EEOC Year-End Countdown

Victory At Last: Fourth Circuit Orders EEOC To Pay Up On Hefty Attorneys’ Fees Award

Posted in EEOC Litigation

By Christopher DeGroff, Gerald L. Maatman, Jr., and Lily M. Strumwasser

This week the Fourth Circuit put its foot down on a decision almost eleven years in the making, ordering the government to pay Propack Logistics $189,113.50 in attorneys’ fees.  This welcome news brings the EEOC’s long battle in EEOC v. Propak Logistics Inc., Case No. 13-CV-1687 (4th Cir. 2014) to an end. 

After the EEOC took a stunning eight years to investigate a charge of discrimination, the Commission finally filed suit in 2009, which the U.S. District Court for the Western District of North Carolina subsequently dismissed in August 2012.  Ever since, the EEOC and Propak have battled over attorneys’ fees and costs.  After all is said and done, Propak came out on top yet again:  defeating both the EEOC’s discrimination claims and securing hefty attorneys’ fees.

Background

We first reported on this case here in 2012.  By way of background, in EEOC v. Propak Logistics, Inc., Case No. 09-CV-311 (W.D.N.C. Aug. 7, 2012), the EEOC claimed Propak refused to hire non-Hispanic applicants and employees for non-management positions at a Wal-Mart distribution center.  Before the lawsuit was filed, and beginning in 2003, the EEOC investigated a discrimination charge from an applicant.   The investigation included an initial interview with the Charging Party in August 2003, an interview of Propak’s witness in August 2003, several requests for information from Propak from May 2003 to September 2008, interviews with Propak’s management in April 2004, interviews of potential class members in May and June 2006, and subpoenas issued by the EEOC to third-party entities in late 2007.  Id. at 12-13.

Nearly five years after the initial charge was filed, the EEOC issued a right to sue letter to the Charging Party in February 2008.  Curiously, the letter was issued before the EEOC completed its the investigation into the Charging Party’s allegations.  This is rare because as a result, the EEOC made no finding as to the allegations contained in the Charging Party’s Charge of Discrimination at the time it issued the right to sue letter.  Id. at 7.  The Charging Party later filed suit, and the Court dismissed his claims.  Shortly thereafter, the EEOC concluded its investigation and issued a letter of determination finding reasonable cause of discrimination, and “conciliation failure” as declared by the Commission. The EEOC then filed its lawsuit in August 2009 — almost a full year after it declared conciliation failure, and seven years after the Charging Party filed a charge of discrimination. Id.

Propack filed a motion for summary judgment relying on the defense of laches.  To prevail on the equitable defense of laches, the Court reasoned that Propak was required to prove:  (1) lack of diligence by the EEOC, and (2) that Propak suffered undue prejudice as a result.  Id. at 16.  The U.S. District Court for the Western District of North Carolina granted the motion. The Court found that the EEOC dealt Propak “a double-fisted blow” and reasoned that the Commission’s delay in investigating the alleged discrimination was unreasonable.  The Court later granted Propak’s request for attorneys’ fees and ordered the EEOC to pay Propak $189,113.50 in fees and $61.20 in costs.  The Court’s decision reiterated its position that the EEOC was unreasonable in filing a case after an eight-year investigation.

The Fourth Circuit’s Decision

The EEOC appealed the District Court’s grant of attorneys’ fees and costs claiming that the District Court abused its discretion in reaching its decision.  The EEOC argued that it had a reasonable basis for believing it could defeat Propak’s defense, and that it had valid support for its position that the defense of laches did not bar the EEOC from filing is lawsuit.  Case No. 13-CV-1687 (4th Cir. 2014) at 9-10.  Thus, the EEOC claimed that it should not be required to pay Propak $189,113.50 in attorneys’ fees.

The EEOC struck out again when the Fourth Circuit concluded that the District Court did not abuse its discretion in holding that the EEOC acted unreasonably in initiating the litigation.  The Fourth Circuit explained that it “disagree[s] with the EEOC’s argument that the district court engaged in ‘hindsight logic’ in explaining its award of attorneys’ fees.”  Id. at 13.  The Fourth Circuit explained that the record lacks any description of the substance of the EEOC’s alleged interviews with potential class members, or of any other interviews that may have been conducted to identify the class of purported victims.  Id. at 16.  The record also failed to establish that any of the people who received contact letters from the EEOC fell within the EEOC’s definition of the target class.  Id. at 17.  For these reasons, the Fourth Circuit did not have a “definite and firm” conviction that the District Court mistakenly awarded Propak attorneys’ fees.  Accordingly, the three-judge panel affirmed the District Court’s judgment and grant of fees to Propak.

Implications For Employers

Employers across the nation can relate to the pains of dealing with such long investigations spearheaded by the EEOC.  In this case, the long hard fight was worth it for Propak – who eventually prevailed against the Commission.  Through challenging the EEOC’s investigative techniques, Propak also put a spotlight back on the EEOC’s often misguided tactics in pursuing systemic investigations.  The Fourth Circuit’s ruling gives employers one more piece of ammunition to use against the EEOC when it drags its feet for years during investigations – an all-to-common occurrence.