No. 17-1828

 

IN THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

 

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

          Plaintiff/Appellant,

 

v.

 

CVS PHARMACY, INC.,

          Defendant/Appellee.

 

On Appeal from the United States District Court

for the Northern District of Illinois

Case No. 1:14-CV-863

Hon. John W. Darrah, District Judge

 

OPENING BRIEF OF THE EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION AS APPELLANT

 

JAMES L. LEE

Deputy General Counsel

 

JENNIFER S. GOLDSTEIN

Associate General Counsel

 

ELIZABETH E. THERAN

Acting Assistant General Counsel

 

JEREMY D. HOROWITZ

Attorney

 

EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

Office of General Counsel

131 M St., N.E., Room 5SW24J

Washington, D.C. 20507

(202) 663-4716

jeremy.horowitz@eeoc.gov

TABLE OF CONTENTS

Table of Authorities....................................................................................... iv

 

Statement of Jurisdiction................................................................................. 1

 

Statement of the Issues.................................................................................... 1

 

Statement of the Case...................................................................................... 2

 

          A. Course of Proceedings...................................................................... 2

 

          B. Statement of the Facts........................................................................ 3

 

          C. District Court’s Decision................................................................. 11

 

Standard of Review....................................................................................... 12

 

Summary of Argument................................................................................. 13

 

Argument....................................................................................................... 15

 

I.     The District Court Abused Its Discretion in Awarding CVS Its Attorneys’ Fees Because, Resolving All Reasonable Doubts in the EEOC’s Favor and Eschewing Post Hoc Reasoning, This Case Was Not Frivolous, Unreasonable, or Without Foundation Under Christiansburg and This Court’s Precedent......................................................................... 15

 

A. Christiansburg and its progeny establish that a plaintiff’s failure to prevail, standing alone, cannot support a defensive award of attorneys’ fees; rather, the plaintiff must have proceeded while knowing of an unambiguous adverse previous ruling or of its claim’s factual or legal infirmity...................................................................................... 15

 

B. The EEOC’s legal theory was based on a logical and plausible reading of Title VII; although this Court ultimately disagreed with it, the theory was not frivolous, unreasonable, or without foundation................. 19

 

C. The district court abused its discretion in concluding that the EEOC’s purported “failure to comply with its … regulations” justified an award of attorneys’ fees to CVS under Christiansburg......................... 26

 

1.. The EEOC’s statutory argument that conciliation was not required in this Section 707(a) case alleging a pattern or practice of resistance to Title VII rights was not frivolous, unreasonable, or without foundation............................................................................. 27

 

2.. Because Title VII’s implementing regulations cannot require the EEOC to exceed the authority conferred by the statute, they cannot impose a conciliation requirement where the statute does not, and the district court abused its discretion in holding otherwise................. 33

 

D. Several other reasons counsel against awarding fees based on a failure to conciliate..................................................................................... 37

 

II.    The District Court Did Not Abuse Its Discretion in Concluding the EEOC Had a Sufficient Factual Basis for Its Suit.................................... 44

 

III.   Even if Fees Were Warranted, the Amount the District Court Awarded Was Excessive....................................................................................... 49

 

Conclusion........................................................................................... 57

 

Certificate of Compliance.................................................................... 58

 

Circuit Rule 30(d) Statement............................................................... 59

 

Appendix

 

Certificate of Service

 

 

 

Table of Authorities

     Page(s)

Cases

American Communications Association, Local 10 v. Retirement Plan for Employees of RCA Corp.,
507 F. Supp. 922 (S.D.N.Y. 1981).............................................................. 52

Auer v. Robbins,
519 U.S. 452 (1997).................................................................................... 35

Badillo v. Central Steel & Wire Co.,
717 F.2d 1160 (7th Cir. 1983).......................................................... 14, 17, 26

Barnes Foundation v. Township of Lower Merion,
242 F.3d 151 (3d Cir. 2001)........................................................................ 38

Bluestein v. Central Wisconsin Anesthesiology,
769 F.3d 944 (7th Cir. 2014)....................................................................... 12

Blum v. Stenson,
465 U.S. 886 (1984).................................................................................... 56

Burlington Northern & Santa Fe Railway Co. v. White,
548 U.S. 53 (2006)...................................................................................... 22

Chalmers v. City of Los Angeles,
796 F.2d 1205 (9th Cir. 1986)..................................................................... 54

Christiansburg Garment Co. v. EEOC,
434 U.S. 412 (1978).............................................................................. passim

Delgado v. Village of Rosemont,
No. 03 C 7050, 2006 WL 3147695 (N.D. Ill. Oct. 31, 2006)........................ 54

EEOC v. Continental Oil Co.,
548 F.2d 884 (10th Cir. 1977)..................................................................... 24

EEOC v. CVS Pharmacy, Inc. (“CVS I”),
70 F. Supp. 3d 937 (N.D. Ill. 2014)...................................................... passim

EEOC v. CVS Pharmacy, Inc. (“CVS II”),
809 F.3d 335 (7th Cir. 2015)................................................................ passim

EEOC v. CVS Pharmacy, Inc. (“CVS III”),
No. 1:14-CV-863, 2017 WL 219519 (N.D. Ill. Jan. 18, 2017)............... passim

EEOC v. Doherty Enterprises, Inc.,
126 F. Supp. 3d 1305 (S.D. Fla. 2015)....................................... 37, 38, 39, 40

EEOC v. Doherty Enterprises, Inc.,
No. 9:14-cv-81884-KAM, 2016 WL 4524224 (S.D. Fla. Apr. 5, 2016)........ 38

EEOC v. Harvey L. Walner & Associates,
91 F.3d 963 (7th Cir. 1996)........................................................... 8, 9, 23, 32

EEOC v. Pierce Packing Co.,
669 F.2d 605 (9th Cir. 1982)................................................................. 36, 37

EEOC v. Sears, Roebuck & Co.,
114 F.R.D. 615 (N.D. Ill. 1987)............................................................. 41, 53

Ekanem v. Health & Hospital Corp.,
724 F.2d 563 (7th Cir. 1983)................................................................. 17, 47

Embry v. Colvin,
No. 12 C 3685, 2015 WL 4720106 (N.D. Ill. Aug. 4, 2015)................... 51, 52

General Telephone Co. of the Northwest, Inc. v. EEOC,
446 U.S. 318 (1980).................................................................................... 20

Greenfield Mills, Inc. v. Carter,
569 F. Supp. 2d 737 (N.D. Ind. 2008)........................................................ 54

Greviskes v. Universities Research Association, Inc.,
417 F.3d 752 (7th Cir. 2005)....................................................................... 50

Guckenberger v. Boston University,
8 F. Supp. 2d 91 (D. Mass. 1998)............................................................... 50

Hamer v. Lake County,
819 F.2d 1362 (7th Cir. 1987).................................................... 17, 18, 42, 43

Hamilton v. Daley,
777 F.2d 1207 (7th Cir. 1985).............................................................. passim

Hensley v. Eckerhart,
461 U.S. 424 (1983)......................................................................... 50, 51, 56

Hershinow v. Bonamarte,
772 F.2d 394 (7th Cir. 1985)....................................................................... 15

Hively v. Ivy Tech Community College,
853 F.3d 339 (7th Cir. 2017) (en banc)....................................................... 43

Jaffee v. Redmond,
142 F.3d 409 (7th Cir. 1998)....................................................................... 13

Johnson v. GDF, Inc.,
668 F.3d 927 (7th Cir. 2012)................................................................. 49, 51

Kohler v. Bed Bath & Beyond of California, LLC,
780 F.3d 1260 (9th Cir. 2015)............................................................... 18, 42

LeBeau v. Libbey-Owens-Ford Co.,
799 F.2d 1152 (7th Cir. 1986).................................................... 35, 42, 47, 48

Loan v. Prudential Insurance Co.,
788 F. Supp. 2d 558 (E.D. Ky. 2011).......................................................... 56

Mach Mining, LLC v. EEOC,
135 S. Ct. 1645 (2015)................................................................................. 31

Meritor Savings Bank, FSB v. Vinson,
477 U.S. 57 (1986)...................................................................................... 42

Oncale v. Sundowner Offshore Services, Inc.,
523 U.S. 75 (1998)...................................................................................... 42

Pickett v. Sheridan Health Care Center,
664 F.3d 632 (7th Cir. 2011)....................................................................... 12

Pickett v. Sheridan Health Care Center,
813 F.3d 640 (7th Cir. 2016)....................................................................... 12

Price Waterhouse v. Hopkins,
490 U.S. 228 (1989).................................................................................... 42

Serrano & EEOC v. Cintas Corp.,
699 F.3d 884 (6th Cir. 2012)....................................................................... 24

Tarkowski v. County of Lake,
775 F.2d 173 (7th Cir. 1985)....................................................................... 17

In re TCI,
769 F.2d 441 (7th Cir. 1985)................................................................. 41, 53

United States v. Allegheny-Ludlum Industries, Inc.,
517 F.2d 826 (5th Cir. 1975)....................................................................... 24

United States v. City of Yonkers,
592 F. Supp. 570 (S.D.N.Y. 1984).............................................................. 21

