Federal District Court Orders The EEOC To Pay $4.7 Million Dollars For Bringing "Groundless" Class Claims


In a recent landmark decision, a federal court in Iowa ordered the EEOC to pay an employer nearly $4.7 million in attorneys' fees and costs incurred by an employer while defending itself against class action claims brought against it by the EEOC which the court concluded were "unreasonable or groundless."  The EEOC investigated the company after a single female filed a sexual harassment charge. The EEOC expanded the scope of the initial charge and ultimately filed a lawsuit to include a class of 255 females who were purportedly harassed by male employees. In an opinion that followed the dismissals, the court cited, as a partial basis for its sanctions, the fact that the EEOC had not even investigated many of the class allegations or attempted to conciliate them prior to bringing the lawsuit. Then, on the same day of the dismissal of these EEOC class claims, a Wisconsin employer filed a lawsuit in federal court alleging that the EEOC violated its constitutional and statutory rights by surreptitiously sending emails to current employees’ work accounts in an attempt to "troll for plaintiffs to commence a class action" against the employer. Among other allegations, the employer alleged that the questionnaire sent to the employees was biased, came without warning, did not limit itself to the underlying age discrimination claims brought against the company, and asked that the employees stop their work to complete the questionnaire. In typical situations, cooperating with EEOC investigations normally leads to a faster and less expensive resolution of disputes. However, reasonable cooperation may not always work, despite repeated good-faith efforts to do so on the part of employers. In those instances, as these recent developments show, employers retain legal remedies to protect their interests.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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