Court has made clear that a defendant may be entitled to recover attorneys’ fees even absent a victory on the merits if the EEOC does not adequately investigate or conciliate before filing suit. As we previously reported, it was unclear whether the Court’s 2015 ruling in EEOC v. Mach Mining would provide the needed “stick” for the EEOC to truly change its behavior during the conciliation process and actually provide information that is helpful for employers to assess whether engage in the process or risk expensive, protracted litigation. Although this remains an open question, the CRST decision will hopefully give the EEOC greater incentive to make its pre-suit investigation and conciliation efforts thorough and meaningful.