Equal Emp't Opportunity Comm'n v. Propak Logistics, Inc.

• Decision Date: 25 March 2014
• Docket Number: No. 13–1687.,13–1687.
• Citation: 746 F.3d 145
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant, v. PROPAK LOGISTICS, INC., Defendant–Appellee.

746 F.3d 145

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff–Appellant,

v.PROPAK LOGISTICS, INC., Defendant–Appellee.

No. 13–1687.

United States Court of Appeals,Fourth Circuit.

Argued: Jan. 28, 2014.

Decided: March 25, 2014.

ARGUED:Susan Ruth Oxford, U.S. Equal Employment Opportunity Commission, Washington, D.C., for Appellant. John Doughty Cole, Sr., Nexsen Pruet, PLLC, Charlotte, North Carolina, for Appellee. ON BRIEF:P. David Lopez, Lorraine C. Davis, U.S. Equal Employment Opportunity Commission, Washington, D.C., for Appellant.

Before WILKINSON, KEENAN, and DIAZ, Circuit Judges.

Affirmed by published opinion. Judge KEENAN wrote the opinion, in which Judge WILKINSON and Judge DIAZ joined. Judge WILKINSON wrote a separate concurring opinion.

BARBARA MILANO KEENAN, Circuit Judge:

In this appeal, we consider whether the district court abused its discretion in ordering that the Equal Employment Opportunity Commission (EEOC) pay attorneys' fees to a prevailing defendant employer after the court awarded summary judgment to the employer in an action brought by the EEOC. In awarding attorneys' fees, the district court concluded that the EEOC acted unreasonably in filing the employment discrimination complaint, because events that occurred during the EEOC's administrative investigation precluded the EEOC from obtaining either injunctive or monetary judicial relief. Upon our review, we affirm the district court's judgment.

I.

In January 2003, Michael Quintois filed a charge of discrimination with the EEOC against his former employer, Propak Logistics, Inc. (Propak), a provider of commercialwarehousing, transportation, packaging, and shipping services. Quintois was a supervisor at Propak's Shelby, North Carolina facility, and alleged that Propak terminated his employment based on his “American” national origin after he complained that the company hired only Hispanic workers for certain supervisory positions. The EEOC notified Propak of the discrimination charge arising under Title VII of the Civil Rights Act of 1964 (Title VII).

Based on Quintois' discrimination charge, the EEOC initiated an investigation of Propak that lasted nearly six years. This investigation included extensive periods of delay and inactivity.

Although Propak responded to the charge in May 2003, the EEOC did not interview Quintois concerning Propak's response until May 2004. The EEOC also delayed until April 2004 its interview of Kathy Ponder, a Propak manager responsible for hiring decisions at the Shelby, North Carolina facility.

In September 2004, the EEOC designated the matter as a “class case.” However, as the district court later found, Propak did not receive notice of this procedural decision until about four years later in September 2008.¹

Although the EEOC scheduled and conducted two witness interviews between October 2004 and March 2005, little other investigative activity occurred during this period. The record also shows that the EEOC did not contact Propak for about two years, between June 6, 2005 and June 7, 2007. In June 2007, the EEOC contacted Propak to speak with Ponder, but was unable to interview her because she had left her job and her whereabouts were unknown.

During the course of the EEOC's inquiry, Quintois requested a “right to sue” authorization.² After the EEOC granted Quintois' request, Quintois filed a lawsuit against Propak in March 2008, which was dismissed about four months later upon agreement of the parties.

In September 2008, the EEOC concluded its investigation of Propak and issued a “determination letter.” The EEOC stated that it had found reason to conclude that Propak violated Title VII by failing to hire a class of non-Hispanic job applicants because of their race or national origin. In the letter, the EEOC also invited Propak to participate in informal conciliation to resolve the matter pursuant to the EEOC's statutory mandate to engage in such efforts.³See42 U.S.C. § 2000e–5(b).

In attempting to conciliate the matter, the EEOC proposed certain remedial measures concerning Propak's facilities in North Carolina and South Carolina. These measures would have required Propak in these locations to offer certain employment opportunities, to provide training for supervisors and managers, and to post certain notices. By this time, however, Propak had closed all its facilities in those states, thereby rendering it impossible for Propak to implement such remedial measures.⁴ Propak advised the EEOC of this fact about one month later.

