April 17, 2014 12:56PM # Judge Rebukes Labor Department Over Shoddy Case By [Walter Olson](https://www.cato.org/people/walter-olson) --- SHARE It seems every week or two another federal agency gets smacked down in court for trampling the rights of regulated parties in enforcement litigation. This week it’s the [Labor Department](http://www.nationallawjournal.com/id=1202650414809/Judge-Socks-Labor-Department-With-Costs-of-Failed-Lawsuit)’s turn: > The U.S. Department of Labor must pay more than $565,000 in attorney fees to an oilfield services company it accused of wage-and-hour violations totaling more than $6 million, a federal judge has ruled.… > > > Officials, who opened their investigation in 2010, alleged the business \[Texas-based Gate Guard Services, LLC\] improperly classified 400 gate attendants as independent contractors. > > > The agency would have learned that the guards weren’t employees had it talked to more than just a few of them, \[federal judge John\] Rainey wrote in a 24-page order. Because the probe was not “substantially justified,” Gate Guard was entitled to recover its attorney fees, he said. > > > “The DOL failed to act in a reasonable manner both before and during the course of this litigation,” Rainey wrote. Goaded by labor unions and other interested parties, the Obama Labor Department has made wage-and-hour law a big priority, with the President himself [pushing the law](https://www.cato.org/blog/obamas-overtime-edict-anything-free-lunch) into new ways of [overriding private contractual choice](https://www.cato.org/blog/obama-administration-decrees-overtime-home-health-companions). As for the overzealous enforcement, it’s coming to look less like inadvertence and more like systematic Administration policy. Last year [we noted](https://www.cato.org/blog/eleventh-circuit-overturns-department-labors-claim-authority-absurd) an Eleventh Circuit decision rebuffing as “absurd” a Labor Department claim of authority regarding the H‑2B guest worker program. The pattern extends to agency after agency, from the EPA ([ordered to pay](https://www.cato.org/blog/louisiana-man-wins-17-million-epa-malicious-prosecution) a Louisiana plant manager $1.7 million on a claim that hardly ever succeeds for defendants, malicious prosecution), to [white-collar enforcement](https://www.cato.org/blog/case-should-never-have-been-prosecuted), to a series of Justice Department prosecutions under the [Foreign Corrupt Practices Act](https://www.cato.org/blog/courts-fcpa-runaway-federal-prosecutors). Probably the agency to suffer the most humiliating reversals is the Equal Employment Opportunity Commission, nominally independent but in fact reshaped in recent years by presidential appointments into a hyperactive version of its already problematic self. You can [read here](http://overlawyered.com/2014/03/labor-employment-roundup-ii-8/) about some of the beatings the EEOC has taken in court in recent years, including a case last summer where the federal judge dismissed the commission’s lawsuit over a Maryland company’s use of criminal and credit background checks using words like “laughable,” “unreliable,” and “mind-boggling.” And just last week, as reported in this space, the Sixth Circuit [memorably slapped around](https://www.cato.org/blog/sixth-circuit-youre-drunk-eeoc-go-home) the commission’s amateurish use of expert testimony in another credit-check case, this time against the Kaplan education firm. As I [noted at Overlawyered](http://overlawyered.com/2014/04/judges-vs-eeoc/): > The Sixth Circuit has actually been one of the EEOC’s better circuits in recent years. For example, [it reversed](http://blogs.orrick.com/employment/2012/11/13/sixth-circuit-reverses-cintas-pattern-or-practice-case/) a Michigan federal judge who in 2011 [had awarded](http://www.ohioemployerlawblog.com/2011/08/eeoc-garners-26-million-fee-award-but.html) $2.6 million in attorneys’ fees to Cintas, the employee-uniform company, and reinstated the lawsuit. In doing so, the appellate panel nullified what had been the lower court’s findings of “egregious and unreasonable conduct” by the agency, including a “reckless sue first, ask questions later strategy.” The commission hailed the reversal as one of its big legal wins — although when one of your big boasts is getting $2.6 million in sanctions against you thrown out, it might be that you don’t have much to brag about.… > > > If you wonder why the commission persists in its extreme aggressiveness anyway, one answer may be that the strategy works: most defendants settle, and the commission [hauled in](http://www.abajournal.com/news/article/eeoc_won_record_372m_in_settlements_last_year_despite_filing_fewer_employme/) a record $372 million in settlements last year. Perhaps it is time for defendants to start settling less often. ##### Related Tags [Constitutional Law](https://www.cato.org/constitutional-law), [Regulation](https://www.cato.org/regulatory-studies), [Robert A. Levy Center for Constitutional Studies](https://www.cato.org/robert-levy-center-constitutional-studies) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).