## Facts

- Consolidated Service Systems was a small janitorial business in the Chicago area with annual sales of about $400,000, owned and run by Mr. Hwang, a Korean immigrant who did not speak English.
- During the relevant period in the 1980s, Consolidated’s workforce was predominantly Korean: about 73% of applicants and 81% of hires were Korean.
- Koreans comprised a very small share of the broader Cook County labor market (less than 1% overall and about 3% of janitors/cleaners).
- Consolidated did not use conventional advertising and relied primarily on word-of-mouth referrals within Hwang’s social and community networks, which were largely Korean.
- The EEOC brought a Title VII pattern-or-practice case alleging national origin discrimination against non-Koreans based largely on the statistical disparity and the referral-based recruiting method.
- After a bench trial, the district court entered judgment for Consolidated and denied Consolidated’s request for attorney’s fees.

## Issues

1. Whether an overwhelmingly Korean workforce produced by word-of-mouth recruiting within an ethnic community, supported primarily by statistical disparity evidence, established intentional national-origin discrimination under Title VII.
2. Whether the prevailing defendant was entitled to attorney’s fees under Title VII § 706(k) because the EEOC’s suit was frivolous, unreasonable, or without foundation.

## Decision

- The Seventh Circuit affirmed judgment for Consolidated on the Title VII claim.
- The court held the EEOC failed to prove intentional discrimination; the recruiting practice was characterized as passive reliance on the owner’s social network rather than purposeful exclusion of non-Koreans.
- The court affirmed denial of attorney’s fees to Consolidated, concluding the EEOC’s case was not frivolous given the stark statistics and existing litigation frameworks.

## Legal Principles

- Title VII disparate-treatment (including pattern-or-practice) liability requires proof of intentional discrimination; workforce imbalance alone does not establish intent.
- Statistical disparities may create a prima facie inference, but they do not compel a finding of intentional discrimination when alternative, non-discriminatory explanations credibly account for the outcome.
- Reliance on word-of-mouth referrals, without evidence that qualified nonmembers of the favored group were rejected because of protected status, does not by itself prove intentional discrimination.
- Title VII does not require an employer, particularly a small firm using low-cost recruitment methods, to recruit in ways designed to maximize diversity in the applicant pool.
- A prevailing Title VII defendant may recover attorney’s fees only if the plaintiff’s action was frivolous, unreasonable, or without foundation; losing on the merits is insufficient.

## Conclusion

The Seventh Circuit held that the EEOC did not prove Consolidated intentionally discriminated based on national origin where a small employer’s passive, community-based word-of-mouth recruiting produced a heavily Korean workforce, and it also held the government’s suit was not frivolous, so the defendant could not recover attorney’s fees.


Equal Emp. Opportunity Comm'n v. Consol. Serv. Sys., 989 F.2d 233 (7th Cir. 1993)