Don’t let the facts get in the way of a good story . . . unless you are a governmental agency entrusted to follow the law and you are bringing an expensive class-wide case.  The EEOC has just been given this lesson, again, in a case in western Michigan.  Only a few months ago, in EEOC v. CRST Van Expedited, Inc., Case No. 07-CV-95-LRR, the Commission was ordered to pay over $4.5 million in fees and expenses in a sex discrimination action in which it was found to have engaged in similar misconduct. 

The EEOC has highly publicized its intention to pursue employers who adopt what it contends are blanket rules barring the employment of those with criminal records. This focus is part of the Commission’s “E-RACE” (Eradicating Racism and Colorism from Employment) initiative.  The problem with barring those with conviction records, as explained by the United States Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and its progeny, is that such rules may have a disparate impact against minorities.  However, the law is equally clear that an employer that does not have such a policy, or one that can defend the policy on safety or other important business grounds, is not liable.

In EEOC v. Peoplemark, Inc.pdf., Case No. 1:08-cv-907 (W.D. Mich. 2011), the EEOC brought suit against a temporary agency that it claimed had a “blanket policy” against hiring “any person with a criminal record.”  It’s a good story, but, in fact, it was not true – the employer had no such policy.  The EEOC’s own records reflected that the case would be expensive for both sides and the litigation itself turned out to be, as the court described it, “tumultuous.”  Early in the litigation, the defendant produced 18,000 documents as a result of aggressive discovery efforts by the Commission.  Those documents, however, proved that the defendant did not have a blanket policy, had hired those with criminal records and that, in fact, it had actually employed over 20 percent of the individuals the Commission claimed to have been discriminated against.  Despite this knowledge, the EEOC did not dismiss the case and did not even amend the complaint to change the allegations it now knew not to be true.

While demanding such discovery, the EEOC produced little worthwhile of its own in response to the single interrogatory propounded by the defendant.  Only when confronted with an order compelling a more complete response did the Commission identify the alleged victims of the non-existent policy, and even that production was flawed.  To make matters worse, the sole individual identified by the EEOC, a woman with two felony convictions for housebreaking and larceny, committed yet another felony during the pendency of the case and was back in prison.

Because the EEOC continued with the litigation despite its knowledge that it was without basis, the defendant was forced to hire an expert to review the extensive documentary record and to analyze the data statistically.  As its own records reflected, the EEOC knew that the case would require an expensive expert, and yet it did nothing to stop the defendant from incurring such high costs.   When the defendant moved for summary judgment, relying on this undisputed expert evidence, the EEOC was forced to confess that it had “no statistical expert to rebut [it].”

Taking all of this together, the court found that an award of attorney fees was appropriate.    It ultimately awarded the defendant the bulk of the fees and expenses it incurred more than two months after it had disclosed the documents demonstrating that the claims were without basis.  These consisted of attorney fees $219,350.70 and expert fees of more than $500,000, for a total of $751,942.48.  While this amount may seem high, it could have been worse. 

The Bottom Line:  Even if you’ve behaved completely lawfully, you’re in for an expensive ride if the EEOC names you as a defendant because it wants to make a policy statement through the court system.