July 19, 2016 Articles

What Does "Prevailing Party" for Title VII Defendants Mean?

The Supreme Court finally clarifies in a unanimous decision

by William M. Dunham

One of the few bright spots for an employer defending against a frivolous discrimination claim is the potential for recovering attorney fees. Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination, authorizes an award of attorney fees to the “prevailing party” in certain circumstances. While the U.S. Supreme Court has spelled out what it takes for a Title VII plaintiff to “prevail,” it had never “set forth in detail how courts should determine whether a defendant has prevailed.” Now, in a unanimous decision, the Court has done that: A defendant does not need to win on the merits of a Title VII claim to be considered the prevailing party.

In CRST Van Expedited, Inc. v. Equal Employment Opportunity Commission (U.S. May 19, 2016), a female trainee at a trucking company claimed she had been sexually harassed by veteran drivers during a 28-day over-the-road training trip. She filed a charge with the Equal Employment Opportunity Commission (EEOC), which investigated and found reasonable cause to believe that the company had subjected the trainee and “a class of employees and prospective employees to sexual harassment” in violation of Title VII. The EEOC offered to conciliate—as required by Title VII—prior to filing suit, but the parties were unable to reach an agreement. Taking the position that conciliation had failed, the EEOC then sued the company, seeking relief on behalf of all allegedly aggrieved employees and ultimately identifying over 250 women.

Bit by bit, the district court dismissed the EEOC’s claims. It ruled that the EEOC had not established that the company engaged in a “pattern or practice” of tolerating sexual harassment, that the claims of nearly 100 women should be dismissed because the EEOC failed to present them for deposition, and that the claims of others failed due to the company’s prompt and effective response to claims of harassment, the lack of severity of the alleged harassment, and the employees’ failure to report harassment in a timely fashion. The district court barred the EEOC from proceeding on behalf of an additional 67 women on the ground that the EEOC had not satisfied its pre-suit obligations under Title VII. The court described the case as “one of those exceptionally rare” instances where the EEOC “wholly abandoned its statutory duties” to investigate and conciliate.

The company then moved for attorney fees. Under Title VII, a prevailing defendant can receive a fee award if the plaintiff’s claim was “frivolous, unreasonable, or groundless,” or if “the plaintiff continued to litigate after it clearly became so.” Turning to the 67 employees for whom the EEOC had conducted no pre-suit investigation or conciliation, the district court found the EEOC’s conduct “unreasonable.” It awarded $4 million in attorney fees to the company.

Several appeals and remands followed. While the Eighth Circuit agreed that the EEOC “did not reasonably investigate the class allegations of sexual harassment during a reasonable investigation of the charge,” it ultimately found that the fee award was improper. Applying its precedent, the court of appeals decided that a ruling on the merits was required for the company to be considered the prevailing party. In doing so, the court distinguished “claim elements” from jurisdictional or non-jurisdictional prerequisites to suit and ruled that a dismissal for the EEOC’s failure to investigate and conciliate—not elements of a Title VII claim—was not a decision on the merits. Thus, to that court, the company was not a prevailing party and was therefore not entitled to attorney fees.

Because that decision conflicted with decisions from the Fourth, Ninth, and Eleventh Circuits, the U.S. Supreme Court resolved the split. Starting with “common sense,” the Court disposed of the notion that a defendant cannot prevail without a ruling on the merits. While a plaintiff files suit in the hope of obtaining affirmative relief from the court, a defendant typically seeks only to have the court dismiss the plaintiff’s claims. The Court explained that this objective is achieved “whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision,” and that there was no evidence in Title VII’s fee provision that Congress intended for defendants to recover only after a win on the merits. “[O]ne purpose of the fee-shifting provision is to deter the bringing of lawsuits without foundation”: lawsuits that are “frivolous, unreasonable, or groundless.” To the Court, that aim is served regardless of “the distinction between merits-based and non-merits-based frivolity.” Accordingly, the Court held that “[n]either the text of the fee-shifting provision nor the policy which underpins it” requires a merits win before a defendant can become the “prevailing party.” Consequently, the trucking company prevailed for purposes of a fee award.

The Court, however, left it to the court of appeals to decide whether the EEOC had truly acted unreasonably in filing suit without investigating or pursuing conciliation. While noting that nine years had passed since the commission filed its complaint, the Court chose not to depart from its usual practice of declining to “adjudicate either legal or predicate factual questions in the first instance.” While CRST Van Expedited is good news for employers, it shows that even a “prevailing” Title VII defendant may face a long and winding road to attorney fees.

Keywords: litigation, class actions, prevailing party, attorney fees

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