Opinion
Case No. 6:98-cv-876-Orl-31JGG
March 27, 2002
ORDER
This cause came on for consideration on the Report and Recommendation ("RR") of the Magistrate Judge (Doc. 289), the Plaintiffs' objections thereto (Docs. 290 294), and the Defendant's response to those objections (Doc. 299). The Court has reviewed these documents and the accompanying memoranda and affidavits de novo, reviewed the transcripts of the hearings held before the Magistrate Judge, heard testimony of the parties and their attorneys at the evidentiary hearing held on October 17, 2001, reviewed the written arguments of counsel following the evidentiary hearing, and is otherwise fully advised in the premises.
I. PROCEDURAL HISTORY AND FACTUAL BACKGROUND
The facts of this case have been fully detailed in the "Factual Background" section of the RR (Doc. 289) that is the subject of this Order and the Court's previous orders (Docs. 240 244). However, for purposes of this Order, some discussion of those facts, as well as the additional facts adduced at the evidentiary hearing, is necessary.
Plaintiffs Jerelds, Hill, and Pride worked for the City of Orlando ("City") as firefighters. In order to be promoted to lieutenant, district chief, or assistant chief, candidates must pass an examination. All who pass the examination are placed on the eligibility list and the fire chief selects the person whom he believes is the best candidate for the position from the eligibility list. These selections are subject to administrative review.
In 1995, both Hill and Pride passed the examination for promotion to district chief. Therefore, they were placed on the eligibility list with twenty-six other candidates. In 1996, Chief Harkins promoted three Caucasian candidates from the list. The Civil Service Board approved Harkin's recommendations for promotion to district chief without opposition or challenge.
Neither Hill nor Pride sought review of the 1996 promotions from the Civil Service Board.
Also in 1995, Jerelds took the examination for assistant chief, which he failed. Jerelds filed an appeal with the Civil Service Board challenging his failure of the examination. A hearing was held and the Board rejected Jerelds' challenge and request to be placed on the assistant chief eligibility list. Subsequently, Jerelds filed a charge with the EEOC claiming racial discrimination. On June 17, 1997, the EEOC issued a Letter of Determination finding that there was reasonable cause to believe that "Title VII of the Civil Rights Act of 1964 was violated and that the Plaintiffs and other similarly situated blacks were victims of discrimination as well."
Prior to the 1998 district chief examination, Chief Harkins strongly encouraged all candidates on the 1995 district chief eligibility list to take the 1998 examination, promising to give them additional consideration. Neither Hill nor Pride took the 1998 examination. Nevertheless, Hill and Pride remained on the merged district chief eligibility list along with eighteen other candidates. Although Chief Harkins recommended two Caucasian candidates for promotion in 1998, neither Hill nor Pride sought administrative review of the 1998 promotions.
In 1998, before the district chief examination and the filing of this suit, the Civil Service Rules were amended to provide that the eligibility list for district chief would expire every two years. The rules further provided that the 1998 district chief eligibility list would be the last "merged list" and would thus expire in 2000 when the Civil Service Board certified a new list.
On July 20, 1998, Plaintiffs Jerelds, Hill, and Pride filed a class action complaint against the City of Orlando under 42 U.S.C. § 1981 based upon a theory of disparate impact claiming that Harkin's requirement of a paramedic certification and a four-year degree, when combined, had a disparate impact on the black promotional candidates for the district chief and assistant chief positions. Plaintiffs also filed individual claims against the City alleging violations of Title VII, 42 U.S.C. § 1983, and § 1981 based upon a theory of disparate treatment. Additionally, Jerelds claimed racial discrimination in the grading of the 1995 assistant chief examination that he had failed.
Pride possessed a four-year degree, but not a paramedic certification.
In June 1999, Plaintiffs amended their complaint to add a retaliation claim on behalf of Jerelds and to add Chief Harkins as a defendant to the § 1981 and § 1983 claims. Defendants moved for dismissal on the grounds that Chief Harkins was entitled to qualified immunity. On August 19, 1999, Plaintiffs amended their complaint a second time to add a claim based on a new legal theory of Title VII disparate impact. Defendants again moved for dismissal, or in the alternative, partial summary judgment asserting that Chief Harkins was entitled to qualified immunity. In April 2000, Defendants moved for summary judgment on the remaining claims. In August 2000, this Court granted summary judgment in favor of the Defendants on all of Plaintiffs' claims.