United States v. Fresno Unified School District,
592 F.2d 1088 (9th Cir. 1979)..................................................................... 24

United States v. Thouvenot, Wade & Moerschen, Inc.,
596 F.3d 378 (7th Cir. 2010)....................................................................... 49

Unity Ventures v. County of Lake,
894 F.2d 250 (7th Cir. 1990)................................................................. 18, 32

University of Texas Southwest Medical Center v. Nassar,
133 S. Ct. 2517 (2013)................................................................................. 22

Vandenplas v. City of Muskego,
797 F.2d 425 (7th Cir. 1986)................................................................ passim

Young v. United Parcel Service, Inc.,
135 S. Ct. 1338 (2015)................................................................................. 21

Statutes

28 U.S.C. § 451................................................................................................. 1

28 U.S.C. § 1291................................................................................................ 1

28 U.S.C. § 1331................................................................................................ 1

28 U.S.C. § 1337................................................................................................ 1

28 U.S.C. § 1343................................................................................................ 1

28 U.S.C. § 1345................................................................................................ 1

Civil Rights Act of 1964 Title II, 42 U.S.C. §§ 2000a et seq............................ 25

Civil Rights Act of 1964 Title VII, 42 U.S.C. §§ 2000e et seq................... passim

42 U.S.C. § 2000e-2......................................................................... 13, 19, 22

42 U.S.C. § 2000e-3......................................................................... 13, 19, 22

42 U.S.C. § 2000e-5.............................................................................. passim

42 U.S.C. § 2000e-5(a).................................................................................. 5

42 U.S.C. § 2000e-5(b)......................................................................... passim

42 U.S.C. § 2000e-5(f)..................................................................... 20, 23, 32

42 U.S.C. § 2000e-5(k)............................................................................... 15

42 U.S.C. § 2000e-6.............................................................................. passim

42 U.S.C. § 2000e-6(a)......................................................................... passim

42 U.S.C. § 2000e-6(e)......................................................................... passim

Civil Rights of Institutionalized Persons Act of 1980, 42 U.S.C. §§ 1997 et seq.............................................................................................................. 25

Equal Employment Opportunity Act of 1972, Pub. L. No. 92-261, 86 Stat. 103 (Mar. 24, 1972).................................................................................... 20

Fair Housing Act (Title VIII of the Civil Rights Act of 1964), 42 U.S.C. §§ 3601 et seq.................................................................................................. 25

Other Authorities

29 C.F.R. Part 1601......................................................................................... 33

29 C.F.R. §§ 1601.6-1601.29...................................................................... 20, 34

29 C.F.R. § 1601.24(a).............................................................................. passim

29 C.F.R. § 1601.27........................................................................ 26, 33, 34, 35

29 C.F.R. § 1604.2........................................................................................... 36

Fed. R. App. P. 4(a)(1)(B)................................................................................. 1

 

STATEMENT OF JURISDICTION

The Equal Employment Opportunity Commission (“EEOC” or “Commission”) brought the enforcement action underlying this dispute against defendant CVS Pharmacy, Inc. (“CVS”) pursuant to Title VII of the Civil Rights Act of 1964 (“Title VII”), as amended, 42 U.S.C. §§ 2000e et seq.  R.1 (Complaint) at 1.[1]   The district court had jurisdiction under 28 U.S.C. §§ 451, 1331, 1337, 1343, and 1345.  Id.  Final judgment was entered on February 22, 2017.  Order, R.73.  The EEOC timely appealed on April 20, 2017.  Notice of Appeal, R.74.  See Fed. R. App. P. 4(a)(1)(B).  This Court has jurisdiction over the appeal under 28 U.S.C. § 1291.

STATEMENT OF THE ISSUES

1.  The district court in this civil rights case awarded attorneys’ fees to defendant CVS based entirely on the EEOC’s failure to conciliate before filing suit.  Under Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), was this award an abuse of discretion, given that the EEOC’s decision not to conciliate was based on a reasonable and well-supported interpretation of ambiguous statutory language and its own regulations, no cases foreclosed its interpretation, and the EEOC had no reason to believe with any degree of certainty that its position was factually or legally infirm?

2.  Did the district court abuse its discretion in awarding CVS $307,092.30 in attorneys’ fees for 615 hours of work in a case involving a single, albeit complex, legal issue and no discovery?

STATEMENT OF THE CASE

A.          Course of Proceedings

This is an appeal from a final judgment of the district court awarding CVS its attorneys’ fees in this Title VII enforcement action.  On February 7, 2014, the EEOC filed a complaint alleging that, since at least August 2011, CVS had “been engaged in a pattern or practice of resistance to the full enjoyment of the rights secured by Title VII, in violation of Section 707” of the statute.  R.1 (Complaint) at 2.   On October 7, 2014, the district court issued its Memorandum Opinion and Order granting summary judgment to CVS and entered final judgment against the EEOC.  R.33; EEOC v. CVS Pharmacy, Inc., 70 F. Supp. 3d 937 (N.D. Ill. 2014) (“CVS I”).

The EEOC appealed the decision to this Court on December 5, 2014.  R.38.  On December 17, 2015, this Court affirmed the district court’s judgment.  A.221-37; EEOC v. CVS Pharmacy, Inc., 809 F.3d 335 (7th Cir. 2015) (“CVS II”).  The EEOC filed a petition for rehearing or rehearing en banc on January 28, 2016.  CVS filed its answer to the petition on February 16, 2016.  This Court denied the petition on March 9, 2016.

CVS filed its Motion for Attorneys’ Fees on October 7, 2016.  R.63, 64.  The EEOC filed its Opposition on November 4, 2016, and CVS filed its Reply on November 15, 2016.  R.65, 69.  On January 18, 2017, the district court issued its Memorandum Opinion and Order granting CVS’s motion in part and denying it in part.  A.1-8; EEOC v. CVS Pharmacy, Inc., No. 1:14-CV-863, 2017 WL 219519 (N.D. Ill. Jan. 18, 2017) (“CVS III”).  On February 22, 2017, the district court issued its final judgment awarding CVS $307,902.30 in attorneys’ fees.  A.9; R.72, 73.

B.           Statement of the Facts

This case arose from CVS’s use of a form separation agreement (“Separation Agreement”) containing a number of provisions that, the EEOC argued, were intended to deter a reasonable employee from exercising his or her Title VII rights.  The agreement released CVS from all “causes of action, lawsuits, proceedings, complaints, charges, debts, contracts, judgments, damages, claims, and attorneys fees” relating to the employee’s employment with CVS (including those arising under Title VII, the ADA and the ADEA), and required any signatory taking such actions to reimburse any legal fees CVS incurred in defending them.[2]  (A.100, ¶¶ 7-8.)  Although it excluded rights the employee “cannot lawfully waive,” the agreement did not make clear the scope of such protected rights, particularly when considered from the perspective of a typical employee unfamiliar with contract law.  (Id. ¶¶ 7-8.)  Elsewhere, the agreement provided that the employee would not disclose “confidential information” about CVS (including employee skills, abilities, duties, wages, and affirmative action plans), would notify CVS’s General Counsel immediately if called upon to produce any such confidential information,[3] and would not disparage CVS.  (A.101-02, ¶ 13(a), (d), (e).)  Here, as well, the agreement provided that the signatory “agrees promptly to reimburse [CVS] for all reasonable attorneys fees incurred” in the event of a breach.  (Id. ¶ 14.)

In the merits litigation, the EEOC contended that CVS’s use of the Separation Agreement constituted “a pattern or practice of resistance to the full enjoyment of … rights secured by” Title VII.  (A.91-92, ¶¶ 1, 7.)   The Commission argued it could bring such a suit under Section 707(a) of Title VII, 42 U.S.C. § 2000e-6(a), without alleging that the challenged practice qualified as “an unlawful employment practice” (as that term is used in Section 706(a) of the statute, 42 U.S.C. § 2000e-5(a)) and without engaging in the conciliation efforts required for actions brought pursuant to a charge alleging an unlawful employment practice under Section 706, 42 U.S.C. § 2000e-5.

The district court granted CVS’s motion for summary judgment prior to the start of discovery.  CVS I, 70 F. Supp. 3d at 938.  The court rejected the EEOC’s distinction between Section 707(a)’s reference to a “pattern or practice of resistance to the full enjoyment” of rights under Title VII, which would not require presuit conciliation in the absence of a charge, and Section 707(e)’s reference to “a charge of a pattern or practice of discrimination,” which would require conciliation.  Id. at 940-42.  Instead, the court held that Section 707(a)’s “pattern or practice of resistance” is “encompassed by the antiretaliation and discrimination provisions” of Title VII “and requires some retaliatory or discriminatory act,” which in turn triggers the conciliation requirements.  Id. at 939 n.2. 

The court agreed with the Commission that the EEOC may “proceed without a charge on ‘pattern or practice’ claims” under Section 707(a).  Id. at 942 (citing EEOC v. Harvey L. Walner & Assocs., 91 F.3d 963, 968 (7th Cir. 1996)).  However, the court found that even when the EEOC acts in the absence of a charge under Section 707, it must still follow the full set of Section 706 procedures — including conciliation — provided in the agency’s regulations.  Id. (citing 29 C.F.R. § 1601.24(a)).

