Over the past several years, the Equal Employment Opportunity Commission has taken a decidedly more aggressive position with regard to litigation against employers accused of discrimination. The EEOC has brought a number of cases based on novel legal theories, or ones that allege systematic discrimination based on limited evidence of such practices. In some circumstances, federal courts have dismissed these complaints, and employers have sought reimbursement by the EEOC of their legal fees incurred in defense of the matter.

Earlier this month, the U.S. Supreme Court agreed to hear an appeal of an employer denied fees after the district court concluded that the agency had failed to conduct a sufficient investigation of its claims. In CRST Van Expedited, Inc. v. EEOC, the agency sued the employer alleging a pattern and practice of harassment and discrimination against female trainees. The district court dismissed the suit because the EEOC had actually investigated circumstances involving only two of the 67 alleged female subjects of the discriminatory behavior.

The district court awarded the employer $4.7 million in legal fees based on its conclusion that the EEOC did not have a reasonable basis for its claims. However, the Eighth Circuit Court of Appeals reversed this decision, holding that federal courts may only award employers fees based on unreasonable conduct of the EEOC in the lawsuit itself. In this case, the employer claimed that the agency failed to fulfill its pre-suit obligations to investigate discrimination charges and to attempt to conciliate findings of discrimination. This decision conflicts with three other federal appellate courts, including the Fourth Circuit, which have held that legal fees may be awarded based on unreasonable or frivolous pre-suit conduct by the EEOC.

The EEOC argues that last year’s Mach Mining decision prohibits federal courts from substantive review of the agency’s investigation efforts, including review in the context of an attorneys’ fee award.  If the Supreme Court rules for the employer, the EEOC may have significantly greater financial incentives to avoid suing employers absent a solid legal and factual basis for the action.