After receiving Defendants' letter indicating that the City would seek Rule 11 sanctions if Jerelds did not withdraw his retaliation claim, Jerelds withdrew the claim.
In April 2001, the Eleventh Circuit affirmed the judgment.
Subsequently, Defendants moved for Attorney's Fees and Costs (Doc. 250), and Plaintiffs filed their Opposition (Doc. 260). On November 16, 2000, the Magistrate Judge heard arguments on Defendants' Motion (Doc. 265). The Magistrate Judge directed Defendants to file a proposed order. Plaintiffs objected to the proposed order filed by the Defendants and to the hours billed, but did not provide a reason for their objection, as required (Docs. 280 282).
Thereafter, the Magistrate Judge filed a well-reasoned and extremely thorough RR granting in part and denying in part Defendants' motion for fees (Doc. 289). In the RR, the Magistrate Judge found that Plaintiffs and their counsel had taken "a simple case and artificially inflated it into a class action and multi-count complaint without any basis in law or fact." (Id. at 1). Accordingly, the Magistrate Judge recommended that both Plaintiffs and their counsel be liable for over $200,000.00 in fees and costs incurred by the City. Plaintiffs and their counsel filed objections with accompanying memoranda and affidavits. (Docs. 290, 291, 294, 295, 296). Defendants filed their Response and accompanying affidavits. (Docs. 299, 304, 305, 307). On October 17, 2001, this Court held an evidentiary hearing on the matter in which it heard oral argument and testimony of the Plaintiffs and their attorneys. (Doc. 314). Following the hearing, the parties submitted additional briefs. (Docs. 311, 313, 315, 316).
At the evidentiary hearing, the Court heard the following evidence. Attorney Don Stephens testified that when the City Attorney from Riviera Beach contacted him about the Plaintiffs' claims, Stephens advised the Plaintiffs to contact Attorney Jacob Rose who practiced in federal court and also handled civil rights claims. Stephens, along with Rose, the City Attorney for Riviera Beach, and Attorney Bernard Lebedeker met with the Plaintiffs and fourteen other African-American firefighters in December 1996 to hear the firefighters' complaints and decide whether to take the case. However, counsel did not take the Plaintiffs' case immediately. Rather, they met with the three Plaintiffs and a potential fourth plaintiff, whose case the attorneys refused to take, and explained to them the process and necessary expenditures to prosecute the case. It was only at this point that the attorneys decided to take the Plaintiffs' case.
The attorneys decided to wait on the receipt of the EEOC determination letter before they filed suit. The reason they waited was because Stephens knew how difficult it was to get a reasonable cause letter and that without one it was difficult to prove race discrimination. Stephens indicated that only 2.2% of all EEOC claims result in a finding of reasonable cause.
Stephens admitted to writing a letter to the City in September 1997 threatening a boycott unless the City agreed to the Plaintiffs' non-negotiable demands. He claimed that the use of the threatening language was at the insistence of one of the Plaintiffs. Stephens also admitted that, in hindsight, he never should have sent that letter. He indicated that the letter was sent to the City because the EEOC investigator stated that the City was being uncooperative. Stephens contacted the City after the letter was sent to try and resolve the matter, but his efforts were unsuccessful.
After receiving the EEOC determination letter, an extensive research memorandum was prepared and reviewed with the Plaintiffs prior to filing suit. However, the attorneys abstained from filing suit until they received the right to sue letter from the EEOC. The attorneys also contacted Mr. Spriggs, an attorney m Tallahassee, Florida, who specializes in class action cases. Once the suit was filed, the attorneys required Plaintiffs to pay for costs including the cost to copy the City's records, which was approximately $7,000.00. The attorneys indicated that they did this because the attorneys wanted the Plaintiffs to have a stake in the litigation. Also, the Plaintiffs paid for the costs of examining all of the raw data provided in discovery by the Defendants, which totaled approximately $5,000.00.
The attorneys testified that they divided the work between themselves and that they and a paralegal poured over the thousands of documents received in discovery. Additionally, the attorneys also consulted with Dr. Brandon, an expert on disparate impact. Although Dr. Brandon was not used because there were not enough persons for a proper statistical analysis, Dr. Brandon determined that because the City had promoted no African-Americans, then the Plaintiffs met the EEOC's required 4/5's rule. Finally, counsel thought that the testimony of the City's Human Resource Director supported the Plaintiffs' claims of discrimination.