In a footnote, the district court also rejected the EEOC’s argument about the potential chilling effect of the Separation Agreement.  It concluded that Paragraph 8’s carve-out provision allowing employees to “participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws” and “cooperat[e] with any such agency in its investigation” rendered the EEOC’s interpretation of the agreement “not reasonable.”  Id. at 940 n.3.  The court went on to observe that even an explicit ban on filing charges “would be unenforceable and could not constitute resistance to the Act.”  Id.

This Court affirmed.  CVS II, 809 F.3d at 336.  The Court rejected what it termed the EEOC’s “novel interpretation” of Title VII, holding that the statute — including Section 707(a)’s “pattern or practice of resistance” provision — protects only against discrimination and retaliation.  Id. at 340-41.  Accordingly, this Court held, because Section 707(a) “resistance” actions and Section 707(e) “discrimination” actions are one and the same, and both require conciliation, dismissal of this case for failure to conciliate was proper.  Id. at 342.  Like the district court, this Court also relied on EEOC regulations governing presuit conciliation in cases involving charges of unlawful employment practices.  Id. (citing 29 C.F.R. §§ 1601.24(a) and 1601.27).

This Court went on to address its previous statement in Harvey L. Walner that Section 707 gives the EEOC authority previously exercised by the Attorney General “to institute ‘pattern or practice’ lawsuits on its own initiative — i.e., without certain of the prerequisites to a civil action under [Section] 706(f).”  Id. at 343 (quoting Harvey L. Walner, 91 F.3d at 968).  Despite that opinion’s broad language, this Court held that it “should not be interpreted as permitting the EEOC to proceed without a charge.”  Id. at 343. 

In a footnote, this Court agreed with the district court that, based on the Separation Agreement’s exceptions and its advice to consult with an attorney before signing, “it is unreasonable to construe the [Separation Agreement] as restricting the signatory from filing a charge or otherwise participating in EEOC proceedings.”  Id. at 341 n.4.

The EEOC petitioned for rehearing or rehearing en banc, arguing that the panel’s decision holding that the EEOC cannot file suit under Section 707 absent an underlying charge of discrimination implicitly overruled Harvey L. Walner, violated Supreme Court and Seventh Circuit precedent, and created a circuit split.  The Commission also argued that the panel erred in equating Section 707(a)’s “pattern or practice of resistance” language with Section 706’s reference to “any unlawful employment practice.”  This Court sought a response from CVS but ultimately denied the petition.

The case then returned to the district court and CVS moved for attorneys’ fees on two grounds.  First, CVS argued that, because the district court and this Court each stated in a footnote that the EEOC’s characterization of the Separation Agreement’s chilling effect on potential witnesses was unreasonable, the EEOC’s entire basis for the case was unreasonable.  R.64 (CVS Mot. for Fees) at 5-7.  Second, CVS argued that the EEOC’s position in the litigation was inherently unreasonable because its refusal to conciliate violated its own regulations.  Id. at 8-11.  CVS sought a total of $446,339.50 in attorneys’ fees, in part based on “the novel and unprecedented nature of this case” and in part because more than 650 former employees signed the agreement, meaning that its efforts “headed off what likely would have been protracted litigation requiring potentially thousands of hours of attorney time.”  Id. at 13-14.

The EEOC opposed the motion, arguing that fees were not warranted under Christiansburg and Seventh Circuit precedent.  R.65 (EEOC Opp. to Mot. for Fees).  Although the EEOC was advancing a novel legal argument, the agency explained, there was no authority contrary to its position and no reason to believe with any degree of certainty that its legal or factual positions were infirm.  Id. at 1-13.  The EEOC also contested the amount of reimbursement CVS sought, arguing that CVS’s records were insufficiently detailed, that nearly 900 hours of work was excessive in a case without discovery and involving the same arguments below and on appeal, and, moreover, that there was an inherent contradiction in CVS’s claim that the EEOC’s legal argument was obviously meritless but nevertheless required hundreds of hours of work in response.  The EEOC argued that fees, if awarded, should cover no more than 25% of CVS’s request.  Id. at 13-15.

C.          District Court’s Decision

The district court granted CVS’s fee request in part.  The court held, first, that the Commission’s factual premise was not frivolous.  CVS III, 2017 WL 219519, at *2.  As to the Commission’s legal premise, the court noted that, in the Seventh Circuit, “fees are only permitted when litigation proceeds in the face of controlling and unambiguous precedent.”  Id. (citing Hamer v. Lake Cty., 819 F.2d 1362, 1368 (7th Cir. 1987)).  Nevertheless, the court concluded that fees were justified because the EEOC’s decision to file suit without first conciliating conflicted with its regulations, which, contrary to the agency’s interpretation, apply to “pattern or practice of resistance” cases whether or not they are premised on a charge of discrimination.  Id. at *3. 

As to the amount of fees, the court found that the number of hours CVS claimed for the appeal was excessive, given that it made the same arguments on appeal as it made in the district court.  Id.  The court therefore reduced the number of allowable hours for work on the appeal from 574.3 to 300.  Id.  It subsequently entered judgment awarding CVS $307,902.30, i.e., all of CVS’s claimed attorneys’ fees for the district court proceedings and 52.24% of the amount requested for its work on appeal.  R.72.

STANDARD OF REVIEW

This Court reviews attorneys’ fee awards in Title VII cases for an abuse of discretion.  Christiansburg, 434 U.S. at 421; Bluestein v. Cent. Wis. Anesthesiology, 769 F.3d 944, 951 (7th Cir. 2014).  The district court’s decision regarding the amount of fees awarded is also reviewed for an abuse of discretion.  Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 639 (7th Cir. 2011).  Though district court fee award determinations are entitled to wide latitude, “‘wide latitude’ is not unlimited latitude, and the district court still bears the responsibility of justifying its conclusions.”  Id. (quoting Sottoriva v. Claps, 617 F.3d 971, 975 (7th Cir. 2010)).  Any legal analysis contained in the district court’s decision is reviewed de novo.  Pickett v. Sheridan Health Care Ctr., 813 F.3d 640, 645 (7th Cir. 2016); Jaffee v. Redmond, 142 F.3d 409, 412-13 (7th Cir. 1998).

SUMMARY OF ARGUMENT

The district court awarded CVS its attorneys’ fees based on its conclusion that the EEOC unreasonably interpreted its own regulations not to require presuit conciliation.  Under Christiansburg and this Circuit’s cases interpreting it, this decision was an abuse of discretion.  The EEOC did not conciliate here because it understood Section 707(a) of Title VII to mean that conciliation is not required where the alleged “pattern or practice of resistance” to the rights secured by Title VII involves no “unlawful employment practice” as defined in Sections 703 and 704, 42 U.S.C. §§ 2000e-2, 2000e-3, and where there is no charge of discrimination.  It based its interpretation on the wording of the statute and its implementing regulations, its legislative history, and precedents from this Court and elsewhere. 

Although this Court ultimately disagreed with the EEOC’s proffered interpretation of the complex and somewhat ambiguous statutory language, no cases foreclosed the agency’s reading of Section 707, and the EEOC had no reason to believe with any certainty that its claim would be rejected.  Indeed, another federal district court fully adopted the EEOC’s interpretation of Section 707(a) several months after the district court decision in CVS I, lending strong credence to its inherent plausibility.  In addition, the EEOC’s case was factually justified, as the district court held.  Given this support for the EEOC’s position, it certainly did not meet the exacting “frivolous, unreasonable, or without foundation” standard applicable to prevailing defendants seeking fee awards in civil rights cases.  Christiansburg, 434 U.S. at 421; see also Badillo v. Cent. Steel & Wire Co., 717 F.2d 1160, 1163-64 (7th Cir. 1983). 

Finally, in the event this Court should disagree and find that fees are warranted, the district court nonetheless abused its discretion in granting CVS an excessive amount of fees.  The court compensated CVS for the full number of hours it claimed for the litigation through summary judgment of this single, discovery-free, almost purely legal issue; more than half the number of hours it claimed to litigate the appeal; and still more hours for preparing its fee petition.  The court gave no reasons or analysis why such exorbitant fees were warranted in this case and instead largely acceded to CVS’s fee request, which was unreasonable on its face given the nature of this case and CVS’s own representations regarding the merits.

ARGUMENT

I.               The District Court Abused Its Discretion in Awarding CVS Its Attorneys’ Fees Because, Resolving All Reasonable Doubts in the EEOC’s Favor and Eschewing Post Hoc Reasoning, This Case Was Not Frivolous, Unreasonable, or Without Foundation Under Christiansburg and This Court’s Precedent.

A.   Christiansburg and its progeny establish that a plaintiff’s failure to prevail, standing alone, cannot support a defensive award of attorneys’ fees; rather, the plaintiff must have proceeded while knowing of an unambiguous adverse previous ruling or of its claim’s factual or legal infirmity.

