Showing posts with label ability to pay. Show all posts
Showing posts with label ability to pay. Show all posts

Thursday, January 22, 2009

Sixth Circuit Provides Guidance for Imposing Attorney Fees on Unsuccessful Plaintiffs Who Bring or Pursue Frivolous Employment Claims.

Today, the Sixth Circuit affirmed in part and remanded in part a federal court sanction which imposed joint and several liability upon the plaintiffs’ attorney and eight unsuccessful plaintiffs who pursued discrimination and wrongful discharge claims against their former supervisors and managers at the Cuyahoga County Juvenile Court. Garner v. Cuyahoga County Juvenile Court, No. 07-3602. The Sixth Circuit agreed with the district court’s analysis of the merit of the plaintiffs’ claims and affirmed the award of $69,345 in Rule 54 costs, but remanded the $660,103 attorney fee award so that the district court could articulate how the fees should be re-allocated in consideration of (i) each plaintiff’s respective ability to pay; (ii) the admission of the plaintiffs’ attorney that she was primarily responsible for prosecution of the frivolous claims; (iii) the potential conflict of interest between the plaintiffs’ and their attorney on this issue; (iv) each plaintiff being responsible for their own claims and not for the prosecution or defense of other plaintiffs’ claims; and (v) the point in time when each plaintiffs’ claim became frivolous and should have been dropped. Most saliently, the Court found it inappropriate to impose joint and several liability for the fee sanction when there were factual differences in the claims and the plaintiffs’ attorney had admitted her primary responsibility for prosecuting the frivolous claims.

According to the Court’s opinion, the discrimination and wrongful discharge claims of fourteen plaintiffs had been consolidated into one lawsuit and all of them were dismissed on summary judgment in a 250-page opinion. Some of the claims were dismissed because the plaintiff failed to present evidence to substantiate each element of the prima facie case (i.e., the “no evidence plaintiffs”) and some were dismissed because the plaintiff could not show that the defendants’ non-discriminatory/retaliatory explanation was pretextual (i.e., the “insufficient evidence plaintiffs”). After the dismissal of the case, the defendants filed a bill of costs under Civil Rule 54 in the amount of $69,345 (for, among other things, deposition transcripts, witness fees, copies). The defendants then moved for reimbursement of their $664,885 in attorneys fees from the plaintiffs on the grounds that the claims were frivolous under 42 U.S.C. § 1988. Defendants also sought sanctions against the plaintiffs’ attorneys under “28 U.S.C. § 1927, [Civil Rule] 11 .. , Ohio Revised Code § 2323.51, and the court’s inherent authority.”

The district court awarded costs to the Defendants and imposed joint and several liability against all of the plaintiffs. In granting the defendants’ fee motion for $660,103 in fees, the district court did not impose any fee sanctions upon the insufficient evidence plaintiffs or under Civil Rule 11, but held that the remaining claims were frivolous, should not have been pursued at all (and certainly not beyond the close of pre-trial discovery) and justified sanctions against eight of the plaintiffs and their attorney on a joint and several liability basis. The Sixth Circuit agreed with the district court’s analysis of the merits of the plaintiffs’ claims, affirmed the award of Rule 54 costs, and affirmed that the plaintiffs’ attorney could be liable for fees under § 1927, but remanded the attorney fee award so that the district court could reconsider and articulate how the fees should be re-allocated.

As an initial matter, the Sixth Circuit “conclude[d] that the district court erred in holding each employee jointly and severally liable with respect each other’s claims, as opposed to individually liable, for attorney fees under 42 U.S.C. § 1988. While “[t]he employees here all shared a disparate-impact claim involving common allegations about the CCJC’s employment practices, . . . this lone claim does not justify imposing the entire fee award jointly and severally among all of the employees in this case. Most of the individual employees’ claims are in fact unrelated. The disparate treatment claims, for example, do not share a common factual nexus. And the retaliation claims similarly involved different allegations unique to each employee. Indeed, the employees’ respective claims were sufficiently distinct that the district court decided to issue individual summary judgment orders against each one.”

The Court also remanded the sanction award so that the district court could better articulate how the fee sanction should be allocated in light of each plaintiff’s ability to pay. While the court agreed that each plaintiff bore the burden of proving an inability to pay their share of the sanction, “[w]e are nevertheless troubled by the district court’s failure to explain why the salary information provided to the court was insufficient to establish the employees’ inability to pay. In particular, the court itself recognized, in the portion of its order addressing costs, that the employees had “modest incomes” averaging about $35,000 per year. We are therefore puzzled as to why this information was not addressed in the portion of the court’s order discussing the calculation of attorney fees . . . The district court’s obligation to “explain its reasoning adequately” exists irrespective of which party bears the burden of persuasion to demonstrate an inability to pay.”

The Court also remanded so that the district court could explain when the sanctions began to accrue. “The parties disagreed during oral argument as to whether the attorney fees improperly included legal work done before the completion of discovery—i.e., the point in time at which the employees should have realized that their claims were frivolous and the lawsuit should have been voluntarily dismissed. Because the record is not clear on this issue, the district court should ensure on remand that the total attorney-fee award excludes fees incurred before the point in time when the individual employees should have known that their claims were frivolous. We presume that, for most of the employees, this point in time occurred at the close of discovery. But the district court should make a clear finding, for each of the individual employees, to determine whether this presumption is correct.”

Finally, the Court also remanded so that the district court could consider re-allocating a greater portion of the fee sanction against the plaintiffs’ attorney. “Our review of the record suggests that the fault for bringing the groundless claims in this case lies principally with Attorney Frost and not with her clients. Indeed, Frost graciously conceded during oral argument that, if there is anyone to blame for the litigation, she should be the one and not her clients. Frost’s concession tempts us to simply instruct the district court to reverse the imposition of any liability against her clients under § 1988.” However, because clients selected the attorney to be their agent, they remain responsible for the actions of their attorney. Moreover, the court did not want the Defendants to lose their ability to recoup their fees in the event that the attorney became insolvent.

In affirming the frivolous nature of the no-evidence plaintiff’s claims as a sufficient basis for imposing sanctions, the Sixth Circuit rejected the plaintiff’s arguments that the CCJC had previously lost a discrimination claim and there was some evidence to support the claims of the insufficient evidence plaintiffs. The court rejected the plaintiffs’ arguments because the no-evidence plaintiffs failed to “establish[] a clear nexus between themselves” and the prima facie evidence of the insufficient evidence plaintiffs and ruling in their favor “would encourage frivolous “me-too” claimants to piggyback on the nonfrivolous claims of legitimate plaintiffs.” The court also refused to permanently bar every “employer who has lost a discrimination claim . . . from recovering attorney fees against subsequent frivolous claimants” because the plaintiffs failed to “present[] relevant evidence deriving from [the] prior successful jury verdict against the CCJC.”

Insomniacs can read the full court opinion at