In an 82-page opinion issued on remand from the Supreme Court and Eighth Circuit, a federal district court in Iowa engaged in an individualized inquiry as directed by the appeals court, and found that most of the EEOC’s sexual harassment claims on behalf of 78 claimants were frivolous, unreasonable, or groundless. It also concluded that the dismissal of 67 other claims due to the agency’s failure to satisfy pre-suit statutory duties constituted a “material alteration” of the parties’ legal relationship that also justified an award of attorneys’ fees. After reducing the award for certain non-frivolous claims brought on behalf of nine individuals, the court awarded the employer $1,860,127.36 in attorneys’ fees and costs (EEOC v. CRST Van Expedited, Inc., September 22, 2017, Reade, L.).
In 2007, the EEOC filed a sweeping Title VII suit against trucking company CRST, after a female driver alleged that two male trainers sexually harassed her on an over-the-road training trip. Four other women had also filed charges against CRST, and the agency eventually found reasonable cause to believe CRST subjected a class of prospective employees to sexual harassment. Suing under Section 706, the agency claimed that CRST was responsible for severe or pervasive sexual harassment in its new-driver training program, and that it subjected approximately 270 similarly situated female employees to a hostile work environment.
CRST prevails in district court. In a series of rulings, the district court barred the EEOC from seeking relief for all but 67 women. Grounds for the rulings included: discovery sanctions; the statute of limitations; judicial estoppel; CRST’s lack of knowledge of harassment; insufficient evidence of severe or pervasive harassment; failure to report harassment; and the EEOC’s failure to investigate, issue a reasonable cause determination, and conciliate claims for some putative class members. The EEOC also failed to establish a pattern or practice of tolerating sexual harassment. Dismissing the suit, the district court held that CRST was the prevailing party. Also finding that the EEOC’s failure to satisfy its pre-suit obligations as to the final 67 women was unreasonable, it awarded the company over $4,694,442 in attorneys’ fees and costs.
Prior appeals. On appeal, the Eighth Circuit reversed only the dismissal of claims on behalf of two women and vacated the attorneys’ fee award, finding that CRST was no longer a prevailing party because the EEOC had live claims. On remand, the agency settled one claim and withdrew the other. CRST again sought attorneys’ fees, and was again awarded over $4 million. Reversing, the Eighth Circuit held that a Title VII defendant can be a prevailing party only through a ruling on the merits, and because the agency’s pre-suit requirements were not elements of a Title VII claim, dismissal of the claims concerning 67 women due to the EEOC’s failure to investigate or conciliate was not “on the merits.” The appeals court also reversed the fee award because the court failed to make individualized findings in granting summary judgment against claims for 78 other women. The case was remanded, with the Eighth Circuit directing the lower court to make the 78 individualized findings and barring it from awarding fees based on the other 67 claims.
Supreme Court and “material alteration” of legal relationship. Granting cert, the Supreme Court held in 2016 that a favorable judgment on the merits was not required for a defendant to be the “prevailing party” for purposes of attorneys’ fees. It clarified that the inquiry is whether there was a “material alteration” of the parties’ legal relationship, marked by “judicial imprimatur.” “Common sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits,” said the Court. Parties come to court with different objectives and a defendant has fulfilled its primary objective when a plaintiff’s challenge is rebuffed, regardless of the reason. The Court did not address the EEOC’s argument that a defendant must obtain a preclusive judgment to be a “prevailing party,” leaving that for the courts below.
Agency waived preclusion argument. Again before the district court, CRST argued that by not raising it earlier, the EEOC waived its argument that a party must obtain a preclusive judgment to be a “prevailing party” for purposes of attorneys’ fees. The court agreed. Under Eighth Circuit precedent, if the EEOC “could have” raised its preclusion argument in a prior appeal, the court need not consider it now, absent “exceptional circumstances” that were not present here. The court rejected the EEOC’s assertion that its preclusion argument was necessarily implied by its argument that CRST had not obtained a ruling on the merits as to the 67 claims at issue. Not every preclusive judgment will be based on the merits of a given case, noted the court.
“Preclusive” judgment not necessary. That said, the court considered the EEOC’s preclusion argument anyway, and held that a preclusive judgment is not necessary to confer prevailing party status for purposes of attorneys’ fees. “A party can still enjoy a material alteration in the legal relationship between itself and its opponent even without obtaining a preclusive judgment,” noted the court, citing a recent Ninth Circuit case in which the appeals court held that, under the Supreme Court’s standard, “[p]rocedural remedies can constitute a material alteration in the parties’ legal relationship.” The court here also explained that the mere fact that relief does not prevent an opposing party from refiling its case, or that the relief does not entirely inure to the prevailing party’s benefit, does not mean that the parties’ legal relationship is unaltered. A case-by-case analysis must be done to decide if there was a judicially sanctioned material alteration.