Title VII allows the court to award reasonable attorneys’ fees to the prevailing party.  42 U.S.C. § 2000e-5(k).  As the Court explained in Christiansburg, attorneys’ fees may be awarded to a prevailing Title VII defendant only if the court concludes that the plaintiff’s claim was “frivolous, unreasonable, or without foundation,” though the defendant need not show that the action was “brought in subjective bad faith.”  434 U.S. at 421; see also Hershinow v. Bonamarte, 772 F.2d 394, 395 (7th Cir. 1985) (noting that “courts may grant attorney’s fees to prevailing defendants only in very circumscribed situations”).  Fee awards for prevailing defendants are held to a much more stringent standard than those for prevailing plaintiffs for at least two reasons: Congress chose plaintiffs to enforce Title VII and pursue policy goals on which it placed the highest priority, and fees awarded against defendants in federal civil rights cases are, by definition, awarded against a party that has violated federal law.  Christiansburg, 434 U.S. at 418-19.  Neither consideration applies to an award of fees to a prevailing defendant.  Id.

The Christiansburg Court specifically warned district courts that, in applying this standard, they must “resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation.”  Christiansburg, 434 U.S. at 421-22; see also Vandenplas v. City of Muskego, 797 F.2d 425, 431-32 (7th Cir. 1986) (“It goes without saying that simply because a plaintiff’s [civil rights] claim is dismissed does not mean that it was frivolous.”).  This is because such “hindsight logic” would chill plaintiffs from bringing potentially meritorious claims, which “would undercut the efforts of Congress to promote the vigorous enforcement of the provisions of Title VII.”  Christiansburg, 434 U.S. at 422.  The same Christiansburg standard applies whether a private party or the EEOC is the losing plaintiff.  Christiansburg, 434 U.S. at 422 n.20.

According to this Court, “frivolous,” in the Christiansburg context, means that the case “has no reasonable basis, whether in fact or law.”  Tarkowski v. County of Lake, 775 F.2d 173, 176 (7th Cir. 1985).  “All reasonable doubts regarding the merits of the claim are resolved in favor of the plaintiff.”  Hamer, 819 F.2d at 1368.  Thus, in applying Christiansburg, this Court has generally held that awards of attorneys’ fees to defendants are proper only “where the plaintiff proceeds in the face of an unambiguous adverse previous ruling” or “where a plaintiff is aware with some degree of certainty of the factual or legal infirmity of his claim.”  Badillo, 717 F.2d at 1163-64; Ekanem v. Health & Hosp. Corp., 724 F.2d 563, 574-75 (7th Cir. 1983) (reversing the district court’s award of attorney’s fees to defendants as an abuse of discretion because “plaintiffs had no way of predicting to a certainty what the ultimate results of the case would be”).  In accordance with the Christiansburg Court’s observation that “[t]he law may change or clarify in the midst of litigation,” 434 U.S. at 422, this Court has affirmed the denial of fees to a prevailing Title VII defendant when the Supreme Court clarified the relevant law in the middle of litigation.  See Unity Ventures v. County of Lake, 894 F.2d 250, 255 (7th Cir. 1990).

This Court and other circuits have also explained that courts must not confuse novelty or originality with frivolousness.  Congress relies on an “aggressive and creative attack by civil rights plaintiffs” to vigorously enforce the civil rights laws, and “[i]t is often through vigorous advocacy that changes and developments in the law occur and new precedent is created.  Innovative, even persistent advocacy in the face of great adversity must not be unreasonably penalized with hindsight.  Subsequent failure is not the test.”  Hamer, 819 F.2d at 1367; see also Kohler v. Bed Bath & Beyond of Cal., LLC, 780 F.3d 1260, 1267 (9th Cir. 2015) (observing that, where the plaintiff brought claims “not clearly resolved by our prior caselaw,” “[t]he law grows with clarity for benefit of the public through such actions even if they are not successful”).

B.    The EEOC’s legal theory was based on a logical and plausible reading of Title VII; although this Court ultimately disagreed with it, the theory was not frivolous, unreasonable, or without foundation.

Sections 706 and 707(a) of Title VII use different language.  In bringing this lawsuit, the EEOC reasonably interpreted these differences to mean that Congress intended the sections to have different purposes.  While the agency recognizes that this Court in CVS II came to a different understanding of Title VII, this does not render the EEOC’s interpretation frivolous within the meaning of Christiansburg. 

Section 706 of Title VII sets out the standard framework for the EEOC to address an alleged “unlawful employment practice” committed in violation of the statute.[4]  Section 706(b) provides that an individual may file a charge alleging an “unlawful employment practice.”  42 U.S.C. § 2000e-5(b).  The EEOC investigates that charge and determines whether there is reasonable cause to believe discrimination or retaliation has occurred.  Id.  If the agency makes a finding of reasonable cause, it then seeks a voluntary resolution through conciliation.  Id.  The EEOC’s implementing regulations further explain the procedures it follows in carrying out these statutory duties.  See 29 C.F.R. §§ 1601.6-1601.29. 

Prior to 1972, the EEOC’s enforcement authority ended here, with “informal methods of conference, conciliation, and persuasion.”  Gen. Tel. Co. of the NW, Inc. v. EEOC, 446 U.S. 318, 325 (1980).  The Equal Employment Opportunity Act of 1972, Pub. L. No. 92-261, 86 Stat. 103 (Mar. 24, 1972), gave the EEOC litigation authority under two separate provisions.  First, it authorized the EEOC to sue to remedy unlawful employment practices by private employers under § 706 when attempts at conciliation had failed.  42 U.S.C. § 2000e-5(f); Gen. Tel., 446 U.S. at 325-26.  Second, and separately, it transferred litigation authority to the EEOC that had previously been held by the Attorney General under § 707(a).  42 U.S.C. § 2000e-6(a); Gen. Tel., 446 U.S. at 327-29.  The Attorney General’s pre-1972 authority to sue under § 707(a) did not require him to engage in conciliation before filing suit.  See, e.g., United States v. City of Yonkers, 592 F. Supp. 570, 583 (S.D.N.Y. 1984) (“It was clear before passage of the 1972 Amendments that the Attorney General had authority to initiate pattern-or-practice litigation under section 707 without complying with any of the conditions imposed by section 706.”).

The language of § 707(a), as amended, is different from § 706 in several key respects.  Section 707(a) allows the Commission to sue “any person or group of persons … engaged in a pattern or practice of resistance to the full enjoyment of any of the rights secured by” Title VII.  42 U.S.C. § 2000e-6(a).  The EEOC interpreted “resistance” to the full enjoyment of Title VII rights, as used in § 707(a), to mean something different from, and broader than, § 706(b)’s reference to “unlawful employment practices.”  In the Commission’s view, this interpretation made sense both because it avoided rendering § 707 redundant and because it gave different meaning to the different language of the respective provisions, in accordance with Supreme Court precedent.  See, e.g., Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1352 (2015) (“We have long held that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause is rendered superfluous, void, or insignificant.” (internal citations and quotation marks omitted)); Univ. of Tex. SW Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2530 (2013) (explaining that, “in light of Congress’ special care in drawing so precise a statutory scheme” as Title VII, it is “incorrect to infer that Congress meant anything other than what the text does say”); Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 62-63 (2006) (in construing sections 703 and 704 of Title VII, “the question is whether Congress intended its different words to make a legal difference.  We normally presume that, where words differ as they differ here, ‘“Congress acts intentionally and purposely in the disparate inclusion or exclusion.”’”) (citing and quoting Russello v. United States, 464 U.S. 16, 23 (1983)).

Thus, the EEOC argued, Congress intended § 707(a) to allow the Commission to target not only unfair employment practices, but also activities that constitute resistance to Title VII rights more generally, even if they do not meet the statutory definition of an unfair employment practice.  Under the EEOC’s interpretation, lawsuits attacking a “pattern or practice of resistance” may indeed be based on charges alleging unfair employment practices—and, in such cases, the full set of § 706 procedures would apply, as explained in § 707(e).  42 U.S.C. § 2000e-6(e) (stating that when the EEOC “act[s] on a charge of a pattern or practice of discrimination,” it must act “in accordance with the procedures set forth in” § 706).  But the EEOC argued that § 707(a) also allows the Commission to bring suit without an underlying charge, and in those cases, § 706 procedures pertaining to charges do not come into play.

This Court did not ultimately agree with the EEOC’s interpretation of the interplay between Sections 706, 707(a), and 707(e), but disagreement alone does not justify a fee award.  Christiansburg, 434 U.S. at 421-22; Vandenplas, 797 F.2d at 431-32.  Instead, the question now before this Court is whether the EEOC’s argument was frivolous, unreasonable, or without foundation.  Novel though it may have been, the EEOC’s argument was both reasonable and well supported.

