U.S. Equal Employment Opportunity Commission v. CVS Pharmacy, Inc.

Filing 71

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 1/18/2017. (bg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION,
Plaintiff,
v.
CVS PHARMACY, INC.,
Defendant.

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Case No. 14-cv-863
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Defendant CVS Pharmacy, Inc. filed a Motion for Attorney’s Fees [63] pursuant to
42 U.S.C. § 2000e-5(k), Federal Rule of Civil Procedure 54(d), and Local Rule 54.3. For the
reasons stated below, Defendant’s Motion for Attorney’s Fees [63] is granted in part and denied
in part.
BACKGROUND
The Equal Employment Opportunity Commission (the “EEOC”) filed suit against
CVS Pharmacy, Inc., alleging a pattern or practice of resistance to the full enjoyment of rights
secured by Title VII of the Civil Rights Act of 1964 in violation of 42 U.S.C. § 2000-e6(a).
Defendant filed a Motion to Dismiss or, in the Alternative, for Summary Judgment, which was
granted on October 7, 2014. On December 5, 2014, Plaintiff filed a Notice of Appeal. On
December 17, 2015, the Seventh Circuit upheld the grant of summary judgment in favor of
Defendant. Plaintiff’s petition for rehearing en banc was denied on March 9, 2016.

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LEGAL STANDARD
The attorney’s fee provision of Title VII states that “the court, in its discretion, may allow
the prevailing party . . . a reasonable attorney’s fee as part of the costs, and the [EEOC] . . . shall
be liable for costs the same as a private person.” 42 U.S.C. § 2000e–5(k). However, in Title VII
cases, attorney’s fees should be awarded to a prevailing defendant only “upon a finding that the
plaintiff’s action was frivolous, unreasonable, or without foundation, even though not brought in
subjective bad faith.” Christiansburg Garment Co. v. Equal Employment Opportunity Comm’n,
434 U.S. 412, 421 (1978). This standard is the same for the EEOC and for private litigants. Id.
at 422 n. 20.
ANALYSIS
Courts generally have awarded attorneys’ fees to prevailing defendants under 42 U.S.C.
§ 2000e–5(k) in two circumstances: (1) when the plaintiff “proceeds in the face of an
unambiguous adverse ruling”; or (2) when the plaintiff “is aware with some degree of certainty
of the factual or legal infirmity of his claim.” Badillo v. Central Steel & Wire Co., 717 F.2d
1160, 1163 (7th Cir. 1983). It is not disputed that CVS was the prevailing party. In determining
whether a prevailing defendant is entitled to fees, the court considers the following factors:
“(1) whether the suit is one of first impression; (2) whether there is or was a real threat of injury
to the plaintiff; and (3) whether the record supports a finding that the plaintiff’s action was
frivolous.” E.E.O.C. v. Sears, Roebuck & Co., 114 F.R.D. 615, 627 (N.D. Ill. 1987) (citing
LeBeau v. Libbey-Owens-Ford Co., 799 F.2d 1152, 1156 (7th Cir. 1986); Reichenberger v.
Pritchard, 660 F.2d 280, 288 (7th Cir. 1981)). A case is frivolous when it “has no reasonable
basis, whether in fact or law.” Tarkowski v. County of Lake, 775 F.2d 173, 176 (7th Cir. 1985).
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The claim that a Title VII “pattern or practice” case was frivolous must be carefully scrutinized.
Sears, 114 F.R.D. at 629 (citing Hermes v. Hein, 742 F.2d 350, 357 (7th Cir. 1984); Ekanem v.
Health and Hospital Corp. of Marion County, Indiana, 724 F.2d 563, 575 (7th Cir. 1983)).
Defendant argues that the lawsuit was frivolous for two reasons: (1) because the factual
premise of Plaintiff’s case was unreasonable and (2) because the lawsuit was filed in violation of
Title VII and the EEOC’s regulations. Plaintiff argues that the lawsuit was not frivolous or, in
the alternative, that Defendant’s proposed fees are unreasonable.
There is no claim that Plaintiff acted in the face of an unambiguous, advese ruling. It
must therefore be determined whether or not the claim was factually or legally infirm.
Factual Premise
Defendant argues that it was unreasonable for the EEOC to claim that the severance
terms were a pattern or practice of resistance to the rights secured by Title VII. Under Section
707(a), civil complaints may be brought when there is “reasonable cause to believe that any
person or group of persons is engaged in a pattern or practice of resistance to the full enjoyment
of any of the rights secured by” Title VII and “that the pattern or practice is of such a nature and
is intended to deny the full exercise of the rights herein described.” 42 U.S.C. § 2000e-6(a).
This Court found that the severance agreement contained a carve-out to the “covenant not to sue”
provision, which enabled former employees to file a complaint with the EEOC and participate in
enforcement of discrimination laws. The Seventh Circuit agreed. E.E.O.C. v.
CVS Pharmacy, Inc., 809 F.3d 335, 341 n. 4 (7th Cir. 2015) (“. . . the district court correctly
concluded that it is unreasonable to construe the Agreement as restricting the signatory from
filing a charge or otherwise participating in EEOC proceedings.”).
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However, “there is a significant difference between making a weak argument with little
chance of success . . . and making a frivolous argument with no chance of success.” Khan v.
Gallitano, 180 F.3d 829, 837 (7th Cir. 1999). The EEOC argued that a combination of factors
would lead a former employee to believe that they were precluded from exercising their rights
under Title VII. And, as this Court has previously stated, “[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.” Sanglap v. LaSalle Bank, FSB, 194 F. Supp. 2d 798, 800 (N.D. Ill. 2002),
aff’d, 345 F.3d 515 (7th Cir. 2003) (citing EEOC v. Elgin Teachers Ass’n, 27 F.3d 292, 295 (7th
Cir. 1994)). 1 It cannot be said that the lawsuit was based on a frivolous factual premise.
Legal Premise
Defendant argues that it was an unreasonable legal argument for the EEOC to file a
lawsuit without first engaging in conciliation. Plaintiff responds that other courts have held that
conciliation is not required under a Section 707 action. See Equal Employment
Opportunity Commn v. Doherty Enterprises, Inc., 126 F. Supp. 3d 1305, 1312-13 (S.D. Fla.
2015). However, there, the Florida district court was following the precedent of its own circuit:
“a requirement to conciliate is contrary to the precedent that binds this Court.” Id. at 1312
(citing United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826 (5th Cir. 1975)). The
Florida court also failed to analyze the EEOC’s own regulations on the subject of conciliation.