In August 2000, the Magistrate Judge presided as mediator at a settlement conference between the parties. At the conference, the Defendants did not offer any money or promotion to the Plaintiffs, but they did offer to waive approximately $400,000.00 in attorney's fees if Plaintiffs abandoned their claims. According to the attorneys, prior to August 2000, no one including Defendants' counsel had ever indicated that Plaintiffs' suit was frivolous or brought in bad faith.
II. ANALYSIS
In their motion for fees and costs, Defendants seek attorney's fees and costs pursuant to 42 U.S.C. § 1988, 28 U.S.C. § 1927, and this Court's inherent power. The Magistrate Judge recommended an award of fees under 42 U.S.C. § 2000e-5(k), 42 U.S.C. § 1988, and 28 U.S.C. § 1927.
Although Defendants did not expressly request fees under 42 U.S.C. § 2000e-5(k) in their motion (Doc. 250), Defendants did assert this as a basis in their memorandum in support of fees. (Doc. 252). Because Plaintiffs did not raise Defendants' procedural failure as an issue in their opposition to fees, Plaintiffs have implicitly waived any objection on this issue. Moreover, Defendants' entitlement to fees under 42 U.S.C. § 2000e-5(k) has been fully briefed and litigated.
A. Entitlement to Fees as a Prevailing Party under 42 U.S.C. § 1988
Ordinarily, a prevailing plaintiff in Title VII cases "is to be awarded attorney's fees in all but special circumstances." Christiansburg Garment Co. v. E.E.O.C., 434 U.s. 412, 417, 421 (1978). By contrast, a more stringent standard applies to prevailing defendants who may be awarded attorney's fees only when a court finds that the plaintiffs claim was "frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith." Id. at 421. This standard applies equally to awards of attorney's fees sought under 42 U.S.C. § 1988 by prevailing civil rights defendants. Head v. Medford, 62 F.3d 351, 355 (11th Cir. 1995) (citing Hughes v. Rowe, 449 U.S. 5, 14 (1980)). Section 1988(b) permits a court to award attorney's fees to the "prevailing party" for actions brought "to enforce a provision of sections 1981, 1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318, or title VI of the Civil Rights Act of 1964 [ 42 U.S.C. § 2000d et seq.] . . . ."See generally U.S. Steel, LLC, v. Tieco, Inc., 261 F.3d 1275, 1294 (11th Cir. 2001); Zaklama v. Mount Sinai Med. Ctr., 906 F.2d 645, 648 n. 2 (11th Cir. 1990).
Clearly, Defendants were the prevailing party in this case. However, the fact that a plaintiff may ultimately lose his case is not in itself a sufficient justification for the assessment of fees. Hughes, 449 U.S. at 14 (applying Christiansburg standard to attorney's fees award under § 1983). Further, even if the law or the facts are somewhat questionable or unfavorable at the outset of litigation, a party may have an entirely reasonable ground for bringing suit. Id. at 15 (citingChristiansburg, 434 U.S. at 422). Hence, a plaintiff may be assessed fees if he continues to litigate a once colorable claim after it becomes obvious that the claim is frivolous, unreasonable, or groundless.Christiansburg, 434 U.s. at 422. In determining whether to assess attorney's fees, the district court must examine (1) whether the plaintiff established a prima facie case, (2) whether the defendant offered to settle, and (3) whether the trial court dismissed the case prior to trial or held a full-blown trial on the merits. Sullivan v. School Bd. of Pinellas County, 773 F.2d 1182, 1189 (11th Cir. 1985);Turner v. Sungard Bus. Sys., Inc., 91 F.3d 1418, 1422 (11th Cir. 1996). In other words, the district court must focus on the question of whether the case is seriously lacking in arguable merit. Sullivan, 773 F.2d at 1189.
As the Magistrate Judge correctly determined in the RR, the Sullivan factors support an award of fees to the Defendants. (Doc. 289 at 21-34). First, Plaintiffs failed to establish a prima facie case on their claims. Rather, the Court only presumed for purposes of summary judgment that Plaintiffs established a prima facie case on the disparate treatment claim. A review of the record reveals that the majority of Plaintiffs' claims, including the motion for class certification, were patently frivolous with no credible evidentiary support. See Roper v. Edwards, 815 F.2d 1474, 1478 (11th Cir. 1987) (attorney's fees award proper where plaintiffs introduced absolutely no evidence to support their claims). Second, since the Defendants did not offer Plaintiffs a promotion or a monetary settlement, this factor weighs in favor of the Defendants. Finally, the entire case was decided on a dispositive motion in favor of Defendants, rather than after a trial on the merits. Accordingly, Defendants are entitled to reasonable fees from the Plaintiffs pursuant to 42 U.S.C. § 1988, as well as 42 U.S.C. § 2000e-5(k). B. Entitlement to Fees Under 28 U.S.C. § 1927
Although the frivolity of the Plaintiffs' claims may not have been apparent at the outset of the litigation, it was abundantly clear at the close of discovery that no evidence existed to substantiate Plaintiffs' assertions.
