Fourth Circuit Denies Attorneys' Fees To Prevailing Defendant in EEOC Action

The only thing sweeter than winning a civil case against the federal government is to win the case and then be awarded your attorneys' fees.  But the winning defendant in EEOC v. Great Steaks, Inc., decided last week by the Fourth Circuit, will have to resign itself to eating cake without icing, notwithstanding three colorable fee arguments which were shot down by the Court.

The EEOC sued Great Steaks on behalf of several employees who claimed they had been sexually harassed in their work at Great Steaks' restaurant in Greensboro.  Great Steaks won the case after a three day jury trial and moved for its fees under Title VII's fee-shifting provision, under the Equal Access to Justice Act (the "EAJA") and under 28 U.S.C. § 1927.  Judge Beaty of the Middle District of North Carolina denied the fee request and was affirmed by the Fourth Circuit. 

Title VII's Fee-Shifting Provision

Title VII contains a provision allowing the Court in its discretion to award reasonable attorneys’ fees to prevailing parties in actions brought under it. 42 U.S.C. § 2000e-5(k).  The statute makes no distinction between the standard for prevailing plaintiffs versus prevailing defendants, but in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), the Supreme Court established a more stringent standard governing when prevailing defendants may recover as compared to prevailing plaintiffs.  The Supreme Court said in Christianburg Garment  that a prevailing defendant is entitled to fees only if the trial court:

finds that [the plaintiff’s] claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so.

Id. at 422.  A Title VII plaintiff who prevails, on the other hand, "is ordinarily entitled to attorneys' fees unless special circumstances militate against such an award."

The reasons for the difference are discussed by the Court on pages 9-10 of the opinion.

A highly significant factor to the Fourth Circuit in its determination that no fees were warranted was that Great Steaks had made a motion for judgment as a matter of law at the close of the EEOC's evidence at trial, which had been denied.  So the case was strong enough to go to the jury.  Judge Floyd said that the denial of a Rule 50 motion was a ""particularly strong indicator that the plaintiff’s case is not frivolous,unreasonable, or groundless."  He said that "we are hard-pressed to imagine circumstances where the district court could make this determination and nevertheless deem the plaintiff’s case frivolous, unreasonable, or groundless."  Op. at 12.

The review was for abuse of discretion, and the appellate court said that Judge Beaty was "in the best position"  to make the fee assessment" since he had "managed the litigation and conducted the trial."  Op. at 14.

All Great Steaks had to offer in support of its motion was that the EEOC's case had steadily eroded over time from being a class action on behalf of numerous Great Steaks' employees to a case involving only one employee who turned out not to be very credible and whose testimony had been deemed "troubling" by the Magistrate Judge who recommended that a summary judgment motion made by Great Steaks be denied.  One potential class member had refused to appear for her deposition, and another announced that she was quitting the case at her deposition.  This wasn't enough to establish frivolity or groundlessness, according to the Court

Great Steaks took two more shots at a fee award.

 

Fees Under The Equal Access To Justice Act

The EAJA makes an award of fees mandatory for a prevailing party against the government unless the trial court finds that the government's position was "substantially justified." 28 U.S.C. §2412(d). The government bears the burden of proving substantial justification.

This is a lower standard than the standard used in applying Title VII's fee-shifting provision. The Fourth Circuit ruled in what was a case of first impression for it that the EAJA's mandatory fee provision is unavailable to prevailing Title VII defendants.  It rejected the argument that the EAJA should apply because the Title VII standard was "narrower and more difficult." That seems pretty clear, since Section 2412 says that it does not "alter[ ], modif[y], repeal[ ], invalidate[ ], or supersede[ ] any other provision of Federal law which authorizes an award of such fees and other expenses to any party other than the United States."

The  first line of the statute moreover says it applies "[e]xcept as otherwise specifically provided by statute."  So when another provision of federal law provides for the recovery of attorneys' fees (like Title VII), the EAJA does not apply.

It's worth noting that fees are obtainable under the EAJA against the EEOC when it loses a case brought under the Age Discrimination in Employment Act, which has no provision regarding attorneys' fees.  The Fourth Circuit ruled on that point in EEOC v. Clay Printing Co., 13 F.3d 813 (4th Cir. 1994)

Fees Under 28 U.S.C. §1927

Capping off its "three and out" ruling against Great Steaks, the Fourth Circuit also affirmed the denial of attorneys' fees under 28 U.S.C. §1927 , which provides for fees to be awarded against ""[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously...."

The inquiry under §1927 is not on the merits of the litigation, but instead how it is conducted. So Great Steaks' arguments about the lack of merits of the litigation didn't count at all in this part of the analysis. The statute also requires a showing of bad faith on the part of the attorney whose conduct provides the basis for the award.

Great Steaks said that the vexatiousness and bad faith flowed from two motions filed by the EEOC. One was a motion to strike Great Steaks' summary judgment motion on the basis that it used a font size in the supporting brief that was larger than that allowed by the Court's Local Rule. The EEOC failed to pursue its motion after Great Steaks responded to it.

The other actions pointed to by Great Steaks as vexatiously multiplying the case were twelve motions in limine which the EEOC filed the week before trial. Great Steaks didn't respond to any of the motions, and the Court granted four of the motions before the trial began and deferred ruling on the other eight.

Apparently motions about font size are not vexatious, and motions in limine (even twelve) don't meet the Section 1927 standard. So file away, with some discretion. But don't use too small a font.  That's really annoying and potentially vexing.

________________________________________________

The Fourth Circuit's opinion doesn't mention the amount of fees sought by Great Steaks, but the Motion in the trial court sought almost $150,000 in fees.

 

 

 

Trackbacks (0) Links to blogs that reference this article Trackback URL
http://www.ncbusinesslitigationreport.com/admin/trackback/269703
Comments (0) Read through and enter the discussion with the form at the end
Post A Comment / Question Use this form to add a comment to this entry.







Remember personal info?