Government (EEOC) Must Pay Company's Attorneys' Fees After Delay, Unreasonable Lawsuit

Posted on by John M. Erbach in Employment Law, Litigation

At times, corporate targets of government investigations become frustrated by the apparent lack of responsiveness by the investigating agencies. Some members of the judiciary evidently share that frustration and last week took a federal agency to task for suing a business after years of feet dragging during its administrative investigation. In EEOC v. Propak Logistics, Inc., the Fourth Circuit affirmed an order requiring the EEOC to pay the defendant's attorneys' fees to the tune of nearly $200,000. According to the Court, "the EEOC unreasonably initiated the lawsuit" after years of delay.

This is not necessarily a groundbreaking case. In 1978, the Supreme Court approved of fee awards against the EEOC in appropriate cases. But what is somewhat unusual here is the way that the agency was taken to task for its conduct. In Propak, one appellate judge took the opportunity to remind government agencies that their actions have real-life consequences, and that they are not above the law.

In his concurring opinion, Judge Wilkinson dispels the government's implied argument "that federal agencies, and the Equal Employment Opportunity Commission [] in particular, should be treated differently from private parties." The EEOC had suggested that it was too burdened by its statutory responsibilities to move any faster than it had. Rejecting this position, Judge Wilkinson held the government accountable, finding that the government is not beyond reproach. With a sharp pen, his opinion makes several statements that victims of bureaucratic indifference may find refreshing:

  • "[M]ost private parties would not dream of trying to excuse [their] excessive delays [] with the explanation that they were otherwise burdened or occupied."
  • "There is a danger that those inside a public bureaucracy, armed with significant resources, authority, and discretion, may become gradually numb as to how their actions affect those outside parties they investigate or sue."
  • "It is bad enough for doctors' or lawyers' offices, or car dealerships, or mail-order retailers to jerk patients or clients or customers around, but those relationships are at least often based on some element of choice and subject to a measure of market discipline. Government, by contrast, has a more unfettered hand over those it either serves or investigates, and it is thus incumbent upon public officials, high and petty, to maintain some appreciation for the extent of the burden that their actions may impose."
  • "[I]t is still remarkable that the saga of delay and indifference recounted by the district court has brought forth not a glint of recognition as to what the agency subjected the defendant to with its start-and-stop behavior over a total investigative and litigative course of nearly eight years."
  • "[N]o company deserves to have its affairs tied up by a government agency for this period of time. Even if the agency will not acknowledge the damage that such lengthy investigation and groundless litigation can inflict on companies and their employees, we can."

Although critical of the EEOC, Judge Wilkinson's opinion acknowledges the good work of the EEOC in "provid[ing] primary recourse to those victims of discrimination that persists in our society to an unfortunate extent." In that vein, he suggests that federal agencies may lose much-needed credibility when they engage in such unreasonable litigation, undermining important work.

Few employers will win their attorneys' fees after being subjected to a government investigation or lawsuit. But for those employers battling a government agency, Judge Wilkinson's opinion may provide ammunition to combat unfair charges and unreasonably drawn-out litigation.

About the Author

John M. Erbach represents a wide variety of business entities and individuals in complex business and commercial litigation, including employment disputes, defense of consumer protection claims, and intellectual property litigation.

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