It’s the age-old “man bites dog” story. A federal court in the Western District of Michigan recently dismissed a lawsuit brought by the EEOC, but in doing so, ordered the EEOC to pay the employer some $750,000 in attorneys’ fees for having to defend against a frivolous lawsuit. Such awards are not altogether common, but from a purely anecdotal point of view, they do appear to be on the rise. As some litigators within the EEOC appear to be taking much more aggressive litigation positions, apparently relying more and more on litigation, not legislation, to expand the scope of the EEOC’s mandate, this case is hopefully a cautionary tale for certain EEOC litigators who seek to win at any cost, or who shoot first and ask questions later.
The case is EEOC v. Peoplemark, Inc. U.S. Lexis 38696 (3/31/2011). Peoplemark is a staffing agency in Kentucky that the EEOC investigated for some three years. During the course of the investigation, the EEOC issued multiple administrative subpoenas, forcing the staffing agency to turn over almost 20,000 documents. The EEOC then sued Peoplemark in a purported class action lawsuit, claiming that the company had a blanket policy against hiring candidates with criminal convictions. As we all know, the EEOC has maintained for many years that blanket prohibitions against hiring individuals with criminal backgrounds may have a disparate impact on certain minority groups. This case demonstrates that it is one thing for the EEOC to state a position, but quite another thing to actually prove it in a specific case.
After three years of investigating, and over two years of litigating, the EEOC was unable to prove that Peoplemark had a blanket prohibition against hiring individuals with criminal convictions. In fact, the EEOC was unable to unearth evidence that Peoplemark refused to hire any applicants with criminal records, and the EEOC adduced no evidence to prove that a single person suffered discrimination. The EEOC failed to present expert evidence or statistics demonstrating its disparate impact theory, and it ultimately acceded to Peoplemark’s demand to dismiss the case. In short, the EEOC had no case, but it forced Peoplemark to incur substantial attorneys’ fees defending against an investigation and litigation totally devoid of merit. The district court judge saw this case for what it was, and ordered the EEOC to pay Peoplemark a whopping $750,000 in attorneys’ fees.
Of course, this doesn’t mean that the EEOC always pursues frivolous lawsuits. This doesn’t mean that all EEOC litigators fight to win at any cost. This doesn’t even mean that more than a handful of EEOC litigators joust at windmills in meritless cases. However, it does mean that the EEOC needs to appreciate that when its litigators drag an otherwise blameless employer through years of investigation and litigation, they do harm to the employer, the economy, the courts, and our civil justice system as a whole.
I say this Peoplemark case is a cautionary tale for the EEOC. But it is more than that. Maybe it, and other recent cases like it, should alert Congress to the need to re-shuffle the deck when it comes to attorneys’ fees awards under Title VII and similar statutes. The current statutory framework makes it very hard for employers to recover their attorneys’ fees when they win in these cases. This fosters an almost no-risk situation for employees and the EEOC alike, allowing them to pursue lawsuits that are barely colorable or, as in Peoplemark’s case, downright frivolous, because the plaintiffs in such cases have only a small risk of coming out of pocket should the employer actually win the case.
And maybe, just maybe, Congress might see the Peoplemark case and others like it as a reason to reexamine EEOC class action litigation procedures. In recent years, the EEOC has used its “systemic initiative” to bring “class action” lawsuits that do not come close to what attorneys or even people on the street would recognize as a class action. This is so because, in theory, the EEOC is not subject to any of the due process protections afforded to all parties in class actions under Rule 23 of the Federal Rules of Civil Procedure. Regardless of what one might say generally about Rule 23, it establishes ground rules that at least establish some modicum of fairness to both sides in a class action. The Peoplemark case appears to open the door for a robust discussion about this very issue.
So, another man bites another dog. The question is will the EEOC or Congress notice?