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The Seventh Circuit noted that “the EEOC [did not] present evidence that anyone has
actually been misled by the Agreement; instead, the EEOC admits that Ramos filed a charge of
discrimination one month after signing it.” CVS Pharmacy, Inc., 809 F.3d at 341 n. 4. But
again, plaintiff was advocating an inference that a reasonable person would be confused and
believe that they could not file a complaint with the EEOC and/or participate in enforcement of
discrimination laws, which the Court declined to adopt.
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Even so, fees are “only permitted when litigation proceeds in the face of controlling and
unambiguous precedent.” Hamer v. Lake Cty., 819 F.2d 1362, 1368 (7th Cir. 1987). 2
However, the EEOC’s own regulations require the agency to use informal methods of
eliminating an unlawful employment practice where it has reasonable cause to believe that such a
practice has occurred or is occurring. See 29 C.F.R. § 1601.24(a). Those regulations also
provide that the EEOC may only bring a civil action if it is unable to secure “a conciliation
agreement acceptable to the [EEOC].” 29 C.F.R. § 1601.27. Plaintiff argues that those
regulations only apply to unlawful employment practices, which it did not allege in this case.
However, the Complaint clearly alleges that CVS was engaging in unlawful employment
practices: “The alleged unlawful employment practices were and are now being
committed . . . .” (Compl., ¶ 3.)
Plaintiff also responds that it was not proceeding under a charge and that those
regulations are only applicable when the EEOC proceeds under a charge. 3 The regulation
requiring conciliation is not predicated on whether or not a charge has been brought: “Where the
Commission determines that there is reasonable cause to believe that an unlawful employment
practice has occurred or is occurring, the Commission shall endeavor to eliminate such practice
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An unpublished district court opinion has held that conciliation is required under
Section 707, but that is not controlling precedent. See E.E.O.C. v. United Air Lines, Inc.,
73 C 972, 1975 WL 194, *2 (N.D. Ill. June 26, 1975). That does not lead to the conclusion that
Plaintiff “proceed[ed] in the face of an unambiguous adverse ruling.” Badillo, 717 F.2d at 1163.
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The Seventh Circuit clarified proceeding without a charge is also not permitted. See
CVS Pharmacy, Inc., 809 F.3d at 343 (“Lastly, we clarify a statement made in dicta in an earlier
decision . . . . That statement should not be interpreted as permitting the EEOC to proceed
without a charge . . . .”).

