A workplace sexual harassment lawsuit brought against Cedar Rapids, IA-based CRST Van Expedited Inc. by the Equal Employment Opportunity Commission was dismissed by a federal district appeals court in February due to unfair legal tactics used by the EEOC, according to a Seattle Times report.

The CRST suit was prompted by a December 2005 complaint from driver Monika Starke, of Azle, TX, who alleged she was paired with a driver who constantly made sexual remarks and advances. She said she was later paired with another driver who demanded sex in exchange for a passing grade.

After failing to reach a settlement for Starke, EEOC filed a lawsuit in 2007 on behalf of all female drivers for the company charging they were subjected to “a sexually hostile and offensive work environment.” About 150 female drivers gave depositions against the company, but most were thrown out for a variety of legal reasons, the Times reported. The U.S. Chamber of Commerce filed a friend-of-the-court brief in the CRST case denouncing EEOC’s tactics.

EEOC formally appealed the ruling on Monday.

Judge Linda Reade dismissed the case and ordered the agency to pay CRST $4.4 million in attorney’s fees, saying the EEOC used “a ‘sue first, ask questions later’ litigation strategy.”

The appeals court largely sided with Judge Reade and in a 2-1 ruling said EEOC should have done more investigation and informal mediation before filing suit. CRST said it took disciplinary action against the offenders.

The court threw out the fee award and reinstated two claims: Starke’s and one filed by a woman who said her trainer repeatedly entered the cab wearing only his underwear.

“It’s a tragedy what happened,” said Cedar Rapids attorney Matt Reilly, who has represented female drivers in the case. “The sad thing about this is, the merits haven’t been an issue for so long. The appeal was about technicalities.”

“We think it was a very favorable decision,” said CRST General Counsel Eric Baker. “We certainly believe in all instances we took those matters seriously. We do believe that we will be exonerated.”

CRST is expected to renew its request for compensation for legal fees.

Because of the ruling, before filing a lawsuit on behalf of employees alleging similar discrimination, the EEOC will first have to investigate the merits of every worker’s claim and attempt to reach settlements, the Times report said, or risk having the case dismissed.

The EEOC argued that such a standard is impractical in cases involving hundreds or thousands of potential victims.

“It’s incredibly significant,” said Chicago lawyer Gerald Maatman Jr., who represents companies sued by the EEOC. “It is a signal by the federal courts that the tactics the EEOC has been using over the last several years may be improper.”

In its appeal on Monday, filed with the 8th Circuit Court of Appeals, EEOC asked the court to reconsider its ruling.

“The panel’s unprecedented imposition of this new requirement will impede EEOC’s ability to enforce ... civil rights laws in workplaces with the most widespread discrimination,” CNBC quoted the agency’s lawyers as writing in the filing.