Eggleston et al v. Quality Restaurant Concepts, LLC et al

MEMORANDUM in Support re MOTION for Attorney Fees and Expenses

S.D. Miss.January 18, 2019

4820-9643-8405v1 1033978-000424 01/18/2019 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI NORTHERN DIVISION JOSH EGGLESTON, DEMETRIC MONTGOMERY, ETHEL JACKSON, AND SADIE MCGREW PLAINTIFFS VERSUS CIVIL ACTION NO. 3:17-CV-758-WHB-JCG QUALITY RESTAURANTS CONCEPTS LLC; APPLEBEE'S FRANCHISOR, LLC; APPLEBEE'S RESTAURANTS, LLC; APPLEBEE'S SERVICES, INC.; AND APPLEBEE'S RESTAURANTS WEST, LLC DEFENDANTS DEFENDANTS' MEMORANDUM IN SUPPORT OF ITS MOTION FOR ATTORNEYS' FEES AND EXPENSES Defendants, Quality Restaurant Concepts, LLC ("QRC"), Applebee’s Restaurants, LLC; Applebee’s Franchisor, LLC; Applebee’s Services, Inc.; and Applebee’s Restaurants West, LLC (the "Applebee's Defendants") (collectively "Defendants"), pursuant to 42 U.S.C. § 1988, the Mississippi Litigation Accountability Act, Rule 54(d)(2), and this Court's inherent power, moves the Court for the taxation of its attorneys' fees and expenses incurred in the defense of this action against the Plaintiffs, Josh Eggleston, Demetric Montgomery, Ethel Jackson, and Sadie McGrew (collectively "Plaintiffs"). In support of its Motion, Defendants state the following: I. INTRODUCTION Defendants are entitled to all fees and expenses incurred in the defense of this action because the Plaintiffs' claims were meritless and without foundation from the outset. Alternatively, Defendants maintain that, in the Court's discretion, it is entitled to a reasonable portion of its fees and expenses because Plaintiffs continued to litigate this matter after it clearly became frivolous, unreasonable, or groundless. Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 1 of 12 - 2 - 4820-9643-8405v1 1033978-000424 01/18/2019 II. FACTS AND PROCEDURAL HISTORY On September 19, 2017, Plaintiffs filed their Original Complaint asserting racial discrimination claims pursuant to 42 U.S.C. § 1981 and 42 U.S.C. § 2000(a), and a state law negligent infliction of emotional distress claim against the Defendants. (Dkt. No. 1). The Applebee's Defendants filed their Answer and Affirmative Defenses, not only denying these allegations, but also asserting that they were not proper parties to this litigation as they did not own, operate, or manage the premises in question. (See Dkt. Nos. 4-7). That same day, QRC filed its Answer and Affirmative Defenses denying Plaintiffs' allegations. (Dkt. No. 8). Subsequently, the Applebee's Defendants served their initial disclosures on January 11, 2018, once again notifying Plaintiffs that they did not own the restaurant in question and had no involvement in its active operations. (Dkt. No. 23). On March 7, 2018, both QRC and the Applebee's Defendants served written discovery requests to Plaintiffs. (See Dkt. Nos. 28-30). On July 12, 2018, upon entry of protective order, Defendants' served its Supplement Rule 26(a) Disclosures providing the Applebee's Franchise Agreement to Plaintiffs which confirmed that the only relationship that existed between QRC and the Applebee's Defendants was one of franchisee/franchisor. (Dkt. No. 75). At that point in time, Plaintiffs had all responsive, non- privileged documents from Defendants. On June 7 and June 8, 2018, Defendants deposed Plaintiffs. During these depositions, it became clear that Plaintiffs could not, at the very least, support their claim of negligent infliction of emotional distress as none of them testified to a physical manifestation of injury required to support such a claim. Notwithstanding, Plaintiffs continued to pursue this claim. In July 2018, Plaintiffs deposed QRC through its 30(b)(6) designee, Gregory Hicks, the supervisor of QRC's restaurant in question. At that point in time, Plaintiffs should have known Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 2 of 12 - 3 - 4820-9643-8405v1 1033978-000424 01/18/2019 that their race-based discrimination claims and negligent infliction of emotional distress claim lacked merit. Notwithstanding, Plaintiffs continued to pursue these claims. Upon the conclusion of discovery, Defendants moved for summary judgment. (Dkt. No. 75). On August 8, 2019, Plaintiffs filed its Response and Supporting Memorandum in Opposition. (Dkt. Nos. 81-82). Defendants submitted their Reply in Support of their Motion for Summary Judgment on August 15, 2018. (Dkt. No. 83). On January 4, 2019, the Court granted