First, the EEOC found support for its interpretation in Harvey L. Walner’s observation that § 707 actions filed by the EEOC “on its own initiative” may be brought “without certain of the prerequisites to a civil action under § 2000e-5(f).”  91 F.3d at 968.  This language tracked that of other cases holding that § 707 actions may differ, in both substance and procedure, from § 706 actions.  See United States v. Allegheny-Ludlum Indus., Inc., 517 F.2d 826, 843 (5th Cir. 1975) (holding that § 707 actions may be brought without a charge, and distinguishing § 707’s “swift and effective weapon to vindicate the broad public interest in eliminating unlawful practices” with § 706’s “requirements that charges be filed, investigations conducted, and an opportunity to conciliate [be] afforded the respondent”); Serrano & EEOC v. Cintas Corp., 699 F.3d 884, 896 (6th Cir. 2012) (distinguishing EEOC actions under § 706, which require a charge, and those under § 707, which do not); United States v. Fresno Unified Sch. Dist., 592 F.2d 1088, 1096 n.5 (9th Cir. 1979); EEOC v. Cont’l Oil Co., 548 F.2d 884, 890 (10th Cir. 1977). 

Indeed, the district court agreed with the EEOC’s contention that cases brought under § 707(a) did not need to rely on an underlying charge.  CVS I, 70 F. Supp. 3d at 942.^[5]  Even though this Court ultimately disagreed, 809 F.3d at 343, the disparity of views between the courts is additional strong evidence that the law regarding the scope of the EEOC’s powers under Sections 706 and 707 is unclear.  Thus, the EEOC’s lawsuit — which aimed to clarify this scope — cannot be deemed frivolous, unreasonable, or without foundation.

The EEOC derived additional support from other civil rights statutes drawing a similar distinction between claims of discrimination, on the one hand, and a broader “pattern or practice of resistance to the full enjoyment of rights,” on the other.  See Title II of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000a et seq.; Fair Housing Act (Title VIII of the Civil Rights Act of 1964), 42 U.S.C. §§ 3601 et seq.; Civil Rights of Institutionalized Persons Act of 1980, 42 U.S.C. §§ 1997 et seq.  These other instances indicate that Congress’s word choice in Title VII was intentional, and not simply an accidental case of shoddy draftsmanship.

As the extensive material cited above shows, the EEOC had a viable legal basis to argue that the distinction between §§ 706 and 707(a) is a meaningful one, that the concept of a “pattern or practice of resistance to the full enjoyment of” Title VII rights is broader than just discrimination and retaliation, and that the EEOC could bring such “resistance” suits under § 707(a) without following the presuit procedures of § 706.  A legal theory undergirded by such extensive support cannot be the basis of a defensive fee award under Christiansburg.      

C.   The district court abused its discretion in concluding that the EEOC’s purported “failure to comply with its … regulations” justified an award of attorneys’ fees to CVS under Christiansburg.

Basing its analysis on the framework in Badillo, the district court acknowledged that the EEOC did not proceed in the face of an unambiguous adverse ruling and concluded that the factual basis for the Commission’s claim was not frivolous.  CVS III, 2017 WL 219519, at *2.  The court nevertheless concluded that an award of fees to CVS was appropriate because the EEOC failed to follow two of its implementing regulations pertaining to Section 706’s conciliation procedures: 29 C.F.R. §§ 1601.24(a) and 1601.27.  CVS III, 2017 WL 219519, at *2-3.  This conclusion misunderstands both the EEOC’s main argument and the relationship between Title VII and its implementing regulations.  Because it was not frivolous or contrary to existing law for the EEOC to make the statutory argument that Section 706’s conciliation requirement did not apply to Section 707(a) actions, it was not frivolous for the EEOC to have argued that these implementing regulations also did not apply to Section 707(a).  Accordingly, the district court abused its discretion in awarding attorneys’ fees to CVS on this basis.

1.     The EEOC’s statutory argument that conciliation was not required in this Section 707(a) case alleging a pattern or practice of resistance to Title VII rights was not frivolous, unreasonable, or without foundation.

As explained above, the EEOC’s challenge to CVS’s use of the Separation Agreement principally relied on linguistic distinctions between Sections 706, 707(a), and 707(e) of Title VII.  Section 707(a), which allows the Commission to sue anyone “engaged in a pattern or practice of resistance to the full enjoyment of any of the rights secured by” Title VII, 42 U.S.C. § 2000e-6(a), contrasts with Section 706(b), which summarizes the EEOC’s process for responding to a charge that an employer “has engaged in an unlawful employment practice,” id. § 2000e-5(b).  It also contrasts with Section 707(e), which permits the Commission to “investigate and act on a charge of a pattern or practice of discrimination.”  Id. § 2000e-6(e). 

Section 706(b) provides the procedures for filing and processing charges of unlawful employment practices, including the use of “informal methods of conference, conciliation, and persuasion” as part of the Commission’s attempts “to eliminate any such alleged unlawful employment practice.”  42 U.S.C. § 2000e-5(b).  Thus, by its plain language, Title VII obliges the EEOC to engage in presuit conciliation only when there has been a charge alleging an “unlawful employment practice” and the EEOC has determined there is reasonable cause to believe the charge is true.  The statute does not contemplate or provide for a charge alleging “a pattern or practice of resistance” and contains no other conciliation obligation. 

Based on these linguistic differences, the EEOC argued, the resistance actions countenanced by Section 707(a) may or may not arise from a charge of unlawful employment practice(s).  Actions not based on such a charge cannot require conciliation, but where a Section 707(a) action does arise from a charge of unlawful discrimination or retaliation, the full panoply of Section 706 procedures applies, including presuit conciliation after a reasonable cause finding.^[6]  42 U.S.C. § 2000e-6(e); EEOC Merits Opening Br. at 22, 23-24, 25-26, 36 (A.48, 49-50, 51-52, 62); EEOC Merits Reply Br. at 17-18 (A.207-08).

Thus, under the EEOC’s reading of the statutory language, Section 706’s conciliation requirement (as applied to Section 707 through Section 707(e)) did not apply in this case because the case arose entirely from an alleged “pattern or practice of resistance” in violation of Section 707(a) — there was no predicate charge of discrimination.^[7]  This interpretation of the ambiguous statutory language, though admittedly novel, finds support in precedent from this Court and others, the legislative history and text of Title VII, Supreme Court interpretation of other parts of Title VII, and the structure of other civil rights statutes.  See EEOC Merits Opening Br. at 15-41 (A.41-67); EEOC Merits Reply Br. at 2-12, 16-20 (A.192-202, 206-10). 

Indeed, the EEOC, the Supreme Court, and this Court in CVS II are all in complete agreement about at least one aspect of the EEOC’s understanding of Title VII: the EEOC’s statutory obligation to conciliate arises from the existence of a charge alleging an unlawful employment practice.  See Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1651 (2015) (noting the EEOC’s duty “to attempt conciliation of a discrimination charge prior to filing a lawsuit” (emphasis added)); CVS II, 809 F.3d at 341-42.  Thus, this portion of the EEOC’s argument cannot even be considered erroneous, much less frivolous under Christiansburg. 

Rather, this Court’s disagreement with the EEOC in CVS II over the necessity of conciliation in this case stemmed from its conclusion (contrary to the district court) that the EEOC may file suit under Section 707(a) only where there has been a charge of an unlawful employment practice.  CVS II, 809 F.3d at 341.  However, Christiansburg makes clear that disagreement alone does not justify a fee award.  434 U.S. at 421-22; see also Vandenplas, 797 F.2d at 431-32.  The EEOC’s argument was an internally consistent and reasonable interpretation of Title VII’s imprecise language, and it was not frivolous.  See supra at 19-26; see also EEOC Merits Reply Br. at 16-18 (A.206-08).  Importantly, in CVS III, the district court did not address the EEOC’s statutory argument at all, much less find that it was frivolous or unreasonable.

In addition, CVS II turned on a clarification of the law the EEOC could not have reasonably anticipated.  In its argument, as explained supra at 23-24, the EEOC relied on this Court’s precedent explaining that actions the EEOC files on its own initiative under Section 707 may be brought “without certain of the prerequisites to a civil action under § 2000e-5(f) [i.e., Section 706(f)].”  Harvey L. Walner, 91 F.3d at 968.  Relying on the same language, the district court agreed with the EEOC that cases brought under Section 707(a) did not require an underlying charge.  CVS I, 70 F. Supp. 3d at 941.  In CVS II, this Court clarified that Harvey L. Walner does not, in fact, allow the EEOC to proceed in any case without a charge.  809 F.3d at 343. 

The EEOC’s failure to foresee the panel’s subsequent interpretation of Harvey L. Walner — an interpretation brought to light only because the EEOC raised the issue via this litigation — does not render its contrary argument frivolous or unreasonable.  If a clarifying holding in another case arising in the midst of litigation prevents an award of fees, see Unity Ventures, 894 F.2d at 255, certainly such a holding on appeal in the same litigation, in a case clarifying the scope of the EEOC’s powers under §§ 706 and 707, must similarly preclude a fee award.  The fact that the district court agreed with the EEOC on this point further indicates that the statutory language is ambiguous and that the Commission’s position was not frivolous, unreasonable, or without foundation.

2.     Because Title VII’s implementing regulations cannot require the EEOC to exceed the authority conferred by the statute, they cannot impose a conciliation requirement where the statute does not, and the district court abused its discretion in holding otherwise.

