Human resource managers know the importance of fully investigating allegations of discrimination and harassment. In Equal Employment Opportunity Commission v. CRST Van Expedited, Inc., 07-CV-95-LRR (N.D. Iowa 2010), an Iowa court made clear that the Equal Employment Opportunity Commission (“EEOC”) also has a responsibility to investigate claims of discrimination and harassment before bringing a lawsuit. The court awarded the employer in the case, CRST Van Expedited, Inc. (“CRST”), more than $4.5 million in attorneys fees and costs after the court concluded that the EEOC had not conducted the necessary pre-filing investigations and findings.

Background:

The case arose from a single charge of sexual harassment filed with the EEOC in 2005 by a female employee of CRST. The EEOC conducted an investigation into the employee’s allegations and issued a finding of probable cause to believe they were true. More than two years later, the EEOC brought a civil lawsuit against CRST on behalf of the female who had previously alleged harassment, as well as a class of unidentified females working at CRST.1 The EEOC did not conduct any investigation into who should be included in the class, or whether those class members had actually experienced harassment. Instead, the EEOC filed the lawsuit and used the litigation discovery process to “investigate” its claims and determine who should be included in the class.

The case expanded into a class action involving 270 current or former female employees of CRST. The court eventually dismissed all but 67 of those plaintiffs from the case. Because the EEOC had not conducted an investigation or issued a probable cause finding with regard to any of the 67 remaining plaintiffs, CRST asked the court to dismiss the lawsuit for failure to follow the required administrative procedures.3 The court agreed with CRST, ultimately dismissing all of the EEOC’s claims in August 2009 because the EEOC had not investigated or issued probable cause findings on the allegations, or attempted to settle or mediate the charges. Equal Employment Opportunity Commission v. CRST Van Expedited, Inc., 2009 WL 2524402 (N.D. Iowa 2009). The court acknowledged that dismissal was a “severe” remedy but stated that it was necessary to discourage a “sue first, ask questions later” litigation strategy by the EEOC.

Analysis:

After the court dismissed the EEOC’s claims, CRST requested that the court order the EEOC to reimburse all of the attorneys’ fees and costs CRST incurred in defending against the lawsuit. CRST brought its request under the provision of Title VII that allows a “prevailing party” to recover attorneys fees and costs in a lawsuit. While the statute technically states that either prevailing party can recover fees and costs, courts have historically found that a defendant company may only recover such funds if it can show that the plaintiff’s claim was “frivolous, unreasonable, or without foundation.” See Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978). As such, CRST had a high burden to show that it was entitled to its attorneys’ fees and costs.

The court agreed with CRST that the EEOC’s actions were “unreasonable, contrary to the procedure outlined by Title VII and imposed an unnecessary burden upon CRST and the court.” The court based its decision on the same grounds on which it had dismissed the EEOC’s claims, namely that the EEOC had failed to investigate the claims and issued a reasonable cause determination prior to bringing the claims, and did not attempt to negotiate with CRST to resolve the claims outside of litigation. The court stated that the award of fees and costs was necessary to “guarantee that Title VII’s procedures are observed in a manner that maximizes the potential for ending discriminatory practices without litigation in federal court.”

The court awarded CRST more than $4.5 million in attorneys fees. The court also granted CRST more than $400,000 in costs CRST incurred in defending against the lawsuit, including costs for messenger and mail expenses, investigators, depositions, and copy costs. While CRST did not receive all of the fees and costs it requested, it was a significant award nonetheless.

What this case means:

This case is a warning sign to plaintiffs’ attorneys that they must thoroughly investigate claims made by plaintiffs before bringing a claim. While the court sanctioned the EEOC more harshly than it would have a private attorney (because the EEOC is a federal agency that regularly practices in this area), the case nonetheless demonstrates that employees’ attorneys can become liable for fees and costs if they do not investigate cases before bringing them. Even in the absence of frivolous or unreasonable claims leading to the award of attorneys fees, employees can be required to pay a defendant’s statutory court costs, which can be in excess of $5,000. In light of this decision, a prevailing employer should consider asking for attorneys’ fees under Title VII. In addition, an employer prevailing on a Title VII claim may also be able to recover attorneys’ fees for frivolous claims under various state statutes and rules of civil procedure.