Merits Win Unnecessary for Legal Fees, Justices Say

WASHINGTON (CN) — A business need not defeat litigation on the merits to be considered the prevailing party, the U.S. Supreme Court ruled Thursday.

The Equal Opportunity Employment Commission initiated the litigation with a complaint in Iowa, accusing CRST Van Expedited of having allowed severe and pervasive sexual harassment in its new-driver training program.

Out of 154 female drivers that the EEOC identified, however, the agency found traction only with claims on behalf of its lead plaintiff, Monika Starke.

CRST reached a $50,000 settlement as to Starke, but the court considered it the prevailing party anyway, awarding it more than $4.6 million in attorneys' fees, expenses and costs.

The Supreme Court took up the case last year to settle whether a party must obtain a ruling on the merits to be considered the prevailing party.

Vacating the Eighth Circuit's holding today, the justices were unanimous that a merits victory is not necessary.

"Plaintiffs and defendants come to court with different objectives," Justice Antony Kennedy wrote for the court. "A plaintiff seeks a material alteration in the legal relationship between the parties. A defendant seeks to prevent this alteration to the extent it is in the plaintiff's favor. The defendant, of course, might prefer a judgment vindicating its position regarding the substantive merits of the plaintiff's allegations. The defendant has, however, fulfilled its primary objective whenever the plaintiff's challenge is rebuffed, irrespective of the precise reason for the court's decision. The defendant may prevail even if the court's final judgment rejects the plaintiff's claim for a nonmerits reason."

Kennedy found no indication from Congress "that defendants should be eligible to recover attorney's fees only when courts dispose of claims on the merits."

Citing precedent that lets prevailing defendants recover whenever they face frivolous claims, Kennedy said "it would make little sense if Congress' policy of 'sparing defendants from the costs of frivolous litigation' depended on the distinction between merits-based and non-merits-based frivolity."

"Congress must have intended that a defendant could recover fees expended in frivolous, unreasonable, or groundless litigation when the case is resolved in the defendant's favor, whether on the merits or not," the decision continues. "Imposing an on-the-merits requirement for a defendant to obtain prevailing party status would undermine that congressional policy by blocking a whole category of defendants for whom Congress wished to make fee awards available."

Kennedy concluded the ruling with regret that a battle over fees brought a second major round of litigation.

Justice Clarence Thomas meanwhile penned a concurring opinion to criticize the 1978 case Christiansburg Garment Co. v. EEOC, which he said "mistakenly cast aside the statutory language" in interpreting the phrase "prevailing party."

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