Eighth Circuit Reverses $4.5 Million Sanction Against EEOC

Two years ago, Judge Linda Reade of the U.S. District Court for the Northern District of Iowa made headlines when she dismissed an EEOC lawsuit on behalf of 270 current and former female long haul drivers of Cedar Rapids based CRST Van Expedited.   What was notable about the decision was not so much the dismissal itself as the order that EEOC pay $4.5 million of the Defendant's attorneys fees.   (See our post about the decision here).

The blockbuster sanction against EEOC ended with a whimper last week, when a three judge panel of the Eighth Circuit reversed the attorney fee award.   

While the attorney fee reversal is no doubt a significant blow to the Defendant, CRST actually prevailed on most aspects of the appeal.   The attorney fee award was reversed because the Court of Appeals also ruled Judge Reade should not have granted summary judgment with respect to claims of two Plaintiffs, and thus was no longer a "prevailing" defendant.  However, the grant of summary judgment was affirmed on the dismissals of 268 other purported plaintiffs. 

Other than the attorney fee issue, there are two important takeaways from the Circuit Court’s opinion.   First, the Court of Appeals held the claims of 67 plaintiffs were properly dismissed because EEOC did not investigate their claims or provide CRST the opportunity to conciliate before filing suit.   The Eighth Circuit agreed with Judge Reade that Title VII does not allow EEOC to use the discovery process in a lawsuit to fish for new complainants who had never filed an administrative charge. Unless the employer is given notice of the identity of claimants and provided the opportunity to conciliate with respect to those particular claimants during the administrative phase of the process, no lawsuit will be permitted.  

Second, the court affirmed Judge Reade’s holding that the claims of three plaintiffs were barred because they failed to disclose the existence of their sexual harassment claim when they filed for bankruptcy protection. The Court relied upon the doctrine of judicial estoppel, which holds that judicial acceptance of a party’s position in one proceeding bars that party from taking an inconsistent position in another proceeding. In short, by failing to disclose the existence of the sexual harassment claim in the bankruptcy petition, the plaintiffs could not then claim in another court they had a such claim.  The panel did not, however, extend the bar of judicial estoppel to claims the EEOC was pursuing in its own name, even if based upon conduct of the individual plaintiffs who were subject to judicial estoppel. 

This case is not yet over. The two plaintiffs whose cases were reinstated will now have the opportunity to prove their claims in court.   The decision must still be seen as a victory for CRST, however, because the scope of the case is much more manageable than it was before. 

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