U.S. SUPREME COURT RULINGS CLARIFY TITLE VII LIMITATIONS PERIOD AND “PREVAILING PARTY” CRITERIA

Standard

In two recent cases, the United States Supreme Court clarified (1) that the statute of limitations on a Title VII cause of action based on constructive termination begins upon notice of the employee’s resignation, and (2) that a defendant in a Title VII case may be determined a “prevailing party,” which may be entitled to attorneys’ fees, without having obtained a favorable ruling on the merits. The first decision was unanimous; the second, nearly so.

Statute of Limitations in a Title VII Claim Based upon Constructive Discharge. In Green v. Brennan (May 23, 2016), the Postal Service passed over its longtime employee, Green, in 2008 for a promotion for which he had applied, and he complained that the decision was due to his race (African-American). He later alleged that in 2009 his employer retaliated against him for that complaint. He tendered his resignation on February 9, 2010, effective March 31. Green contacted an Equal Employment Opportunity counselor on March 22, 2010, claiming he was constructively discharged, in violation of Title VII, 42 U.S.C. § 2000e et seq., which prohibits employers from discriminating on the basis of, among other things, race, or retaliating against an employee for seeking relief for such discrimination.

The applicable regulations, 29 CFR § 1614.105(a)(1), require a federal civil servant to contact an EEO counselor “within 45 days of the date of the matter alleged to be discriminatory.” The Court noted that this regulation, which applies to federal employees, “has a statutory analog for private-sector Title VII plaintiffs, who must file a charge with the EEOC within 180 or 300 days ‘after the alleged unlawful employment practice occurred,’” under 42 U.S.C. § 2000e-5(e)(1). Therefore, the Court’s holding most likely will apply to Title VII claims filed against private employers.

Applying the “standard rule” for limitations periods, under which the period commences only when a plaintiff “has a complete and present cause of action,” i.e., a claim on which the plaintiff “can file suit and obtain relief,” the Court determined that, in a constructive discharge claim, the “matter alleged to be discriminatory” must include his or her resignation. The Court also determined that “resignation” occurs when the employee gives notice of his or her resignation, not the subsequent date when the resignation is effective.

Three reasons supported the determination that the statute of limitations begins to run upon resignation: (1) In a constructive discharge claim, the employee’s resignation is an element of the cause of action. (2) The language of the applicable regulation evinced no intent to displace the standard rule. And (3) practical considerations supported the determination, in light of Title VII’s structure, which is geared toward giving employees a remedy when impacted by discrimination.

Defendant Employer Need Not Obtain Favorable Ruling on the Merits to be Deemed the Prevailing Party. In CRST Van Expedited, Inc. v. EEOC (May 19, 2016), the Supreme Court held that an employer may be determined to be the prevailing party in an action brought by the EEOC against it even if the court has not made a favorable ruling on the merits for the defendant. Under Title VII, 42 U.S.C. § 2000e-5(k), a court may grant a “prevailing party” other than the EEOC “a reasonable attorney’s fee” as costs. Before determining whether to exercise that discretion, therefore, the court must first determine whether the party seeking fees has prevailed.

Noting that the Court has used a consistent approach in interpreting the term “prevailing party” in the various fee-shifting statutes in which it appears, and that the “touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties,” which is “marked by ‘judicial imprimatur,’” the Court held “that a defendant need not obtain a favorable judgment on the merits in order to be a ‘prevailing party.’” Common sense principles supported this holding. “The defendant has . . . fulfilled its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision,” and even if the judgment against the plaintiff is “for a nonmerits reason.” Moreover, neither the language of nor the policy underlying the fee-shifting statute required that such a decision be on the merits for the defendant to be the prevailing party.

 

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