Title VII allows federal courts to award attorneys’ fees to the prevailing party in discrimination suits. While plaintiffs typically receive their fees if they win a discrimination or retaliation claim, defendants can also collect attorneys’ fees when the plaintiff’s claims are found to be frivolous, unreasonable or groundless. Last month, the U.S. Supreme Court concluded that this fee-shifting provision applies to defendants in some situations where there is no final verdict in their favor.

CRST Van Expedited, Inc. involved an initial claim of sexual harassment by a female trainee driver. The EEOC determined that the company had received prior harassment complaints, and initiated a class action lawsuit. However, the class identified in litigation went well beyond the scope of the initial EEOC investigation. The district court narrowed the claim, dismissed a number of statutorily barred plaintiffs from the class, and imposed discovery sanctions on the EEOC for failure to respond to the employer’s requests. It eventually dismissed the suit and awarded the employer over $4 million in attorneys’ fees based on its conclusion that the EEOC had acted unreasonably.

The Eighth Circuit Court of Appeals vacated the fee award on the basis that the employer was not a prevailing party as defined under Title VII. That court said that the dismissal resulted from a pleading deficiency on the part of the EEOC, and not due to the employer prevailing on the merits of the claim. Regardless of how unreasonable the EEOC’s actions in the case, the defendant could not collect fees absent prevailing in the lawsuit.

In a unanimous decision, the Supreme Court reversed this decision, finding that a defendant prevails in a discrimination suit when the court resolves the claim in its favor, regardless of the grounds for doing so. Despite this conclusion, the Supreme Court remanded the case to the Eighth Circuit for a determination on the underlying dismissal of the claim. As a result, depending on the lower court’s decision, the defendant may still lose its opportunity to finally collect the fee award.

Although the defendant may not ultimately prevail, this decision provides some disincentive for the EEOC to pursue baseless claims against employers. In recent years, the Commission has become more aggressive in filing suits using novel legal theories, or attempting to prove pattern and practice claims based on scant evidence of such actions. Employers faced with unreasonable conduct on the apart of the EEOC can now assert claims for reimbursement of attorneys’ fees even if they prevail short of a final verdict on the merits of the claims.