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by informal methods of conference, conciliation and persuasion.” 29 C.F.R. § 1601.24(a). 4 Fee
awards have been upheld due to the “EEOC’s failure to comply with both its enabling act and its
regulations.” Equal Employment Opportunity Comm’n v. Pierce Packing Co., 669 F.2d 605, 609
(9th Cir. 1982).
The EEOC failed to comply with its enabling act and its regulations, and a fee award is
appropriate.
Attorney’s Fees
“The party seeking the fee award bears the burden of proving the reasonableness of the
hours worked and the hourly rates claimed.” Spegon v. Catholic Bishop of Chicago, 175 F.3d
544, 550 (7th Cir. 1999) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). The EEOC
does not challenge Defendant’s proposed hourly rates but does challenge the number of hours
claimed.
First, the EEOC argues that the records are insufficient and lack detail. This, the EEOC
contends, precludes an accurate determination of what hours were spent on frivolous claims and
what hours were spent on non-frivolous claims. A court must only award “fees requested [that]
would not have accrued but for the frivolous claim.” Fox v. Vice, 563 U.S. 826, 839 (2011). As
Defendant notes, there was only one claim: that CVS was engaging in a pattern or practice of
resistance to the full enjoyment of rights secured by Title VII of the Civil Rights Act of 1964 by
conditioning certain employees’ severance pay on the signing of a separation agreement. That

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It should be noted that 29 C.F.R. § 1601.24 is not located in the section titled
“Procedure Following Filing of a Charge,” as the EEOC claims, but in the section titled
“Procedure to Rectify Unlawful Employment Practices.”
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claim was legally frivolous because the suit ignored the EEOC’s obligation, under the statute and
its own regulations, to engage in conciliation before filing suit.
Second, the EEOC challenges the amount of time that Defendant spent on each
component of the trial and appellate court litigation. Defendant responds that the nature of the
issues required an in-depth understanding of Title VII’s text, structure, and history. This is true,
in part; the amount of hours claimed for the Motion to Dismiss or, in the Alternative, for
Summary Judgment are reasonable on this basis. However, Defendant is claiming more than
twice the number of hours spent on the appeal than it claims for the Motion to Dismiss or, in the
Alternative, for Summary Judgment. 5 The amount of hours spent on the appeal is excessive in
light of the fact that the legal issues were the same as those presented in the motion practice, and
there was no need to further develop a factual record at the appellate stage. Even the Petition for
Rehearing in the appellate court filed by the EEOC only required one more filing by Defendant
and essentially repeated the same arguments. Other courts have similarly reduced the hours
claimed on appeal where there is no apparent reason for the disparity given the similarity of the
issues raised in the trial court and those presented during the appeal. See Greenfield Mills, Inc. v.
Carter, 569 F. Supp. 2d 737, 753-54 (N.D. Ind. 2008) (“The court has reviewed the docket for
the appellate case and there is nothing reflected in the docket entries that would justify the
extensive time expenditures on appeal in this case. But for a supplemental brief filed ordered by
the Seventh Circuit after the amicus brief was submitted by the EPA, there appears to be nothing
substantially out of the ordinary on appeal to justify the time expenditures.”). Therefore, based

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The Motion seeks compensation for 249.2 hours for the Motion to Dismiss and for
Summary Judgment and 574.3 hours for the appeal.
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on the foregoing, the number of requested hours for the appeal is reduced from 574.3 hours to
300 hours.
CONCLUSION
For the reasons stated above, Defendant’s Motion for Attorney’s Fees [63] is granted in
part and denied in part. Defendant shall submit a proposed judgment order consistent with this
Memorandum and Opinion within thirty days of the entry of this Order.

Date:

January 18, 2017

/s/
JOHN W. DARRAH
United States District Court Judge

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