Court Awards The EEOC Attorneys’ Fees In Contempt Dispute

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In EEOC v. New Indianapolis Hotels, LLC, No. 10-CV-1234 (S. D. Ind. Nov. 9, 2015), Judge William T. Lawrence of the U.S. District Court for the Southern District of Indiana granted the EEOC attorneys’ fees for the time it spent trying to enforce a consent decree against an employer.  This ruling is a cautionary tale for employers, both because it shows how far the EEOC is willing to go to enforce consent decrees and provides further support for the EEOC’s position that it can seek attorneys’ fees even though its attorneys do not bill a client.

Case Background

On November 30, 2010, the EEOC brought a Title VII action against New Indianapolis Hotels LLC (“New Indianapolis”).  On September 20, 2012, the EEOC and New Indianapolis settled the case pursuant to a consent decree.  The consent decree provided for a significant amount of injunctive relief.  On March 26, 2014, the EEOC filed  a motion for contempt, arguing that New Indianapolis violated five provisions of the consent decree, including: (1) workplace posting; (2) training of managers; (3) establishment of a new hiring procedure; (4) recordkeeping; and (5) reinstatement of alleged victims of discrimination

After almost a year of contempt proceedings, the Court found that New Indianapolis was in contempt because it had violated all five of the foregoing provisions.  The EEOC moved for attorneys’ fees for the time it spent litigating the motion for contempt.

The Court’s Ruling

The Court began by observing that federal judges have discretion to award attorneys’ fees in contempt actions.  Id. at 2.  It then pointed out that it would consider four factors in deciding whether to award attorneys’ fees, including: “(1) the harm from non-compliance; (2) the probable effectiveness of the sanction; (3) the financial resources of the contemnor and the burden the sanctions may impose; and (4) the offending party’s willfulness in disregarding the Court’s order.”  Id.

With respect to the first factor, the Court found that the violations of the consent decree “had a significant deleterious effect on individual class members.”  Id. at 3.  With respect to the second factor, the Court determined that an award of attorneys’ fees would be effective because it would “provide some remuneration for the time and expenses spent on the litigation.”  Id.  With respect to the third factor, the Court opined that New Indianapolis had failed to provide evidence that the imposition of attorneys’ fees would present a financial hardship.

The Court then addressed New Indianapolis’s argument that its violation was not willful as evidenced by the fact that it immediately complied with the consent decree after the magistrate judge recommended a finding of contempt.  Id. at 4.  The Court said this was “too little, too late,” and that New Indianapolis should have complied with the consent decree before the contempt motion was filed and before the magistrate judge issued his recommendation.  Id.  It thus concluded that an award of fees was appropriate.  Id.

The Court then determined whether the amount of fees requested by the EEOC was reasonable.  It found that the lodestar method – multiplying the hours spent by the EEOC on the contempt motion by a reasonable hourly rate – was the proper method of determining the EEOC’s fees.  Id.  It found that it could determine a reasonable hourly rate by looking to “prevailing market rates in the relevant community.”  Id.  It held that rates $325 and $275 per hour were reasonable for the EEOC’s attorneys, and that a rate of $100 per hour was reasonable for the EEOC’s paralegal.  Id. at 5.  As a result, the Court awarded the EEOC $50,515 in fees.  Id. at 9.

Implications For Employers

Employers involved in EEOC litigation should be wary of what injunctive terms they agree to in settling with the EEOC.  As this case demonstrates, the EEOC is willing to enforce the injunctive terms of consent decrees, so employers should be sure they are willing and able to satisfy the injunctive terms of any settlement with the EEOC before agreeing to them.  In addition, this case will provide further support for the EEOC’s position that, despite the fact its attorneys do not bill any client for their time, it should be entitled to attorneys’ fees in appropriate circumstances.

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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