Defendants' Motion for Summary Judgment, entering judgment in favor of the Defendants. (Dkt. Nos. 86-87). The total fees charged to Defendants since the date Plaintiffs filed their Complaint on September 19, 2017 through January 4, 2019 are $94,350.50. The total expenses incurred by Defendants since the date Plaintiffs filed their Complaint on September 19, 2017 are $3,744.69. From January 11, 2018, i.e. the time Plaintiffs should have known that some, if not all, allegations were groundless, to January 4, 2019, Defendants' attorneys' fees and expenses were $78,038.50. The fees and expenses during the course of this litigation are reasonable, were necessary to the defense of this action, and are recoverable. III. ARGUMENT "In any action … to enforce a provision of section 1991…, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs…." 42 U.S.C. § 1988; see also, Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 420 (1978) (In enacting § 1988, Congress sought "to protect defendants from burdensome litigation having no legal or factual basis."). Moreover, Mississippi Litigation Accountability Act provides: Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 3 of 12 - 4 - 4820-9643-8405v1 1033978-000424 01/18/2019 [I]n any civil action commenced or appealed in any court of record in this state, the court shall award, as part of its judgment and in addition to any costs otherwise assessed, reasonable attorney's fees and cost against any party or attorney if the court, upon motion of any party or on its own motion, finds that an attorney or party brought an action, or asserted any claim or defense, that is without substantial justification, or that the action, or any claim or defense asserted, was interposed for delay or harassment, or if it finds that any attorney or party unnecessarily expanded the proceedings by other improper conduct including, but not limited to, abuse of discovery procedures available under the Mississippi Rules of Civil Procedure. MISS. CODE ANN. § 11-55-5(1). A. DEFENDANTS ARE ENTITLED TO ALL REASONABLE COSTS AND FEES INCURRED AS A RESULT OF THIS LITIGATION UNDER SECTION 1988. Defendants are entitled to all fees and expenses incurred from the date the Plaintiffs filed their Complaint in this matter. Plaintiffs knew or should have known that the actions allegedly taken by a supervisor did not amount to race discrimination. Further, Plaintiffs knew or should have known that they did not have any evidence to demonstrate pretext in that they could not provide evidence that white patrons who engaged in loud and disruptive behavior where not told to leave the premises. Finally, Plaintiffs knew that they did not suffer any supported physical manifestation of injury as a result of Defendants' justified actions. Plaintiffs' claims, therefore, were meritless, and Defendants are entitled to recoup all of their fees and expenses. 1. Plaintiffs' Claims Were Frivolous, Unreasonable, and Without Foundation. As the United States Supreme Court has determined, attorneys' fees may be awarded to prevailing defendants when the Plaintiffs' suit "was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith." Christianburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978). As set forth in Christianburg, in discussing the Congressional Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 4 of 12 - 5 - 4820-9643-8405v1 1033978-000424 01/18/2019 debates leading to the enactment of the statute, 1 the Supreme Court identified at least two purposes for the statute. The Court noted, "First, Congress desired to 'make it easier for a plaintiff of limited means to bring a meritorious suit'…. But second, and equally important, Congress intended to 'deter the bringing of lawsuits without foundation' by providing that 'the prevailing party' - be it plaintiff or defendant - could obtain legal fees." Id. at 420 (quoting Grubbs v. Butz, 548 F.2d 973, 975 (D.C.C. 1976)) (emphasis added). With respect to attorneys' fees under Section 1988, in Hensley v. Eckerhart, the Supreme Court notes, among other things: "The provision for counsel fees in § 1988 was patterned upon the attorney's fees provisions contained in Title II and Title VII of the Civil Rights Act of 1964"….The legislative history of § 1988 indicates that Congress intended that "the standards for awarding fees be generally the same as under the fee provisions of the 1964 Civil Rights Act…. The standards set forth in this opinion are generally applicable in all cases in which Congress has authorized an award of fees to a "prevailing party.'" 