On February 9, 2010, U.S. District Judge Linda Reade ordered the Equal Employment Opportunity Commission (link courtesy of Ross Runkel) to pay Cedar Rapids based CRST Van Expedited $4.5 million in attorney’s fees and costs it incurred to defend itself against a meritless sexual harassment lawsuit.
The action started in 2005 when a CRST employee filed an EEOC charge alleging sexual harassment. The Agency never completed its investigation, and the employee herself did not pursue an action in court. Nonetheless, in 2007, the EEOC filed suit in the Northern District of Iowa on behalf of the woman and other unspecified female employees. Ultimately, the EEOC identified 270 women it claimed were victims of sexual harassment at the company.
The court dismissed or granted summary judgment to CRST on all but 67 of the women involved, because of a lack of evidence to support the claims. Later, the court dismissed the claims involving the remaining 67 women. The reason for the dismissals: the court found the EEOC conducted no investigation of the circumstances involving the 67 before filing the suit on their behalf, and did not make a finding there was reasonable cause to believe discrimination occurred. The EEOC’s failure to investigate, the court concluded, prejudiced CRST because it denied them the opportunity to conciliate and foreclosed the possibility that some of the claims might be settled before the necessity of defending a federal lawsuit. According to Judge Reade, "the EEOC’s actions in pursuing this lawsuit were unreasonable, contrary to the procedure outlined by Title VII, and imposed an unecessary burden on CRST and the court." She characterized the EEOC’s litigation strategy as "sue first, ask questions later."
Judge Reade’s order was striking not only in the amount of the award but in the fact that it sanctioned a federal agency because of the burden it imposed on a private company to defend itself against claims that did not really exist. Any company that has been the target of an EEOC lawsuit is likely to cheer Judge Reade’s attorney fee award. It seems only fair that the Agency should be subject to the same standards as a private litigant when brining a lawsuit; that is, it should be required to have a good faith belief, based upon a reasonable investigation, that its claims are supported by the facts and law.
Not everyone agrees, however, that the sanction imposed is a good thing. Marcia McCormick at Workplace Prof Blog wonders what alternatives were available to the EEOC. She seems to take the position that the EEOC should have the right to litigate harassment claims of persons who never filed a charge and whose circumstances were never investigated.
Jon Hyman at Ohio Employer’s Law Blog cheers the result, but warns that this sanction could be a mixed blessing for employers. He believes it will cause the EEOC to conduct more in-depth investigations of its claims, which could in the end impose more administrative burdens than is commonly the case now.
A very interesting case that likely is not yet over. The EEOC believes the decision was wrong and intends to appeal.