Many employers who have dealt with the EEOC in large cases suffer frustration over inexplicable delays combined with at times unreasonable requests for information and/or relief.  In a recent case from the Fourth Circuit, that kind of conduct led not only to a dismissal of the underlying claim by laches, but to an attorney fee award against it of nearly $200,000.  EEOC v. Propak Logistics, Inc., Case No. 13-1687 (4th Cir. Mar. 25, 2014).

The facts don’t make the Commission look especially good.  In January, 2003, a white employee filed a charge against the employer claiming that he was terminated based on his “American” national origin and because he had complained that the company would only hire Hispanic employees for some supervisory jobs at a facility in North Carolina.  The company responded to the charge by March 2003.  It took the EEOC a year to interview the charging party or the company’s hiring manager about the response.  Several months later (September of 2004), the EEOC internally designated the matter as a “class case”, a designation it did not share with the employer for another four years.  During those four years, the Commission engaged in feeble efforts to contact some witnesses.  The company, unaware of the “double secret” class designation, destroyed personnel files at the plant under its pre-existing document retention policy.

His patience exhausted, the charging party sought and received a Notice of Right to Sue and filed his own individual case in early 2008.  That case quickly settled.

Undaunted by its own delays or the settlement of the charging party’s claims, the EEOC in September of 2008 issued a determination that the company had engaged in class-wide discrimination against non-Hispanic job applicants.  The company attempted to conciliate, but a significant part of the relief the EEOC sought was remedial relief as to the company’s locations in the states of North and South Carolina.  The problem with that proposal, however, was that by this time the company had closed those facilities.

In 2009 (or more than six years after the charge had been filed) the EEOC brought suit requesting, among other things, similar remedial relief.  The employer moved to dismiss the claims on laches grounds and, following limited discovery, the court granted that motion.  The district court then awarded the employer virtually all of its attorney fees, finding that the Commission had acted unreasonably in pursuing the litigation.

Laches is a tough defense and it’s rare to find it applied in a discrimination case, let alone one seeking class-wide relief.  But the Fourth Circuit had little difficulty in affirming based on the EEOC’s many delays and the prejudice caused to the employer due to the passage of time, including the loss of records and dissipation of witnesses who had worked at now-closed facilities.

On that note, the EEOC tried to argue that the employer was responsible for the loss of records.  In other contexts, this might have been a serious problem for the employer, but in this instance the Commission had failed to advise it of its internal decision to pursue class claims, and so the employer was basically blameless.

The Fourth Circuit also found without trouble that sanctions were appropriate.  Indeed, the opinion suggests incredulity over the delays and decision to bring the case when the Commission was already aware that the facilities at issue had closed.  The concurrence in particular expressed astonishment at the EEOC’s actions during the investigation and in connection with the decision to pursue claims after so much time and after so much evidence had become lost or difficult to locate.

The Bottom Line:  Unreasonable delays by the EEOC can give rise both to a laches defense and potential sanctions against it.