461 U.S. 424, 433 n.7 (1983) (quoting Hanrahan v. Hampton, 446 U.S. 254 (1980). When determining whether a plaintiff's civil rights action is frivolous, the court may consider the following factors: (1) whether the plaintiff established a prima facie case; (2) whether the defendant offered to settle; and (3) whether the court dismissed the case or held a full trial. Myers v. City of West Monroe, 211 F.3d 289, 292 (5th Cir. 2000). Here, the Court noted that Plaintiffs' evidence of poor service and alleged rude treatment does not generally support a claim for race-based discrimination. (Order, p. 11). Even after giving Plaintiffs the benefit of the doubt, the Court concluded that Plaintiffs could not establish pretext to refute Defendants' legitimate, non-discriminatory reason for asking them to leave the premises. (Order, pp. 13-14); see Williams v. Packaging Corp. of America, Civ. No. 7:06-cv-111(HL), 2009 WL 1 The statute at issue in this case was Section 706(k) of Title VII of the Civil Rights Act of 1964. Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 5 of 12 - 6 - 4820-9643-8405v1 1033978-000424 01/18/2019 761168, at *4-5 (M.D. Ga. Mar. 20, 2009) (awarding defendant attorneys fees as the prevailing party with respect to Title VII and Section 1981 claims where the plaintiff was unable to meet her burden of proving her prima facie case at summary judgment). As such, the Court held that Plaintiffs' race-based discrimination claims must fail and granted Defendants' Motion for Summary Judgment making this action meritless. (Order, p. 15). Similar to the race-based discrimination claims, the Court held that Plaintiffs failed to satisfy a prima facie case for their related state law claim of negligent infliction of emotional distress. (Order, pp. 15-16); See Munson v. Milwaukee Bd. of School Directors, 969 F.2d 266, 272 (7th Cir. 1992) (Court found that when the federal and pendent state claims are factually or legally related, and when both the federal and state claims are found to be frivolous, they should be treated as one action for purposes of fee awards under § 1988.). Here, Plaintiffs based their negligent infliction of emotional distress claim on the alleged treatment they endured during their visit to QRC's restaurant which form the basis of their race-based discrimination claims. (Order, p. 16). As such, Plaintiffs' state law claim was frivolous and without foundation from the outset. As to costs incurred by Defendants, the Fifth Circuit Court of Appeals, using the Christianburg analysis, determined that an employer that prevailed on an ex-employee's reverse discrimination and retaliation claims under Title VII was entitled to award of costs, excluding attorney fees, as matter of course, even without showing that ex-employee's claims were frivolous, unreasonable, without foundation, or filed in bad faith. Byers v. Dallas Morning News, Inc., 209 F.3d 419 (5th Cir. 2000). The Plaintiffs' claims, therefore, are unreasonable and without foundation. As such, the Court should award fees in the amount of $94,350.50 and expenses in the amount of $3,744.69, for a total award of $98,095.19. Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 6 of 12 - 7 - 4820-9643-8405v1 1033978-000424 01/18/2019 2. Alternatively, Plaintiffs' Claims Became Frivolous During Discovery. Should the Court determine that the Plaintiffs' claims were not meritless or frivolous from the outset, the Court should find that Defendants are entitled to a reasonable portion of the fees and expenses incurred during this litigation as a result of Plaintiffs continuing to litigate after this matter clearly became frivolous, unreasonable, and/or groundless. Christianburg, 434 U.S. at 422. ("Needless to say, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney's fees incurred by the defense."); see also EEOC v. Eagle Quick Shop, Civ. No. 2:05-cv-2074-KS-MTP, 2007 WL 4268778, at * 5-7 (S.D. Miss. Nov. 30, 2007) (Court concluded that, after the depositions were conducted, plaintiff should have known that it could not establish a prima facie case against defendant. As such, plaintiff proceeded with a claim that was frivolous after those depositions were conducted and attorneys fees should be awarded against the plaintiff.); White v. City of Ypsilanti, No. 96-2414, 1997 WL 705253, at *1 (6th Cir. Nov. 4, 1997) ("Since White continued