Although Defendants offered to waive a claim for its attorney's fees in exchange for a settlement, this is not the type of settlement offer which benefits Plaintiffs under the Sullivan analysis.
To the extent that Plaintiffs' attorneys pursued frivolous claims on behalf of their clients without educating the clients of the potential consequences, the clients' remedy against the attorneys is a suit for malpractice.
In their Motion, Defendants urge this Court to find Plaintiffs' counsel liable for attorney's fees under 28 U.S.C. § 1927. Defendants argue that Plaintiffs' claims were not only frivolous, but also brought in bad faith.
Section 1927 provides that "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. Section 1927 is penal in nature and must be strictly construed. Id. (citing Monk v. Roadway Express, Inc., 599 F.2d 1378, 1382 (5th Cir. 1979), aff'd sub nom., Roadway Express, Inc. v. Piper, 447 U.S. 752 (1980)) (declaring that § 1927 is not a "catch-all" provision for sanctioning objectionable conduct by counsel). Moreover, the legislative history of the statute is sparse, and the cases interpreting it are not very helpful in divining the congressional purpose. United States v. Ross 535 F.2d 346, 349 (6th Cir. 1976). The Eleventh Circuit has acknowledged that "there is little case law in th[e] circuit concerning the standards applicable to the award of sanctions under § 1927." Peterson v. BMI Refractories, 124 F.3d 1386, 1395 (11th Cir. 1997).
All decisions of the Fifth Circuit prior to October 1, 1981 are binding precedent on this Court. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
The plain language of the section sets forth three requirements to justify an imposition of sanctions: (1) an attorney must engage in "unreasonable and vexatious" conduct; (2) such "unreasonable and vexatious" conduct must "multipl[y] the proceedings"; and (3) the amount of the sanction cannot exceed the costs occasioned by the objectionable conduct. McMahan v. Toto, 256 F.3d 1120, 1128 (11th Cir. 2001) (citing Peterson. 124 F.3d at 1396). Vexatious is not defined in the statute. When words are not defined in the statute, they "must be given their ordinary meaning." Chapman v. United States, 500 U.S. 453, 462 (1991). Webster's Third New International Dictionary (1971) defines "vexatious" as "lacking justification and intended to harass." Ross, 535 F.2d at 349; see also Voss v. USS Great Lakes Fleet, Inc., 35 F.3d 567, unpubl. op. (6th Cir. 1994); Black's Law Dictionary 1559 (7th ed. 1999) (defining "vexatious" as "without reasonable or probable cause or excuse").
Some courts have construed the language "unreasonably and vexatiously" to require a showing of intent, recklessness, or bad faith. Optyl Eyewear Fashion Int'l Corp. v. Style Cos., Ltd., 760 F.2d 1045, 1048 (9th Cir. 1985); United States v. Blodgett, 709 F.2d 608, 610 (9th Cir. 1983);Baker Indus., Inc. v. Cerberus, 764 F.2d 204, 208 (3rd Cir. 1985); West Virginia v. Charles Pfizer Co., 440 F.2d 1079 (2d Cir. 1971). Other courts have ruled that § 1927 does not require a demonstration of subjective bad faith as a precondition to the imposition of sanctions. Rather, these courts have stated that § 1927 requires a more relaxed, objective standard that does not require conscious impropriety.Knorr Brake Corp. v. Harbil, Inc., 738 F.2d 223, 226-27 (7th Cir. 1984);In re Ruben, 825 F.2d 977, 983-84 (6th Cir. 1987); Jones v. Continental Corp., 789 F.2d 1225, 1230 (6th Cir. 1986); Lewis v. Brown Root, Inc., 711 F.2d 1287, 1291-92 (5th Cir. 1983); see also Cruz v. Savage, 896 F.2d 626, 631-32 (1st Cir. 1990) and cases cited therein ("Behavior is `vexatious' when it is harassing or annoying, regardless of whether it is intended to be so. . . . It is enough that an attorney acts in disregard of whether his conduct constitutes harassment or vexation, thus displaying a "`serious and studied disregard for the orderly process of justice.'").