The two procedural regulations on which the district court relied in awarding attorneys’ fees, 29 C.F.R. §§ 1601.24(a) and 1601.27, are implementing regulations for Title VII under 29 C.F.R. Part 1601.  They appear in Subpart B, the “Procedure for the Prevention of Unlawful Employment Practices.”  The regulations within Subpart B cover the range of procedures applicable to the EEOC’s processing of charges of unlawful employment practices from beginning to end: they start with the submission of information about violations of the antidiscrimination statutes and charge-filing; cover the processing and filing of charges; move on to investigations of charges and determinations of their merits; discuss conciliation of those charges; and conclude with the issuance of notices of right to sue and referral of certain matters to the Attorney General.  Id. §§ 1601.6-1601.29.  In other words, they are implementing regulations for the charge-processing procedures of § 706, and, as one might expect, both §§ 1601.24(a) and 1601.27 address conciliation in the context of charges of unlawful employment practices.  See § 1601.24(a) (requiring conciliation “where the Commission determines that there is reasonable cause to believe that an unlawful employment practice has occurred or is occurring”); § 1601.27 (authorizing the EEOC to “bring a civil action against any [non-government] respondent named in a charge . . . unless a conciliation agreement acceptable to the Commission has been secured” (emphasis added)).

The EEOC reasonably argued that neither regulation compelled conciliation in this case for two reasons.  First, if Section 706’s procedural requirements do not apply to Section 707(a) “resistance” cases brought without a charge, as the EEOC argued, Section 706’s regulations implementing those procedures perforce cannot apply in such situations.  Second, each regulation’s plain language makes it inapplicable to a pure resistance claim, i.e., one that does not involve a charge of unlawful employment practices: § 1601.24(a) applies only in cases involving “unlawful employment practices,” and § 1601.27 applies only in cases brought pursuant to a charge.  At the very least, this was how the EEOC interpreted its own regulations, and an agency’s interpretation of its own regulations must be given deference unless it is “plainly erroneous or inconsistent with the regulation.”  Auer v. Robbins, 519 U.S. 452, 461 (1997).  Given the regulations’ structure and plain language, the EEOC’s interpretation that they do not apply to suits brought under Section 707(a) without an underlying charge is certainly not “plainly erroneous or inconsistent” with them.  Thus, the district court’s award of attorneys’ fees for an alleged lack of compliance with §§ 1601.24(a) and 1601.27 is an abuse of discretion.  See LeBeau v. Libbey-Owens-Ford Co., 799 F.2d 1152, 1163 (7th Cir. 1986) (“[O]ur rejection of the EEOC’s arguments does not, without more, make them frivolous. The EEOC’s interpretation [of 29 C.F.R. § 1604.2] is within the fair meaning of the words of the guidelines.”).

The district court also relied on EEOC v. Pierce Packing Co., 669 F.2d 605 (9th Cir. 1982), in awarding fees against the EEOC for ostensibly not following its own regulations, but Pierce Packing is distinguishable.  That case involved a charge of sex discrimination — unquestionably an unlawful employment practice — filed with both the EEOC and the Department of Labor (DOL).  The DOL investigated the charges, and the EEOC relied on the DOL’s investigation in reaching a settlement agreement with the employer.  Several years later, the EEOC attempted to enforce the agreement by filing suit under Section 706 without conducting its own independent investigation, making its own finding of reasonable cause, or attempting conciliation.  Id. at 607-08.  The Ninth Circuit held that the EEOC was required to comply with these procedures prior to filing suit, and that its failure to abide by its regulations was unreasonable.  Id. at 609. 

Here, in contrast, there was no suit brought under Section 706 and no allegation of an unlawful employment practice.  The EEOC reasonably believed that because no charge existed, there was nothing triggering the application of its conciliation procedures.  The plausibility of the EEOC’s theory and the uncertain interpretation of Section 707 make this case wholly distinguishable.  In short, Pierce Packing is inapposite and does not support the imposition of fees here.

D.  Several other reasons counsel against awarding fees based on a failure to conciliate.

In addition to the reasonable basis for the EEOC’s interpretation of Title VII and its implementing regulations discussed above, several other factors strongly counsel against awarding attorneys’ fees in this case.  First, perhaps the clearest evidence the case is not legally frivolous is the fact that another federal court explicitly adopted the EEOC’s legal theory in a published opinion.  See EEOC v. Doherty Enters., Inc., 126 F. Supp. 3d 1305, 1310 (S.D. Fla. 2015).  In that case, after describing the EEOC’s rationale for its position, the court concluded, “[S]ection 707 does not require the EEOC to receive a charge, nor does it require conciliation.  Moreover, section 707(e) provides that the EEOC must comply with the administrative requirements of section 706 (which includes engaging in conciliation) only when the EEOC is investigating or acting on a charge of discrimination.”  Id.; see also id. at 1308 (“The question before the Court is whether the EEOC may bring a section 707 lawsuit against Defendant without an individual or Commissioner’s charge of discrimination and without an attempt at conciliation which are required for the EEOC to bring a suit pursuant to its authority under section 706.  The Court finds that it can.”).  The court in Doherty was fully aware of the contrary decision in CVS I but found it unpersuasive.  Id. at 1312-13.  Nor did it revisit its opinion following this Court’s decision in CVS II.  See EEOC v. Doherty Enters., Inc., No. 9:14-cv-81884-KAM, 2016 WL 4524224 (S.D. Fla. Apr. 5, 2016) (denying defendant’s motion for reconsideration in light of CVS II).  This difference in opinion between two federal courts about precisely the same legal issue strongly indicates the EEOC’s theory was at least plausible, and cannot be deemed legally frivolous.  See Barnes Found. v. Twp. of Lower Merion, 242 F.3d 151, 161 (3d Cir. 2001) (“[W]e are encouraged to reach the conclusion that the [plaintiff’s] action was not legally frivolous by the circumstance that courts addressing that doctrine in a civil rights context have not adopted the [contrary] position universally.”).

The district court dismissed the relevance of Doherty, concluding that it was simply following the precedent of its own circuit.  CVS III, 2017 WL 219519, at *2.  But Doherty did not merely rely on its circuit precedent.  Instead, the court engaged in a thorough analysis of the issue to come to a conclusion at odds with that of the district court here.  Even if the court in Doherty were simply following circuit precedent, moreover, that does not make the EEOC’s position unreasonable or legally frivolous; it merely shows that courts can disagree (and have disagreed) about the underlying issue.  The district court here also chided the court in Doherty for “fail[ing] to analyze the EEOC’s own regulations on the subject of conciliation.”  CVS III, 2017 WL 219519, at *2.  But this does not mean the Doherty court erred in overlooking a crucial argument; it merely means the court accepted the EEOC’s argument regarding the distinction between Section 706 and 707, and thus that the regulations governing the EEOC’s response to a charge alleging an unlawful employment action did not apply.  In short, the fact that Doherty accepted the EEOC’s theory of the case is strong evidence that the EEOC’s legal position was not frivolous, unreasonable, or without foundation.

Further demonstrating the inherent reasonableness of the EEOC’s theory in this case is the amount of hours CVS spent defending against it.  CVS requested reimbursement for 823.5 hours of attorney time to brief and argue the case in the district court and on appeal,^[8] a total it asserted was “below the actual number” of attorney hours spent on the case.  R.64 (CVS Mot. for Fees) at 12.  Because the case was disposed of prior to discovery, as CVS acknowledges, id., all such hours were presumably spent grappling with the legal issues involved.  See R.69 (CVS Fees Reply) at 7 (noting that its briefing in the case “address[ed] novel issues that required deep understanding of Title VII’s text, structure, and history”).  As this Court explained, “[T]he more time and effort a defendant spends in defending a [civil rights] case, the less likely it is that the case was frivolous and that a fee award is appropriate in the first place.”  Hamilton v. Daley, 777 F.2d 1207, 1214 n.7 (7th Cir. 1985); see also EEOC v. Sears, Roebuck & Co., 114 F.R.D. 615, 632 (N.D. Ill. 1987) (“The fact that Sears presented its own extensive evidence to rebut EEOC’s prima facie showing supports this court’s conclusion that EEOC’s case was not frivolous.”); In re TCI, 769 F.2d 441, 448 (7th Cir. 1985) (noting that “defendants need not incur substantial costs” defending a “preposterous” case).

The EEOC freely acknowledges the novelty of its legal theory — as did both this Court and CVS.  See CVS II, 809 F.3d at 341 (referring to the EEOC’s “novel interpretation of its powers under Section 707(a)”); CVS Merits Opp. Br. at 1, 9, 23, 35-37, 46, 50 (A.117, 125, 139, 151-53, 162, 166); R.64 (CVS Mot. for Fees) at 13 (referring to the “novel and unprecedented nature of this case”).  But the lack of controlling precedent on this issue of statutory interpretation counsels against an award of attorneys’ fees, as the Supreme Court and this Court have both explained.  The Supreme Court in Christiansburg approvingly noted the district court’s characterization of the case as “an issue of first impression requiring judicial resolution” in explaining why a defensive fee award was unwarranted.  434 U.S. at 423-24.  In LeBeau, similarly, this Court observed that one factor relevant to the imposition of fees was “whether the issue involved in the case was one of first impression requiring judicial resolution,” and explained that an action’s novelty could “militate against a fee award to a defendant.”  799 F.2d at 1156-57 (citing Reichenberger v. Pritchard, 660 F.2d 280, 288 (7th Cir. 1981)). 

