Workplace Labor Update - Court Slams EEOC For Frivolous Case– July 1994

In a sharp rebuff to the EEOC, the federal appellate court with jurisdiction over Maryland, Virginia, and other mid-Atlantic states has affirmed an award of attorneys' fees of over $200,000 against the agency. The case, EEOC v. Clay Printing Company, No. 93-1065 (4th Cir. 1994), arose out of an unsuccessful suit filed by the EEOC under the Age Discrimination Act. The opinion is important as a guidepost for judging the merits of bias cases when private sector defendants seek fees and expenses from the government, and may reign in EEOC aggressiveness in borderline cases. The EEOC sued Clay Printing, alleging discrimination on the basis of age in twenty-three individual cases. After successfully having all claims dismissed before trial, the Company sought to recover its attorneys' fees under the Equal Access to Justice Act. This federal law was enacted to punish the government for the use of its "vast resources in baseless litigation" against private citizens. It permits private parties to recover fees and expenses when the government's case is not "substantially justified." Although the EEOC investigated the Clay case for two and a half years before filing suit, and then the parties conducted ten months of discovery after the suit was filed, the District Court characterized the EEOC's claims as, "to say the least, simply implausible." On appeal the agency fared no better, with the court finding that the EEOC had attempted to put its case together out of "little more than thin air." Against this background, the District Court awarded Clay Printing its fees and costs under the EAJA. The EEOC's appeal of the fee award alleged that the District Court's use of the EAJA's "substantial justification" standard was error, and that the lower court had not gotten the facts right. The Fourth Circuit rejected both arguments. Rejecting the attempt to "spin" the facts, the appellate court held that the case could be disposed of solely by the "objective indicia" of the EEOC's unreasonableness. The EEOC had failed to convince the District Court or the Fourth Circuit of the merits of any of its twenty-three claims -- even when all it had to do to avoid summary judgment was to produce a "minimal" factual basis for its suits. The Court also noted the "woeful" evidentiary basis for the EEOC's case. In short, the suit failed "quickly and completely." The dissent of a judge from the EEOC's losing appeal was possible evidence of merit, but did not provide enough of a basis to overturn the lower court's fee award.