All of the courts, including those applying a lesser standard, at minimum agree that merely unintended, inadvertent, and negligent acts will not support the imposition of sanctions under § 1927. Cruz, 896 F.2d at 632; Ruben, 825 F.2d at 984. Rather, the power to impose sanctions under § 1927 should be exercised "only in instances of a serious and studied disregard for the orderly processes of justice."Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163, 1167 (7th Cir. 1968) (concluding that Congress intended to impose a sanction on conduct more culpable than mere unintentional discourtesy to a court when it conjoined the word "vexatiously" with "unreasonably").
Here, although Plaintiffs' counsel might have had a good faith basis in law and fact for filing some of Plaintiffs' claims, ultimately all of the Plaintiffs' claims proved to be frivolous. Counsel continued to pursue these claims on behalf of their clients after the close of discovery — the point at which they should have known that there was no evidentiary support for Plaintiffs' claims. However, something more than a lack of merit is required for § 1927 sanctions or they would be due in every case. McMahan, 256 F.3d at 1129.
Although not expressly addressing the issue before this Court, the Eleventh Circuit has stated that, a court may "assess attorney's fees against litigants, counsel, and law firms who willfully abuse the judicial process by conduct tantamount to bad faith." Malautea v. Suzuki Motor Co., LTD., 987 F.2d 1536, 1544 (11th Cir. 1993) (quoting Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir. 1991) (citation omitted) (affirming assessment of fees under § 1927 and Rule 11)). Except for the "boycott" letter, there is no evidence that Plaintiffs' counsel pursued these claims in bad faith or with any intent to harass or annoy the Defendants. Rather, counsel investigated Plaintiffs' claims, waited on the EEOC determination letter, reviewed each and every personnel record and document produced in discovery, and spoke with learned authors and practitioners about the case.
The Court is troubled by the "boycott" letter, which could lead a reasonable person to believe that this litigation was pursued with subjective bad faith. However, the Court declines to award fees based on the letter.
This case is unlike Byrne v. Nezhat 261 F.3d 1075, 1106 (11th Cir. 2001)where the district court awarded sanctions against the attorneys for bringing frivolous claims because they failed to conduct a reasonable inquiry into the factual bases of the claims. Here, the lack of inquiry was not the problem. Rather, it was the failure of counsel to take an objective look at the voluminous facts unearthed by their extensive discovery and conclude that Plaintiffs' claims lacked merit.
Having had the benefit of counsels' testimony and the ability to judge their demeanor — benefits which the Magistrate Judge did not have — this Court rejects the notion that counsel litigated for an improper purpose or in bad faith. Counsel obviously exhibited extremely poor judgment in their zeal to prosecute these claims. In their overzealousness, they lost sight of their roles as advocates, counselors, and officers of the court. This, however, is not conduct tantamount to bad faith. Accordingly, counsel should not be held liable for attorney's fees under 28 U.S.C. § 1927.
This Court rejects the use of its inherent power to impose sanctions. The Eleventh Circuit has explained that "[t]he key to unlocking a court's inherent power is a finding of bad faith." Byrne. 261 F.3d at 1106 (quoting Barnes v. Dalton 158 F.3d 1212, 1214 (11th Cir. 1998)); In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995) (citing Chambers v. NASCO Inc., 501 U.S. 32 (1991) ("Invocation of a court's inherent power requires a finding of bad faith."). Because Plaintiffs' counsel did not litigate in bad faith, this Court will not exercise its inherent power to impose additional sanctions on counsel.
III. CONCLUSION
Based on the foregoing, it is therefore ORDERED AND ADJUDGED that:
1) Plaintiffs' and Plaintiffs' counsels' objections to the RR are SUSTAINED IN PART and Defendants' motion is GRANTED IN PART;
2) Prevailing party fees are imposed against Plaintiffs Jerelds, Hill, and Pride, jointly and severally, in the following amounts
Because Jerelds withdrew his retaliation claim after receiving the Defendants' letter threatening the pursuit of Rule 11 sanctions, this Court declines to follow the Magistrate Judge's recommendation to award fees on that claim.
a) $252,791.90 in attorney's fees,
b) $426.67 in costs,
c) for a total of $253,218.57; and
3) The Clerk is directed to enter judgment accordingly.
DONE and ORDERED in Chambers, Orlando, Florida.