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EEOC forced to put its money where its mouth is

published in Oklahoma Employment Law Letter | October 1, 2012

By Natalie Ramsey

It’s no secret that in recent years, the Equal Employment Opportunity Commission (EEOC) has taken a more aggressive approach with the charges that come through its doors. It’s now apparent that the agency often presses its lawsuits a bit too far, leading courts to conclude its claims are “frivolous, unreasonable, or without foundation” and to grant large attorneys’ fees awards against it.

In the latest of several recent cases admonishing the EEOC for pursuing frivolous claims, the U.S. 10th Circuit Court of Appeals (whose rulings apply to all Oklahoma employers) affirmed an order slamming the agency for pursuing a meritless claim under the Americans with Disabilities Act (ADA). Specifically, the appellate court upheld the New Mexico district court’s order dismissing the case in favor of TriCore Reference Laboratories and affirmed the $140,571.62 prevailing party attorneys’ fees award. The court didn’t stop there but went on to grant TriCore’s request for additional fees related to the EEOC’s frivolous appeal.

Background

Rhonda Wagoner-Alison worked as a clinical lab assistant II, a position that required a significant amount of standing and walking, making those functions admittedly an essential part of her job. In the summer of 2007, Wagoner-Alison exhausted all her leave entitlement under the Family and Medical Leave Act (FMLA) after undergoing surgery on her left foot and ankle. When she was released to return to work after being granted an extended period of leave, she was restricted to desk work, with walking and standing being limited to just one to two hours per day intermittently. Although it was under no legal obligation to do so, TriCore modified her duties on a trial basis and allowed her to perform desk duties, such as patient registrations, to the exclusion of other essential functions of her job that required walking and standing.

However, during the course of the trial period, Wagoner-Alison made significant errors that threatened patient safety. Despite efforts to coach her to improve and correct those issues, she didn’t. As a result, TriCore placed her on unpaid leave for three weeks and encouraged her to apply for other internal positions — which she chose not to do. Instead, she filed for and received Social Security disability benefits based on her inability to stand or walk for any length of time. TriCore ultimately terminated her employment.

The EEOC filed suit, alleging Tri-Core discriminated against Wagoner- Alison in violation of the ADA by failing to provide her with a reasonable accommodation and by terminating her employment. TriCore asked the district court to dismiss the lawsuit, arguing that Wagoner-Alison wasn’t a qualified individual with a disability under the ADA because she couldn’t perform the essential functions of her job with or without accommodation. The court granted the company’s request and dismissed the case, finding that the EEOC couldn’t prove a prima facie, or basic, case of disability discrimination and there was no evidence to refute the undisputed fact that TriCore didn’t terminate Wagoner-Alison because of her disability but rather because she made numerous errors.

TriCore filed a motion to recover its attorneys’ fees — totaling $140,571.62 — which the district court granted, deciding that the EEOC’s claims were frivolous, unreasonable, and without foundation. The EEOC appealed the court’s decision, arguing that the reasons for Wagoner- Alison’s termination were pretextual and the attorneys’ fees award was an improper abuse of discretion by the court because “neither its termination claim nor its accommodation claim [was] frivolous at any point in the proceedings.”

EEOC’s frivolous appeal

On appeal, the 10th Circuit affirmed both the dismissal of the case and the award of attorneys’ fees to TriCore. The court began by pointing out that “the EEOC persisted in litigating this case in spite of clear evidence that TriCore went well beyond ADA requirement[s] in trying to oblige [Wagoner-Alison].” Indeed, the court pointed out that the EEOC’s claims clearly became “frivolous, unreasonable and without foundation” after the agency admitted that standing and walking were essential functions of the job — functions that Wagoner-Alison could not perform. The court also noted that TriCore sent the EEOC a detailed letter setting out the legal and factual insufficiencies of its claims and stated that it would file a request for dismissal and ask for attorneys’ fees if the agency didn’t drop its case.

In approving TriCore’s request for attorneys’ fees, the 10th Circuit relied on Fed. R. App. P. 38, noting that the EEOC failed to even argue on appeal that the district court erred in determining that it hadn’t established a prima facie case of discrimination under the ADA. EEOC v. TriCore Reference Laboratories, No. 11-2096 (10th Cir., 2012).

Impact going forward

What does this decision mean for employers facing litigation from the EEOC? Certainly, the case joins a growing number of decisions in which courts have taken issue with the agency’s aggressive and, at times, improper litigation practices. For example, in EEOC v. Peoplemark, Inc., a court in Michigan awarded fees against the EEOC for pursuing a case that was “without foundation from the beginning.” In EEOC et al. v. Cintas Corp., another Michigan court ordered the agency to pay $2.6 million in fees and costs for engaging in a “reckless ‘sue first, ask questions later’ strategy.”

Indeed, earlier this year, the 8th Circuit was faced with the review of a more than $4 million fee award against the EEOC in EEOC v. CRST Van Expedited, Inc. That case revealed other areas of questionable conduct by the EEOC, including its failure to engage in the mandatory investigation of charges and its admitted failure to engage in the mandatory conciliation process. In 2010, a federal court in Iowa awarded an employer more than $4 million in fees as a prevailing party after it established that the EEOC failed to investigate and engage in proper conciliation.

The moral of the story is that prevailing party fee awards may not be as elusive in cases filed by the EEOC as employers once believed. Certainly, courts appear to be growing weary of protracted unfounded litigation. If a meritless claim is pressed relentlessly, it may be worthwhile to make sure the EEOC is made aware of the shortcomings of its case. Attorneys’ fees are becoming more and more likely when unfounded litigation is pursued.