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A California district court recently sanctioned the Equal Employment
Opportunity Commission (the “EEOC”) to the tune of over $1 million for
filing a lawsuit that the court deemed “unreasonable, frivolous and
without foundation” and for conducting an investigation that was
“incomplete, inadequate, biased and faulty.”
The facts underlying the EEOC’s pursuit of the lawsuit read something
like a made-for-television movie. The target of the EEOC’s lawsuit was
a law firm, which the EEOC accused of sexual harassment and pregnancy
discrimination. The law firm had two former male associates, Hanlon and
Greene, with an axe to grind against the firm. During the pendency of
the EEOC lawsuit, the law firm won a judgment of almost $200,000 against
Hanlon and Greene personally for claims such as interference with
contract and misappropriation of trade secrets. Greene, while he was
in-house counsel for the defendant law firm, had a romantic relationship
with another employee of the defendant, Jacobson.
The EEOC issued a “reasonable cause” finding of class-wide
discrimination based on its interviews with none other than Hanlon,
Greene, and Greene’s girlfriend, Jacobson. Subsequently, Jacobson was
the only employee that the EEOC interviewed with regards to the sexual
harassment portion of the lawsuit. Notwithstanding this seemingly
inadequate investigation of the charges, the EEOC continued litigating
the claims against the law firm, and the case culminated with a ten-day
long jury trial, with a verdict returned for the defendant. The Court
also found that the EEOC had acted in bad faith during discovery, doing
such things as filing a motion to compel information that was not
subject to discovery and seeking discovery directly from the defendant’s
counsel, in direct contravention and disregard of the attorney-client
privilege. In essence, the Court found, the “EEOC basically sought to
parlay a few isolated jokes and comments into bad-faith, exaggerated
allegations of a hostile work environment,” which caused the defendant
to incur over $1 million in litigation expenses.
In awarding fees
to the defendant, the Court found that “the EEOC either knew or
inexcusably failed to deduce that it was being used as a weapon in
Hanlon’s and Greene’s campaign to destroy the Defendant and his firm”
and ordered the EEOC to pay $1,022,653.69.
For questions
about this Alert, the EEOC’s investigative powers or procedures
generally, or any other employment law question, please contact
Bryn Wilson at
bwilson@poynerspruill.com or (919) 783-1117 or
Susie Gibbons at
sgibbons@poynerspruill.com or (919) 783-2813. |