There was a material alteration. The court next considered whether the dismissal of 67 claims due to the EEOC’s failure to satisfy pre-suit duties was a judicially-sanctioned material alteration in the parties’ legal relationship. Finding that it was, the court noted the claims were dismissed by court order, marking them with “judicial imprimatur.” Also, the EEOC “wholly abandoned its duties of investigation and conciliation” as to the 67 claims, robbing CRST of the chance to voluntarily comply with Title VII and forcing it to pay for a defense. Under the court’s rulings, the EEOC had to try to conciliate with CRST to re-file, which it would not otherwise have done. Thus, there was a judicially sanctioned material alteration and CRST was a prevailing party.
Attorneys’ fees stand. The court refused to revisit the decision to award CRST fees on the 67 claims: “The EEOC’s failure to conciliate and investigate the sixty-seven claims at issue caused the resulting claims in the instant action to be frivolous, unreasonable and/or groundless under Christiansburg. As the court has repeatedly found throughout these proceedings, the EEOC’s practice of presenting a moving target of claimants was an unreasonable litigation tactic, the direct result of which was these claims. The fees associated with the sixty-seven claims for which the EEOC abdicated its statutory presuit obligations stand.”
Individualized findings on 78 claims. The court next addressed the Eighth Circuit’s criticism that, concerning 78 other individuals, the court failed to “make particularized findings of frivolousness, unreasonableness, or groundlessness as to each individual claim upon which it granted summary judgment on the merits to CRST.” Here, noted the court, CRST “exhaustively walks through each” claim, detailing why it was frivolous, unreasonable, or groundless, while the EEOC did not break down each individual claim, instead making broader arguments. For its part, the court addressed the individual claims in five groups, depending on the basis for finding them “frivolous, unreasonable, or groundless.” Ultimately, fees for all but seven claims, and portions of two claims, were preserved from the court’s original fee award.
With respect to the first group, the court found that the alleged conduct occurred outside of the statute of limitations. It noted that the EEOC did not challenge the dates, instead arguing that these weren’t merits decisions—this argument failed under the Supreme Court’s ruling. The second group were those whom the EEOC conceded did not suffer severe or pervasive harassment. The agency tried to piggyback their claims on the purported pattern-or-practice claim, but the court had already found that claim frivolous because of the EEOC’s failure to properly plead it.
In the third group were women with respect to whom CRST received no notice or opportunity to remedy harassment. They admitted knowing how to report harassment but not having done so, and because there was no evidence of an alternate means for CRST to learn of harassment, the claims failed. The court rejected the agency’s blanket assertion that CRST should have known these claimants were suffering from sexual harassment because of various other reports.
The court was also mindful of the context in which the EEOC brought a majority of the claims—facing a court-imposed deadline for identifying individual claimants it “piled on claim after claim in a last-ditch attempt to inject as many claimants into the litigation as possible.” Indeed, over half of the 78 claims now at issue were added on the deadline date.
The final two groups of individuals for whom the court performed individualized assessments included those with respect to whom CRST took appropriate action upon learning of the alleged harassment, and those for whom the EEOC failed to make a prima facie case showing that the alleged harassment was severe or pervasive. The court again provided details for each claim, in table format, indicating whether or not it was sufficiently severe or pervasive so as support claims that were not frivolous, unreasonable, or groundless.
Reasonable fees. Having found that CRST was entitled to attorneys’ fees, the court determined a reasonable award under the Supreme Court’s ruling in Fox v. Vice. It noted that the litigation was performed in such a manner as to make it impossible to identify fees incurred for each individual claim. However, because the court found that the EEOC’s claims on behalf of seven individuals and portions of the claims for two others were not frivolous or unreasonable, it excluded those. The final award of attorneys’ fees and costs totaled $1,860,127.36.
Supplemental fees denied. In a separate order issued the same day, the court denied, as untimely, CRST’s motion for $975,439 in attorneys’ fees for work performed in this case following the court’s prior order awarding fees, including fees for briefs and arguments before the Eighth Circuit. The motion was filed more than 120 days after the latest final judgment for which it was requesting fees. That ran afoul of Rule 54, and the court found the delay unreasonable considering CRST could easily have moved for an extension of the deadline.
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