to pursue his claims after his deposition revealed that he could not prevail, we find that the District Court did not err in awarding defendants attorney fees accrued during the five-month period between White's deposition and the dismissal of his claims."). Plaintiffs were aware that the Applebee's Defendants were not proper parties in January 2018 and should have immediately dismissed their claims against the Applebee’s Defendants, but they did not. On June 7 and June 8, 2018, Defendants deposed Plaintiffs. During these depositions, it became clear that Plaintiffs could not at the very least support their claim of negligent infliction of emotional distress as none of them testified to a physical manifestation of injury required to support such a claim. Notwithstanding, Plaintiffs continue to pursue this claim. Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 7 of 12 - 8 - 4820-9643-8405v1 1033978-000424 01/18/2019 In July 2018, Plaintiffs deposed QRC through its 30(b)(6) designee, Gregory Hicks, the immediate supervisor of QRC's restaurant in question. At that point in time, it was abundantly clear that Plaintiffs' claims were then frivolous, unreasonable, and groundless. Yet, instead of dismissing this action (as it should have been), Plaintiffs continued with the litigation. Because Plaintiffs failed to dismiss this action, Defendants were forced to seek summary judgment which was properly granted. Defendants are, therefore, entitled to a portion of the fees and expenses incurred in this litigation as a portion is attributable to defending against claims Plaintiffs knew to be groundless. Defendants request at least $78,038.50, the fees and expenses incurred since January 2018. B. DEFENDANTS ARE ENTITLED TO ALL REASONABLE COSTS AND FEES INCURRED AS A RESULT OF THIS LITIGATION UNDER THE MISSISSIPPI LITIGATION ACCOUNTABILITY ACT. Defendants are entitled to all reasonable costs and fees under Section 11-55-5 because Plaintiffs claims were without substantial justification to bring about these claims. A claim is "without substantial justification" if "it is frivolous, groundless in fact or in law, or vexatious, as determined by the court." MISS. CODE ANN. § 11-55-3(a). "[A] claim is frivolous only when, objectively speaking, the pleader or movant has no hope of success." McBride v. Meridian Pub. Improvement Corp., 730 So. 2d 548, 554 (Miss. 1998). When determining whether to assess attorney's fees under the Act, the Court must consider the following factors, among others: (a) The extent to which any effort was made to determine the validity of any action, claim or defense before it was asserted, and the time remaining within the claim or defense could be filed; (b) The extent of any effort made after the commencement of an action to reduce the number of claims being asserted or to dismiss claims that have been found not to be valid; Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 8 of 12 - 9 - 4820-9643-8405v1 1033978-000424 01/18/2019 (c) The availability of facts to assist in determining the validity of an action, claim or defense; (d) Whether or not the action was prosecuted or defended, in whole or in part, in bad faith or for improper purpose; (e) Whether or not issues of fact, determinative of the validity of a party's claim or defense, were reasonably in conflict; (f) The extent to which the party prevailed with respect to the amount of and number of claims or defenses in controversy; (g) The extent to which any action, claim or defense was asserted by an attorney or party in good faith attempt to establish a new theory of law in the state, which purpose was made known to the court at the time of filing; (h) The amount or conditions of any offer of judgment or settlement in relation to the amount or conditions of the ultimate relief granted by the court; (i) The extent to which a reasonable effort was made to determine prior to time of filing of an action or claim that all parties sued or joined were proper parties owing a legally defined duty to any party or parties asserting the claim or action; (j) The extent of any effort made after the commencement of an action to reduce the number of parties in the action; and (k) The period of time available to the attorney for the party asserting any defense before such defense was interposed. MISS. CODE ANN. § 11-55-7; see also Payne v. Univ. of Southern Miss., Civ. No. 1:12-cv-41-KS- MTP, 2015 WL 1482636, *3 (S.D. Miss. Mar. 31, 2015). 