Indeed, novel challenges like the one the EEOC presented here are fundamental to the enforcement of the civil rights statutes.  Far from merely tolerating such “aggressive and creative attack by civil rights plaintiffs,” courts affirmatively rely on these efforts to develop and enforce civil rights law.  Hamer, 819 F.2d at 1367; see also Kohler, 780 F.3d at 1267.  This may be seen in the numerous landmark decisions interpreting Title VII coming years after the statute’s enactment.  See, e.g., Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 65 (1986) (recognizing sexual harassment theory 22 years after enactment); Price Waterhouse v. Hopkins, 490 U.S. 228, 250-51 (1989) (recognizing sex-stereotyping 25 years after enactment); Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 79 (1998) (recognizing same-sex harassment 34 years after enactment); Hively v. Ivy Tech Community Coll., 853 F.3d 339, 341 (7th Cir. 2017) (en banc) (recognizing that Title VII’s prohibition of discrimination because of sex protects against sexual orientation discrimination 53 years after enactment).  Awarding attorneys’ fees against the EEOC for pursuing a novel theory would constitute precisely the sort of “post hoc reasoning” and “hindsight logic” the Supreme Court forbade in Christiansburg.  See Christiansburg, 434 U.S. at 421-22; Vandenplas, 797 F.2d at 431-32; Hamer, 819 F.2d at 1367 (cautioning against “unreasonabl[e] penaliz[ation] with hindsight” in awarding attorneys’ fees to defendants).

In sum, the EEOC relied on its interpretation of Title VII and its implementing regulations in not conciliating with CVS before filing suit.  This legal theory, though ultimately unsuccessful, was certainly plausible, as shown by the disagreement between this Court and the district court over the need for an underlying charge before bringing suit under Section 707(a), by Doherty’s contrary conclusion about the merits of the case, and by the amount of work CVS claims was necessary to refute it.  The district court’s contrary conclusion was an abuse of discretion.

II.            The District Court Did Not Abuse Its Discretion in Concluding the EEOC Had a Sufficient Factual Basis for Its Suit.

CVS argued extensively in its motion for fees that the EEOC’s case lacked a factual basis, rendering it unreasonable and justifying a fee award.  It based this argument largely on a footnote in the district court’s decision in CVS I, but the district court specifically addressed this argument and rejected it in CVS III, explaining the distinction between its disagreement with the EEOC on the merits and the standard for an award of attorneys’ fees.  In the event CVS should raise this argument again on appeal as an alternative ground for affirmance, this Court should hold that the district court did not abuse its discretion in finding it unavailing.

In describing the Separation Agreement’s potential chilling effect, the Commission explained in detail how the relevant language “might well have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  EEOC Merits Opening Br. at 38-51 (A.64-77) (citing Burlington N., 548 U.S. at 68).  The EEOC highlighted the potential chilling effects of the Separation Agreement’s dense and confusing language, its extremely broad definition of confidentiality, and its repeated threats to saddle the signatory with CVS’s legal fees in the event of a breach.  Id. at 42-47 (A.68-73).  Even if such provisions might ultimately be found unenforceable in court, the EEOC explained, they may nevertheless discourage legally unsophisticated employees from filing EEOC charges or cooperating with EEOC investigations because they leave such employees uncertain about their rights and threaten them with the possibility of significant financial costs.  Indeed, as at least one observer with no involvement in this suit has noted, this chilling effect explains why employers routinely persist in including such legally unenforceable terms in their contracts.  See id. at 47-49 (A.73-75); EEOC Merits Reply Br. at 14-15 (A.204-05) (citing Charles A. Sullivan, “The Puzzling Persistence of Unenforceable Contract Terms,” 70 Ohio St. L.J. 1127, 1127, 1132, 1136-37 (2009)). 

This Court did not ultimately agree with the EEOC’s interpretation of the language in the Separation Agreement or its potential effects, but, as discussed supra at 19-26, that does not render the argument frivolous, unreasonable, or lacking in foundation, as would be necessary to justify the fee award.  Christiansburg, 434 U.S. at 421-22; Vandenplas, 797 F.2d at 431-32.

In contending that the EEOC lacked a reasonable factual basis to bring suit, CVS relied principally on footnotes in the district court’s and this Court’s opinions stating that interpreting the Separation Agreement to restrict contact with the EEOC was “not reasonable” or “unreasonable.”  CVS I, 70 F. Supp. 3d at 940 n.3; CVS II, 809 F.3d at 341 n.4.  When ruling on CVS’s request for attorneys’ fees, however, the district court specifically rejected this argument, holding, “It cannot be said that the lawsuit was based on a frivolous factual premise.”  CVS III, 2017 WL 219519, at *2.  In coming to this conclusion, the court explained, “[T]he fact that a plaintiff advocates an inference that the court declines to adopt does not lead to the conclusion that the plaintiff acted without foundation.”  Id. (quoting Sanglap v. LaSalle Bank, FSB, 194 F. Supp. 2d 798, 800 (N.D. Ill. 2002), aff’d, 345 F.3d 515 (7th Cir. 2003)).  This conclusion was not an abuse of discretion.  Further, it underscores what the EEOC argued to the district court about its case more generally: even though it ultimately lost on this point, it could not have predicted to a certainty it would not prevail.  See Ekanem, 724 F.2d at 574-75.

CVS’s argument is erroneous for several additional reasons.  First, as this Court has recognized, there is nothing talismanic about the use of the term “(un)reasonable” in this context that automatically justifies fees.  In LeBeau, for example, this Court reversed an award of fees against the EEOC because it concluded that the Commission “did not bring or conduct this suit in a manner that could be labeled ‘frivolous’ or ‘unreasonable,’” even though it had previously affirmed the district court’s opinion on the merits of the case “rejecting as unreasonable the EEOC’s reading of its guidelines as prohibiting the defendants’ practices.”  799 F.2d at 1161; id. at 1156.  CVS’s attempt to imbue the word “unreasonable” in the merits decisions with enhanced meaning in the fees context is belied by the district court’s express finding to the contrary.  CVS III, 2017 WL 219519, at *2.

Second, both quotations on which CVS relies were relegated to footnotes by the district court and this Court, and neither relates to the non-frivolous statutory and regulatory issue that constitutes the bulk of both opinions.  In LeBeau, this Court stated it was its “duty to review the district court’s decision on the EEOC’s case as a whole,” not by focusing on whichever aspects of it may have been infirm, however peripheral.  799 F.2d at 1160 n.11 (emphasis added).  CVS pointed to no case in its district court briefs — and the EEOC is aware of no such case — in which an issue the court treated in such an ancillary fashion justified a fee award.

Because the Commission had a reasonable factual basis for its litigation position and could not have predicted to a certainty it would not prevail, the factual underpinning for its case does not justify a fee award.  If CVS were to reargue this issue as an alternative grounds for affirmance on appeal, this Court should conclude that the district court acted well within its discretion in coming to this conclusion.  It should not be reversed on appeal.

III.        Even if Fees Were Warranted, the Amount the District Court Awarded Was Excessive.

As explained above, fees are not appropriate in this case under the Christiansburg standard and this Court’s precedent.  Even if this Court should find that fees were justified, however, the amount the district court awarded was wholly excessive. 

Although a district court has broad discretion in determining the amount of a fee award, that discretion is not unbounded, and the court is not free to reach an unreasonable conclusion.  See Johnson v. GDF, Inc., 668 F.3d 927, 929-30 (7th Cir. 2012) (“[A]lthough a district court has significant discretion in determining the lodestar, it cannot base its decision on an irrelevant consideration or reach an unreasonable conclusion.”); United States v. Thouvenot, Wade & Moerschen, Inc., 596 F.3d 378, 386 (7th Cir. 2010) (“The concept of ‘abuse of discretion’ recognizes the possibility that a judge will at times reach a result that persuades the appellate court that he made an unreasonable ruling....”).  An abuse of discretion exists when a decision “is not one that could have been reached by a reasonable jurist,” is “fundamentally wrong,” or is “clearly unreasonable, arbitrary, or fanciful.”  Greviskes v. Univs. Research Ass'n, Inc., 417 F.3d 752, 758 (7th Cir. 2005).

This case involved only a single legal issue in both the district court and this Court, with no discovery and a minimal record.  All three components of the fee total — the hours allocated for work on the motion to dismiss/motion for summary judgment, for work done on the appeal, and for preparation of the motion for fees — are excessive on their face.  See Guckenberger v. Boston Univ., 8 F. Supp. 2d 91, 100 (D. Mass. 1998) (reducing a fee award where the plaintiff’s claimed fees were “facially excessive”).  Thus, the district court’s unreasonable award of nearly $308,000 in fees is fundamentally wrong and constitutes an abuse of discretion.

District courts may only award fees for hours that are “reasonably expended.”  Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).  The party seeking fees has the responsibility of establishing an entitlement to the claimed fees.  Id. at 437; see also Hamilton, 777 F.2d at 1214 (holding that prevailing defendants “must prevent their costs from becoming exorbitantly high and … establish that the tasks … were reasonably necessary”).  Any fees that are “excessive, redundant, or otherwise unnecessary” must be excluded from the total.  Hensley, 461 U.S. at 434; see also Johnson, 668 F.3d at 931.

