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Equal Employment Opportunity Commission v. CVS Pharmacy, Inc.

United States Court of Appeals, Seventh Circuit

June 8, 2018

Equal Employment Opportunity Commission, Plaintiff-Appellant,
CVS Pharmacy, Inc., Defendant-Appellee.

          Argued December 5, 2017

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C 863 - John W. Darrah, Judge.

          Before Wood, Chief Judge, and Rovner and Hamilton, Circuit Judges.

          Wood, Chief Judge.

         On the surface, this appeal is about a fee award entered against the Equal Employment Opportunity Commission (EEOC or Commission). But there is more than meets the eye. The award relates to a complaint that the Commission filed against CVS Pharmacy, Inc., alleging that CVS was using a severance agreement that chilled its employees' exercise of their rights under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. After an investigation, the Commission filed suit in 2014 against CVS. It contended that CVS's use of the severance agreement constituted a "pattern or practice of resistance" to the rights protected by Title VII, in violation of section 707(a) of the statute. 42 U.S.C. § 2000e-6(a).

         The district court rejected this claim on summary judgment, and we affirmed in EEOC v. CVS Pharmacy, Inc., 809 F.3d 335 (7th Cir. 2015). After our decision, the district court awarded CVS $307, 902.30 in attorneys' fees. It reasoned that the EEOC should have realized even before filing the suit that EEOC regulations required initial conciliation before it could proceed with an enforcement action under section 707(a). But that was not at all clear at the time the EEOC acted. We conclude that the district court's decision impermissibly rested on hindsight, and so we reverse.


         Because we addressed the facts and legal background of this case at length in our earlier opinion, see 809 F.3d at 336- 38, a brief outline suffices for present purposes. CVS's severance agreement came to the attention of the EEOC in 2011 after a former store manager, Tonia Ramos, filed a charge with the Commission. Ramos had accepted a severance agreement that included a broad release of claims and a covenant not to sue, but which carved out exceptions for "rights that Employee cannot lawfully waive" and for participation "in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws." The EEOC argued that the agreement's broad release and obscure exceptions could deter signatories from cooperating with the EEOC or otherwise exercising their retained rights.

         Ordinarily, if the EEOC thinks that a charge has merit, the Commission first engages in conciliation with the employer pursuant to section 706's procedural requirements. See 42 U.S.C. § 2000e-5(b). If the parties cannot negotiate an acceptable solution, the Commission has the authority to sue the employer in federal court, on the employee's behalf. See id. § 2000e-5(f). But the EEOC took a different tack in Ramos's case. It abandoned Ramos's charge of an unlawful employment practice by issuing her a right-to-sue letter in June 2013. Eight months later, the EEOC filed suit under section 707(a), which it believed contained a grant of independent litigation authority. That section allows for suits against "any person or group of persons … engaged in a pattern or practice of resistance to the full enjoyment of any of the rights secured by this subchapter … ." Id. § 2000e-6(a).

         The statute distinguishes between section 706, which allows the EEOC to bring what are essentially individual suits, and section 707's class-like "pattern or practice" provisions. Typically, through section 707(e)'s incorporation of section 706's procedural requirements, the EEOC must follow the same pre-suit procedures whether the suit is an individual one or a pattern-or-practice action. Id. § 2000e-6(e) ("All such actions shall be conducted in accordance with the procedures set forth in [section 706] of this title."). But the EEOC took the position that a distinction between section 707's subsections excused it from doing so in this matter. Section 707(a), unlike section 707(e), gives the EEOC a right to litigate without an underlying charge or unlawful employment practice, and (the EEOC thought) by extension without first conciliating. In drawing this novel distinction, the EEOC noted the difference between the language of section 707(a) and section 707(e): the former refers to a "pattern or practice of resistance, " while the latter speaks of a "charge of a pattern of practice of discrimination." Id. § 2000e-6(a), (e). The Commission also distinguished between section 707(a)'s broad reach to "any person or group of persons" and section 707(e)'s limitation to employers. Id. In our opinion on the merits, we rejected the EEOC's arguments and held that conciliation is necessary under both sections.

         We are now faced with a different question: whether the EEOC's position was far enough afield at the time it was advanced that a fee award is warranted. The district court thought so, but only because it believed that the EEOC had taken a position contrary to its own regulations. (The Commission argued otherwise.) The court did not otherwise address the legal foundations of the case. In fact, it ruled that the EEOC's factual foundations for bringing suit were reasonable. CVS argues that the district court erred in this latter finding, and urges us to affirm on either ground.


         We review a district court's decision to award fees for an abuse of discretion. Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 639 (7th Cir. 2011). This deference accounts for the district court's "superior understanding of the litigation"; it is designed to avoid "a second major litigation" over attorneys' fees. Id. (quoting Spellan v. Bd. of Educ. for Dist. 111, 59 F.3d 642, 645 (7th Cir. 1995). But "the justifications for the generally deferential standard of review are absent" for questions of law. Jaffee v. Redmond, 142 F.3d 409, 412 (7th Cir. 1998). As always, we consider the district court's legal analysis de novo. Pickett, 664 F.3d at 639; Khan v. Gallitano, 180 F.3d 829, 837 (7th Cir. 1999). As applied here, we take a ...

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