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Fight over legal fees in bias case heads to high court

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The U.S. Supreme Court will consider an “egregious” and “outrageous” set of facts in determining whether the U.S. Equal Employment Opportunity Commission must pay $4.7 million in legal fees that a trucking firm spent defending itself from sexual discrimination charges involving hundreds of workers, in a case where the agency largely did not prevail.

While the EEOC's original case in 2007 accused CRST Van Expedited Inc. of sexual discrimination and a hostile work environment in training 270 women, the suit alleging violation of Title VII of the Civil Rights Act of 1964 ultimately was dismissed and resulted in just one settlement of $50,000.

The question that the Supreme Court agreed to consider earlier this month is whether the EEOC's “total failure to satisfy its presuit investigation, reasonable cause and conciliation obligations can form the basis of an attorney's fee award to the defendant.”

“We do think it's an opportunity for the court to say the EEOC needs to take its presuit obligations seriously. We hope that's the way the court will view the case,” said Paul M. Smith, a partner at Jenner & Block L.L.P. in Washington, whose firm represents Cedar Rapids, Iowa-based CRST.

An EEOC spokeswoman declined comment.

In its brief arguing against Supreme Court review, the EEOC said awarding attorneys fee is not appropriate because there had not been a ruling on the merits of the case.

While a lower court ruled in favor of CRST in ordering the EEOC to pay the $4.7 million in legal fees while dismissing the EEOC's suit, the 8th U.S. Circuit Court of Appeals in St. Louis essentially overturned that decision in December 2014.

Experts note that the 8th Circuit's ruling created a split with rulings by the 4th, 9th and 11th circuits, which already have held that companies can recover attorney fees if they prevail in litigation brought by the EEOC.

“This was a pretty egregious set of facts, and so it may have been the right case” for the Supreme Court to review, said Tina A. Syring, a partner at Barnes & Thornburg L.L.P. in Minneapolis.

Observers pointed out that the court accepted the case following its unanimous ruling earlier this year in Mach Mining L.L.C. v. Equal Employment Opportunity Commission, where it held that the agency's conciliation efforts are subject to judicial review, although the EEOC has “extensive discretion” in the kind and amount of communication it has with an employer.

The court accepted the case for the same reason it decided to hear Mach Mining, “to determine what the EEOC's obligations are before they file lawsuits,” said Robin E. Shea, a partner at Constangy, Brooks, Smith & Prophete L.L.P. in Winston-Salem, North Carolina.

In Mach Mining, “the only thing the EEOC allegedly failed to do was conciliate.” In this case, at least according to CRST, there was no investigation of nearly all of the 270 women allegedly affected, Ms. Shea said.

“The facts here are outrageous” compared with Mach Mining, said Thomas P. Gies, a partner at Crowell & Moring L.L.P. in Washington.

“Its new playbook consistently allows the EEOC to take on one or two plaintiffs and blow a case completely out of proportion, which is precisely what they did in this particular case,” said John Alan Doran, a member of law firm Sherman & Howard L.L.C. in Scottsdale, Arizona, who is not involved in the case.

The Supreme Court may also use this case to revisit its 1978 ruling in Christiansburg Garment Co. v. Equal Employment Opportunity Commission, in which it held that awarding attorney fees to an employer was not justified because the EEOC's lawsuit was not “unreasonable or meritless.”

That ruling “made it very tough to recover attorneys' fees,” said Mr. Doran.

There is a “dynamic” between the idea the EEOC acts in the public interest and should be given latitude in its actions versus the view that it should spend the public's money “in a responsible and reasonable manner,” said Gerald L. Maatman Jr., a partner at Seyfarth Shaw L.L.P. in Chicago. The “two competing values, I suspect, will be seen with different weights by the conservative and liberal justices.”

Several observers expect the nation's high court to overturn the 8th Circuit's ruling on legal fees.

“They don't grant cert to affirm a lower court,” said Mr. Gies.

“CRST's position probably has some appeal just from a fairness standpoint,” said Ms. Shea.