Employers involved in litigation under Title VII and related federal civil rights laws understand that a prevailing plaintiff is entitled to collect his or her attorneys’ fees. These employers may not be aware that in more limited circumstances, a prevailing employer can also recover its fees if the claims brought against it are frivolous, unreasonable or without foundation. Last week, the Fourth Circuit Court of Appeals (which includes North Carolina and South Carolina) affirmed the awarding of attorneys’ fees to a prevailing employer sued by the EEOC in a class action claim.

 

In EEOC v. Propack Logistics, Inc., one of the defendant’s employees filed an EEOC charge in 2003 alleging that he was terminated in favor of Hispanic employees. The EEOC investigation went on for five and one-half years, including periods of inactivity lasting years at a time. The agency eventually found cause to believe the employer had engaged in national origin and race discrimination, and in 2009 filed suit on behalf of an unidentified class of non-Hispanic employees. The employer sought to dismiss the claim based on unreasonable delay, and the district court eventually granted summary judgment on this basis. The court also awarded the employer almost $200,000 in attorneys’ fees, concluding that the lawsuit brought by the EEOC was unreasonable.

 

The Fourth Circuit affirmed this decision, concluding that the six and one-half years between the filing of the initial EEOC charge and the lawsuit imposed an unreasonable delay that unfairly prejudiced the employer. The court first rejected the EEOC’s argument that unreasonable delay or “laches” cannot be used as a defense against a government agency. The Fourth Circuit next found that the attorneys’ fee award was justified because the lawsuit was unreasonable. The defendant had closed its facility under scrutiny before the suit was filed, making any injunctive relief impossible. The court also concluded that the EEOC had not told the employer that it was investigating the matter as a potential class action until the lawsuit was filed. This means that the employer had long since disposed on any records that would allow identification of class members, making any monetary relief impossible.

Given the absence of any possible recovery against the employer, combined with the unreasonable delay in bringing suit, the Fourth Circuit agreed that the lawsuit was unreasonable, and that the defendant was entitled to its attorneys’ fees from the EEOC. Courts are hesitant to award attorneys’ fees to prevailing employers, and are even less inclined to do so when the EEOC is the plaintiff. Such courts often note the agency’s limited resources and large case load as the basis for accepting delays that would not be tolerated from private litigants. However, even hesitant federal courts can be convinced to dismiss claims and to sanction the government where, as in this case, the delays are so unreasonable as to defy legitimate explanation.