The EEOC nevertheless initiated a lawsuit in the district court against Propak in August 2009, more than six and one-half years after Quintois filed his discrimination charge. The EEOC alleged in its complaint that between October 2002 and June 2004, Propak violated Title VII by refusing to hire, on the basis of national origin, a class of non-Hispanic individuals at the Shelby, North Carolina facility. The EEOC sought certain injunctive relief, including an order requiring that Propak institute policies and programs to benefit non-Hispanic persons in order to mitigate the effects of the allegedly unlawful employment practices. The EEOC also sought monetary relief on behalf of the affected class of non-Hispanic employment applicants.

Propak filed a motion to dismiss arguing, among other things, that the action should be barred under the doctrine of laches.⁵ The district court denied the motion without prejudice with respect to Propak's laches defense, and ordered the parties to engage in discovery limited to the issue whether Propak had suffered prejudice resulting from the EEOC's extensive delay in initiating the litigation.

At the conclusion of this discovery period, Propak filed a motion for summary judgment, again asserting the defense of laches. The district court granted Propak's motion, concluding that the EEOC's delay in initiating the lawsuit was “unreasonable.” In reaching this conclusion, the court emphasized the fact that during the investigation, “there were significant periods when the EEOC took little or no action toward completing the investigation.”

The district court held that Propak suffered prejudice resulting from the EEOC's “unreasonable delay.” The court observed that certain important witnesses, including the site managers for the Shelby facility during the relevant time period, were no longer employed by Propak and that “locating them would be difficult, if not impossible.” The court also stated that even if such witnesses ultimately could be located, they likely would have “faded memories” of the time period at issue, which was more than five years before the complaint was filed.

The court noted that the EEOC's delay caused Propak additional prejudice, because Propak routinely had destroyed personnel records three years after an individual no longer was employed by the company. Thus, Propak destroyed the records of employees who left the company between 2002 and 2004 before being notified in September 2008 that the EEOC was pursuing the matter on a class basis.⁶ The court specifically rejected the EEOC's argument that it had notified Propak of the class designation at an earlier date, observing that the record did not support the EEOC's assertion. Although the court also noted the EEOC's failure to identify purported victims and the unavailability of injunctive relief, the court primarily emphasized Propak's inability to produce key witnesses and the destruction of documents essential to Propak's defense.

After the district court entered its judgment in favor of Propak, the EEOC timely filed a notice of appeal. The EEOC later sought dismissal of the appeal, which this Court ordered upon the agreed motion of the parties.

The district court later considered Propak's motion seeking attorneys' fees in the amount of $192,602.95, which were incurred by Propak after the EEOC filed the complaint. The district court granted the motion, and awarded Propak nearly the full amount requested. Relying on the Supreme Court's holding in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the district court concluded that an award of attorneys' fees was appropriate because the EEOC knew or should have known that its claim “was frivolous, unreasonable, or groundless.” Id. at 422, 98 S.Ct. 694.

The district court held that the EEOC acted “unreasonably” in filing the complaint, and alternatively held that the EEOC acted “unreasonably” in continuing the litigation in view of the developing record. The court stated that the EEOC had acted unreasonably in filing the complaint because “by the time the EEOC determined to bring this action it was abundantly clear that a lawsuit would be moot and thus it was unreasonable to have filed it.” The court held that injunctive relief was not available because Propak had closed the Shelby plant and its other North Carolina facilities, and that an award of monetary damages was unlikely because the EEOC knew before filing the complaint that it could not identify the class of alleged victims.

With respect to the EEOC's continued pursuit of the litigation following discovery, the district court alternatively held that such pursuit was unreasonable because “it was again reaffirmed [during discovery] that purported victims and witnesses could not be located [and] the facilities were closed.” The court further concluded that the EEOC unreasonably continued to pursue the litigation after learning that the relevant employment records “were no longer in existence.”

Addressing the amount of attorneys' fees, the district court analyzed Propak's request in detail, despite the EEOC's failure to contest the amount sought, and ultimately awarded Propak $189,113.50.⁷ The EEOC filed a timely appeal challenging this award.

II.

The EEOC asks us to hold that federal courts are not permitted to apply the equitable defense of laches in a lawsuit brought by an agency of the federal government. Conceding that it...