Employer is Not Entitled to Recover Attorney’s Fees When Victorious Against the EEOC

The Equal Access to Justice Act (EAJA) was designed to address the disparity of resources between the government and a private party to a lawsuit. Its mandatory fee provision requires the government to bear the litigation costs of a prevailing defendant, evening out the playing field between small businesses and the federal government. However, in EEOC v. Great Steaks, Inc., 2012 U.S. App.  LEXIS 1430 (4th Cir. 2012), the Fourth Circuit took away this provision for wrongly-accused employers in Title VII cases.

Usually when an employee files with the EEOC, the individual must ultimately pursue the claim. Only in rare circumstances when the EEOC thinks the claim has real merit or affects many employees will the agency take on the case. After successfully defending a sexual harassment lawsuit, Great Steaks, Inc., moved for an award of attorneys’ fees under three federal provisions: Title VII §2000e-5(k); the Equal Access to Justice Act  (EAJA) §2412(d); and 28 U.S.C. §1927.  The court held that none of the provisions applied, most significantly, the EAJA “mandatory” provision, thus taking away a potential weapon for wrongly-accused employers.

The EAJA’s provision applies to cases in which the United States is a party, and requires that the government bear the expense of litigation when it is the losing party in a civil action “unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.” The court rejected Great Steak’s argument that the mandatory fee provision was intended to supplement more limited attorneys’ fee provisions, such as the stringent Title VII provision.

Under Title VII’s provision, the trial court is granted the discretion to shift the defendant’s fees to the plaintiff if the plaintiff’s claims were frivolous, unreasonable, or groundless. However, if the judge allows the case to go to trial, and denies the defendant’s motion to dismiss after the presentation of all evidence, it is highly unlikely that the fee-shifting provision will apply.

The Fourth Circuit declined to reverse the trial court’s denial of Great Steak’s request for attorney’s fees for this reason: if the case went to trial, there must have been enough evidence that the case wasn’t groundless, unreasonable, or frivolous.

Great Steaks also argued for 28 U.S.C. §1927, a punitive provision and requires a showing of bad faith by the opposing party who “so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” The Fourth Circuit found that the EEOC’s case had obvious weaknesses, but that they did not amount to bad faith or vexatious multiplication of proceedings.