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EEOC ordered to pick up employer’s tab

eeoc_seal copy crAn employer won attorney’s fees from the Equal Employment Opportunity Commission when the agency’s investigation dragged on for six years before it filed its losing lawsuit.

Before the agency filed suit in 2009, the employer had closed its facilities in North and South Carolina, making it difficult for the employer to find witnesses or class members.

A North Carolina federal court said the agency should have realized during its administrative investigation that it would not be able to win either injunctive or monetary relief, and it was unreasonable to file suit against Propak Logistics Inc., a commercial warehouse and transportation company. On March 25, the federal appeals court upheld an award of $189,113.50 for Propak’s lawyers.

The agency cited its over-burdened staff as one reason for the drawn-out case, but that was no reason it should be graded on a curve, said one appellate judge in EEOC v. Propak Logistics Inc. (VLW 014-2-062).

In 2003, Propak employee Michael Quintois filed an EEOC charge alleging he had been terminated because of his “American” national origin after he complained that the company hired only Hispanic workers for certain supervisory positions.

The agency notified Propak, launching an investigation that stopped and started over a period of nearly six years. Although the agency designated the complaint as a “class case” in 2004, it failed to notify Propak of the designation until 2008. Quintois requested a “right to sue” letter and filed his own lawsuit in 2008, which was dismissed four months later by agreement of the parties.

In trying to conciliate the matter in 2008, the agency proposed remedial measures, including requiring Propak to offer certain employment and training opportunities and post certain notices in its facilities in North and South Carolina. By this time, however, Propak had closed all its facilities in those states.

Despite these closures, the EEOC filed suit against Propak in 2009, more than six and one-half years after Quintois filed his discrimination charge. The district court said Propak had suffered prejudice from the agency’s “unreasonable delay” in initiating suit, because important witnesses were no longer available or would have “faded memories,” and the company routinely destroyed personnel records three years after an employee left.

The district court granted summary judgment to the company and awarded Propak nearly all of the $192,602 of its requested fees and costs. The court faulted the agency for pursuing the case after it knew Propak’s facilities were closed and it could not identify members of the alleged class of victims.

On appeal by the EEOC, the 4th U.S. Circuit Court of Appeals said the agency had waived its new-on-appeal claim that federal courts may not apply the equitable defense of laches in a federal agency’s lawsuit.

It’s tough for an employer to win fees against the EEOC, because it faces a “heightened standard” in a Title VII action, according to the 4th Circuit opinion by Judge Barbara M. Keenan. The employer has to show the agency’s suit was “frivolous, unreasonable or without foundation.”

The trial judge’s summary judgment decision “rested primarily on the unavailability of key witnesses and documents that Propak needed to support its defense,” Keenan wrote. And the judge awarded fees “chiefly on the basis that the EEOC’s lawsuit effectively was moot at its inception.”

There were some “overlapping” facts between the trial judge’s decision to award summary judgment because of prejudice to Propak and its fee award based on unreasonableness, the appeals panel acknowledged. But the panel drew a line between the two rulings and did not consider the EEOC’s assertions that it could overcome any prejudice to Propak due to the delay.

The trial judge did not abuse its discretion in holding “that the EEOC acted unreasonably in initiating this litigation,” Keenan concluded.

Judge J. Harvie Wilkinson III weighed in with an eight-page concurrence that refused to cut the agency slack for having insufficient staff to deal with its regulatory burdens.

Most private parties “would not dream of trying to excuse the excessive delays here with the explanation that they were otherwise burdened or occupied,” he said. No company “deserves to have its affairs tied up by a government agency for this period of time.”

Fee awards for employers are rare but not unheard of. Last October, the 6th U.S. Circuit Court of Appeals upheld $750,000 in lawyer fees and costs for the EEOC’s suit alleging Peoplemark Inc., a temporary staffing agency, had a blanket policy of denying employment opportunities to persons with felony records, and that companywide policy had a disparate impact on African-Americans. There was no such companywide policy, the court said.

Last August, an Iowa federal court ordered the agency to pay a whopping $4.6 million in fees and costs in its lawsuit alleging sexual harassment and hostile environment at a trucking company, CRST Van Expedited Inc. The case is pending in the 8th U.S. Circuit Court of Appeals.

VLW 014-2-062

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