1. Plaintiffs Knew or Should Have Known that the Applebee's Defendants Were Not Proper Parties. Plaintiffs improperly asserted race-based discrimination claims under Section 2000a, 1981, and 1981(b), and a state law claim of negligent infliction of emotional distress against the Applebee's Defendants knowing that they were not proper parties to the lawsuit. In the Applebee's Defendants' Answers to Plaintiffs' Complaint, each asserted that it was not a proper party to this litigation as it did not own, operate, or manage the premises at issue. (See Dkt. No. Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 9 of 12 - 10 - 4820-9643-8405v1 1033978-000424 01/18/2019 4, No. 5, No. 6, and No. 7). Subsequently, the Applebee's Defendants served their initial disclosures on January 11, 2018 (Dkt. No. 23) once again notifying Plaintiffs that none of them owned the restaurant in question and had no involvement in its active operations. In response to written discovery, Defendants disclosed the Applebee's Franchise Agreement to Plaintiffs which revealed that the only relationship that existed between QRC and the Applebee's Defendants was one of franchisee/franchisor. Despite having all this information, Plaintiffs erroneously continued to pursue claims against the Applebee's Defendants under the doctrine of apparent authority. Yet, the Court noted that such theory was not supported by controlling case law found in a Fifth Circuit Court of Appeals decision, Arguello v. Conoco, Inc., 207 F.3d 803 (5th Cir. 2000). (Order, p. 5). As Plaintiffs had a duty to reduce the number of parties (defendants) in this action once they discovered that the Applebee's Defendants were not proper, this Court should award reasonable attorneys' fees to the Defendants. See MISS. CODE ANN. § 11-55-7(j). 2. Negligent Infliction of Emotional Distress Claim Lacked Merit From the Start. Likewise, Plaintiffs improperly asserted a negligent infliction of emotional distress claim against all Defendants knowing that they did not have any physical manifestation of injury required to support such claim. (Order, p. 16). Most importantly, Plaintiffs knew that the types of emotional distress allegedly suffered from could not form the basis of a negligent infliction of emotional distress claim. See Illinois Cent. R. Co. v. Hawkins, 830 So. 2d 1162, 1175 (Miss. 2002); (Order, p. 16). As this claim was not valid from the initial filing of Plaintiffs' Complaint, this Court should award reasonable attorneys' fees to the Defendants. See MISS. CODE ANN. § 11-55-7(a), (b), and (i). Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 10 of 12 - 11 - 4820-9643-8405v1 1033978-000424 01/18/2019 WHEREFORE PREMISES CONSIDERED, Defendants, Quality Restaurant Concepts, LLC, Applebee’s Restaurants, LLC; Applebee’s Franchisor, LLC; Applebee’s Services, Inc.; and Applebee’s Restaurants West, LLC, respectfully requests that this Court award all fees and expenses incurred since Plaintiffs' Complaint was filed in this matter. In the alternative, Defendants request that this Court, in its discretion, award Defendants a reasonable portion of its fees and expenses incurred based on Plaintiffs' continued prosecution of a frivolous, unreasonable, and/or groundless action. Defendants request any additional relief deem warranted by the circumstances. This, the 18th day of January, 2019. Respectfully submitted, QUALITY RESTAURANT CONCEPTS LLC, APPLEBEE'S RESTAURANTS, LLC, APPLEBEE'S FRANCHISOR, LLC, APPLEBEE'S SERVICES, INC., AND APPLEBEE'S RESTAURANTS WEST LLC By its Attorneys, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC By: /s/ Jennifer G. Hall JENNIFER G. HALL Jennifer G. Hall (MSB No. 100809) jhall@bakerdonelson.com D. Sterling Kidd (MSB No. 103670) skidd@bakerdonelson.com BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC One Eastover Center 100 Vision Center, Suite 400 Jackson, Mississippi 39211-6391 Telephone: (601) 351-2400 Facsimile: (601) 351-2424 Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 11 of 12 - 12 - 4820-9643-8405v1 1033978-000424 01/18/2019 CERTIFICATE OF SERVICE I hereby certify that I electronically filed with the Clerk of the Court using the ECF system the foregoing Memorandum in Support of Defendants' Motion for Attorneys' Fees, which sent notification to counsel of record. This, the 18th day of January, 2019. /s/ Jennifer G. Hall JENNIFER G. HALL Case 3:17-cv-00758-WHB-JCG Document 90 Filed 01/18/19 Page 12 of 12