EEOC Has to Pay for Unreasonably Instituting Litigation

Posted on April 4, 2014
Posted in Title VII

Title VII includes a fee-shifting provision, allowing district courts discretion to award reasonable attorneys’ fees to a prevailing party. But what if the non-prevailing party is the EEOC? The Fourth Circuit recently affirmed a district court’s award of attorneys’ fees to a prevailing defendant in a case brought by the EEOC where the district court had determined that the EEOC acted unreasonably in initiating litigation. EEOC v. Propak Logistics, Inc., No. 13-1687 (4th Cir. March 25, 2014).

Michael Quintois was a supervisor for Propak Logistics, Inc., a provider of commercial warehousing, transportation, packaging and shipping services. Quintois worked at Propak’s Shelby, North Carolina facility. In January 2003, Quintois filed an EEOC charge asserting that Propak terminated his employment based upon his “American” national origin after he complained that the company hired only Hispanic workers for certain supervisory positions. The investigation conducted by the EEOC ended up lasting six years and involved significant periods of delay and inactivity. By way of example, Propak responded to the charge in May 2003, but the EEOC did not interview Quintois regarding Propak’s response until May 2004. The EEOC also failed to interview the manager responsible for hiring decisions at the relevant Propak facility until May 2004. Apparently, the EEOC designated the matter as a “class case” in September of 2004, but Propak did not receive notice of this until four years later.

According to the court, in 2004 and 2005, the EEOC conducted two witness interviews, but did little other investigation. EEOC had no contact with Propak between June 2005 and June 2007. Following Quintois’ request for a right to sue, the EEOC issued it and Quintois filed suit in March 2008, however the suit was dismissed about four months later upon agreement of the parties. In September of 2008, the EEOC issued a determination letter, stating that Propak had violated Title VII by failing to hire a class of non-Hispanic job applicants because of their race or national origin. The EEOC invited Propak to conciliate the matter and some of the proposals for conciliation involved Propak offering certain employment opportunities and training and posting notices at its facilities in North Carolina and South Carolina. However, by this time, Propak had closed all of its facilities in these two states for other reasons and so could not adopt these remedial measures. Despite all of these issues, the EEOC initiated a lawsuit against Propak in August 2009; six and a half years after the charge had been initially filed.

The district court granted summary judgment to Propak on the basis of laches, finding that the EEOC’s delay in initiating the lawsuit was unreasonable. The district court found that Propak had suffered prejudice from this delay, including that certain important witnesses were no longer employed by Propak and locating them would be difficult, if not impossible, and that their memories would have suffered and because Propak had destroyed personnel records as a matter of routine three years after employees left employment (and had not known about the EEOC’s class designation, although this was an issue in dispute). The district court granted Propak’s motion for attorneys’ fees and awarded it almost the entire amount sought: $189,113.50, finding both that the EEOC had acted unreasonably in filing the complaint and in continuing the litigation in light of the developing record. The EEOC appealed on a number of grounds, including that it would be unjust to allow an attorneys’ fee award incurred in asserting a laches defense and that the district court had impermissibly relied on its laches determination in awarding attorneys’ fees. The Fourth Circuit disagreed and affirmed the ruling of the district court.

The Fourth Circuit found that the district court’s award of attorneys’ fees was not based on its summary judgment ruling related to laches. Instead, the court explained, “[a]lthough the court referenced its previous findings of delay and prejudice from the summary judgment holding, and the two decisions set forth many overlapping facts, the two holdings were based on different principles of law.” Propak, p. 13. Unlike the decision regarding laches which was based on the EEOC’s unjustified delay in bringing the lawsuit and the resulting prejudice suffered by Propak, the attorneys’ fee award was based “chiefly on the basis that the EEOC’s lawsuit effectively was moot at its inception.” Id., p. 14. The Fourth Circuit ruled that the district court had not abused its discretion in ruling that the EEOC had acted unreasonably in initiating this litigation. Id., p. 18.

Employers have often felt frustrated by what they perceive to be the very slow pace of the EEOC in concluding investigations. This case demonstrates that in the extreme case, the EEOC may have to suffer the consequences of such severe delay if a party can demonstrate that initiating the litigation at that point was unreasonable.

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