This case turned entirely on a single legal issue of statutory interpretation.  Because the parties conducted no discovery, all attorney time went to the research and presentation of arguments on this issue, which CVS presented to the district court in its motion to dismiss and reply.  The drafting of two twenty-page briefs concerning a single legal issue does not justify the nearly 250 hours of attorney time claimed for CVS’s district court briefing, and the district court’s contrary conclusion was an abuse of discretion. 

Courts have repeatedly reduced the amount of a fee award in analogous circumstances.  For example, in Embry v. Colvin, No. 12 C 3685, 2015 WL 4720106 (N.D. Ill. Aug. 4, 2015), the prevailing party claimed 233 hours for work on a summary judgment motion, including review of a 524-page record, and 357 hours overall.  The court found that the number of claimed hours was “unreasonable” and “excessive by any standard,” and reduced it to 70.  Id. at *5-6.  Similarly, in American Communications Association, Local 10 v. Retirement Plan for Employees of RCA Corp., defendant sought attorneys’ fees for 262.5 hours’ work spent on a case dismissed prior to discovery.  The court held that this amount was “excessive,” given that the defendant’s initial challenge to the complaint was dispositive, and “[t]he legal services rendered did not include pretrial discovery, preparation for trial or a trial.”  507 F. Supp. 922, 924 (S.D.N.Y. 1981).  The court therefore awarded less than a quarter of the requested legal fees.  Id.

The EEOC acknowledges that the single legal issue in this case was a complicated one, involving the interpretation of complex and ambiguous statutory language.  In its district court briefing, however, CVS does not even concede that much.  Instead, CVS contends that the case presented no ambiguity: it argues that “no extensive analysis was necessary,” the case did not present “any factual complexities,” application of Section 707 was “clear,” and the Commission’s theory was so obviously “baseless” from the outset that any argument to the contrary is necessarily “nonsense.”  R.69 (CVS Fees Reply) at 1-3.  The EEOC vigorously disputes this characterization, but insofar as this Court might agree with CVS, it follows that CVS cannot justify the hours it claims were necessary to refute such an ostensibly groundless claim.  As this Court explained in Hamilton, the amount of time spent defending a civil rights claim is inversely proportional to the likelihood of its frivolousness — if it is in fact clearly frivolous from the outset, the defendant cannot justify spending extensive hours to dispose of it.  Hamilton, 777 F.2d at 1214 & n.7; see also Sears, Roebuck & Co., 114 F.R.D. at 632 (holding that the defendant’s extensive rebuttal of the EEOC’s case belied its claim of frivolousness); In re TCI, 769 F.2d at 448 (holding that substantial costs are unnecessary to defeat a meritless case).

The district court awarded fees for 300 hours CVS spent litigating this case on appeal.  Although this is fewer than the 574.3 hours CVS claimed for its appellate work, the reduction did not go far enough considering the posture of the case.  The record was virtually nonexistent; CVS had already conducted all necessary legal research for the arguments it presented to the district court; and the hours claimed for district court briefing are already overly inflated for a case CVS claims was clearly destined to fail from the outset.  See Greenfield Mills, Inc. v. Carter, 569 F. Supp. 2d 737, 753-54 (N.D. Ind. 2008) (reducing claimed amount of plaintiff’s attorneys’ fees for appellate work from 457.55 hours to 250 hours, the same amount awarded for “the extensive summary judgment proceedings” in a complicated Clean Water Act suit); see also Chalmers v. City of Los Angeles, 796 F.2d 1205, 1214 (9th Cir. 1986) (reducing amount of allowable hours on appeal when issues were the same as those presented to the district court); see generally Hamilton, 777 F.2d at 1214 & n.7 (questioning the number of hours defendants spent defending a case they claimed was frivolous from the outset).

The district court also awarded CVS fees for an additional 66.2 hours spent preparing its fee petition.  With respect to the number of hours claimed for such petitions, courts in the Seventh Circuit “repeatedly have reduced the amount of time spent in preparation of the fee petition so that that amount is less than 10% (and often below 5%) of the total hours expended in prosecution.”  Delgado v. Village of Rosemont, No. 03 C 7050, 2006 WL 3147695, at *4 (N.D. Ill. Oct. 31, 2006) (reducing plaintiff’s reimbursable time working on fee petition from 6.4% to 4% of time spent litigating).  Here, reducing the fee petition amount to 5% of the 549.2 hours the district court allowed would reduce this figure to 27.5 hours; even at 10%, the amount of reimbursable hours should not have exceeded 54.9.  Under either standard, 66.2 hours was excessive.

In an attempt to justify the enormous amount of attorneys’ fees claimed, CVS argued in part that it should be rewarded because it “headed off what likely would have been protracted litigation requiring potentially thousands of hours of attorney time,” and that the “relative efficiencies” allegedly gained by heading off litigation before it became more expensive justifies a fee increase.  R.64 (CVS Fees Br.) at 14; see also R.69 (CVS Fees Reply) at 7 (claiming entitlement to fees because “both sides saved thousands of hours that would otherwise have been spent exploring whether the ‘more than 650 employees’ who signed CVS’s agreement had been chilled” (emphasis in original)).  CVS cites no case supporting this remarkable “stitch in time saves nine” theory of fee entitlement — which should be no surprise.  The law is clear that prevailing parties cannot recover fees they would not bill to their clients.  See Hensley, 461 U.S. at 434 (“Hours that are not properly billed to one’s client also are not properly billed to one’s adversary pursuant to statutory authority.” (citation omitted)); Hamilton, 777 F.2d at 1214 (same).  It is inconceivable CVS would agree to pay its counsel inflated fees for “thousands of hours of attorney time that CVS’s attorneys’ successful strategy saved”; there is, accordingly, no legal authority allowing CVS to bill the EEOC for the same amount. 

Nor does the alleged prevention of subsequent litigation costs support any upward adjustment to the lodestar amount of fees.  As the Supreme Court has explained, the lodestar is “presumed to be the reasonable fee” in civil rights cases.  See Blum v. Stenson, 465 U.S. 886, 897-901 (1984) (rejecting a claim for fees in excess of the lodestar amount premised on the novelty and complexity of legal issues and the claim that “the results were of far-reaching significance to a large class of people”); Loan v. Prudential Ins. Co., 788 F. Supp. 2d 558, 567 (E.D. Ky. 2011) (“A positive result in a case that does not involve traditional discovery or a jury trial … is not exceptional.”).

CONCLUSION

For the foregoing reasons, the EEOC respectfully asks this Court to vacate the judgment of the district court awarding attorneys’ fees and costs to CVS.

Respectfully submitted,

 

JAMES L. LEE

Deputy General Counsel

 

JENNIFER S. GOLDSTEIN

Associate General Counsel

 

ELIZABETH E. THERAN

Acting Assistant General Counsel

 

/s/ Jeremy D. Horowitz

JEREMY D. HOROWITZ

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., Room 5SW24J

Washington, D.C. 20507

(202) 663-4716

jeremy.horowitz@eeoc.gov

 

CERTIFICATE OF COMPLIANCE

I hereby certify that this brief complies with the type-volume requirements set forth in Federal Rules of Appellate Procedure Rule 32(a)(7)(B).  This brief contains 10,825 words, from the Statement of Jurisdiction through the Conclusion, as determined by the Microsoft Word 2016 word processing program, with 14-point proportionally spaced type for text and footnotes.

/s/ Jeremy D. Horowitz

JEREMY D. HOROWITZ

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., Room 5SW24J

Washington, D.C. 20507

(202) 663-4716

jeremy.horowitz@eeoc.gov

 

 

Dated: July 17, 2017

 

 

CIRCUIT RULE 30(D) STATEMENT

Pursuant to Seventh Circuit Rule 30(d), counsel certifies that all materials required by Seventh Circuit Rules 30(a) and 30(b) are included in the Appendix.

/s/ Jeremy D. Horowitz

JEREMY D. HOROWITZ

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., Room 5SW24J

Washington, D.C. 20507

(202) 663-4716

jeremy.horowitz@eeoc.gov

 

Dated: July 17, 2017

CERTIFICATE OF SERVICE

I, Jeremy D. Horowitz, hereby certify that, this 17th day of July, 2017, I electronically filed the foregoing brief and appendix with the Court via the appellate CM/ECF system.  I also certify that the following counsel of record, who have consented to electronic service, will be served the foregoing brief and appendix via the appellate CM/ECF system:

 

 

Counsel for Defendant/Appellee:

Eric S. Dreiband

Jacob Moshe Roth

Jones Day

51 Louisiana Ave., N.W.

Washington, D.C. 20001

(202) 879-3720

esdreiband@jonesday.com

 

 

/s/ Jeremy D. Horowitz

JEREMY D. HOROWITZ

Attorney

Equal Employment

Opportunity Commission

Office of General Counsel

131 M St. N.E., Room 5SW24J

Washington, D.C. 20507

(202) 663-4716

jeremy.horowitz@eeoc.gov