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EEOC's aggressive litigation strategy may be curbed by recent ruling

EEOC's aggressive litigation strategy may be curbed by recent ruling

Employers can take heart from a recent appeals court ruling that criticizes the U.S. Equal Employment Opportunity Commission's aggressive litigation strategy over employment practices.

Despite the Oct. 7 ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Equal Employment Opportunity Commission v. Peoplemark Inc., employers should not necessarily expect any significant change in the agency's litigation strategy, at least in the short term, experts say.

The ruling followed several comparable rulings against the EEOC.

The appeals court panel decided in its 2-1 ruling that Memphis, Tenn.-based Peoplemark, a temporary employment agency, was entitled to more than $750,000 in attorneys and expert fees in connection with a lawsuit that unjustifiably charged the firm with having a companywide policy of rejecting job applicants who are felons, in violation of Title VII of the Civil Rights Act of 1964.

The ruling said that in the course of the EEOC's investigation, a company official's initial statement that it had such a companywide policy was untrue. Once the EEOC learned this, it should have reassessed its claim.

“From that point forward, it was unreasonable to continue to litigate the commission's pleaded claim,” according to the majority opinion, in granting the award.


The EEOC said in a statement it is considering its options with respect to the ruling.

“We will take the ruling into account, but do not plan on any major changes in our litigation strategy. We believe that the cases we file are strong, and it is important that the legal process play out before coming to any (premature) conclusions,” the EEOC said.

“The EEOC has demonstrated now its ability to move forward and ignore the facts and ignore the law,” said Gerald L. Maatman Jr., a partner with law firm Seyfarth Shaw L.L.P. in Chicago.

It is almost “as if, in this case, they put the cart before the horse and went after the big, flashy lawsuit without having substance behind it,” said Rae T. Vann, general counsel to the Washington-based Equal Employment Advisory Council, an employer group that submitted an amicus brief on Peoplemark's behalf that was joined by the U.S. Chamber of Commerce.

It is encouraging that the federal courts are beginning to “take a moment to reflect on what the EEOC is doing in its aggressive” efforts “other than simply deferring to the agency's judgment on these matters,” Ms. Vann said.

“These rulings may help arm employers who feel like they're being strong-armed into settling frivolous claims,” she said.


John B. Lewis, a partner with law firm Baker & Hostetler L.L.P. in Cleveland, said, “The courts are saying, "Wait a minute. You don't have a proper basis for your case,'” and then holding the agency responsible for attorneys and expert fees. “The chickens are coming home to roost in these cases, which is very good news for employers,” Mr. Lewis said.

Robin E. Shea, a partner with law firm Constangy, Brooks & Smith L.L.P. in Winston-Salem, N.C., said that “it's encouraging to employers, or should be, that they're winning some of these cases and not only getting lawsuits thrown out, but actually getting compensated for the time they've spent on litigation.”

“I can't imagine this isn't making an impression on the EEOC regardless of what they're saying publicly,” she said.

The ruling suggests to employers that “there may be times when the EEOC may be taking a position that is overly aggressive and the employer will need to push back,” said Mark B. Wiletsky, of counsel at law firm Holland & Hart L.L.P. in Boulder, Colo.

Brian D. Hall, a partner with law firm Porter Wright Morris & Arthur L.L.P. in Columbus, Ohio, said if employers are “clearly on the right side of the line and the EEOC is continuing to aggressively pursue them, then I think they should stand their ground and continue to fight because ... courts are willing to award costs against the EEOC.”

However, Mr. Lewis said, “My suspicion is, short term, (the ruling) probably won't have much of an impact. I think there's a feeling that the EEOC needs to be aggressive. Long term, the hope is they'll moderate” their position.


Diana Hoover, a partner with law firm Hoover Kernell L.L.P. in Dallas, said, “While there may be some light at the end of the tunnel for the employer in terms of getting their fees back, I think that in some of those cases you have to take the risk of going to trial,” and many employers are averse to doing so. “I don't know that this really will be a big weapon for employers,” she said.

Unfortunately, the ruling means that although employers ultimately may win attorneys fees, it “doesn't mean they still won't have to go through years of expensive and very burdensome litigation until they get to that point,” said Ms. Shea, noting that the Peoplemark case went on for six years.

“It would be risky to avoid a reasonable settlement simply because the EEOC has been losing in court recently,” Ms. Vann said. “That's always a risky and dangerous proposition for any employer that wants to get to the bottom of discrimination claims.”

And the best course of action continues to be avoiding such lawsuits in the first place.

“Continue to implement good anti-discrimination policies by quickly and thoroughly investigating and remediating discrimination in the workplace,” said Natasha L. Wilson, a shareholder with law firm Greenberg Traurig L.L.P. in Atlanta.