457 F.3d 1180 (11th Cir. 2006), 04-14499, Amlong & Amlong, P.A. v. Denny's, Inc.

Docket Nº:04-14499.
Citation:457 F.3d 1180
Party Name:AMLONG & AMLONG, P.A., Karen Coolman Amlong, et al., Interested Parties-Appellants, v. DENNY'S, Inc., T.W. Services, Inc., et al., Defendants-Appellees.
Case Date:July 31, 2006
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1180

457 F.3d 1180 (11th Cir. 2006)

AMLONG & AMLONG, P.A., Karen Coolman Amlong, et al., Interested Parties-Appellants,

v.

DENNY'S, Inc., T.W. Services, Inc., et al., Defendants-Appellees.

No. 04-14499.

United States Court of Appeals, Eleventh Circuit.

July 31, 2006

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George Cochran, Fordham University Law School, New York City, for Appellants.

Jon K. Stage, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Ft. Lauderdale, FL, Joan M. Canny, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Averill G. Marcus, Averill G. Marcus, P.A., Miami, FL, A. Hinda Klein, Conroy, Simberg, Ganon, Krevans & Abel, P.A., Hollywood, FL, for Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before HULL, MARCUS and HILL, Circuit Judges.

MARCUS, Circuit Judge:

Karen Coolman Amlong, William R. Amlong, and their law firm, Amlong & Amlong, P.A., appeal from a district court order imposing sanctions in excess of $400,000, under 28 U.S.C. § 1927, for their conduct in representing a Title VII plaintiff in a sexual harassment lawsuit. After thorough review, we conclude that the district court committed reversible error when, after referring the issue of sanctions to a magistrate judge for an evidentiary hearing and Report and Recommendation, the district court discarded numerous findings of fact and credibility determinations made by the magistrate judge and substituted its own findings of fact on bad faith, without conducting any evidentiary hearing. The district court also abused its discretion in ordering the Amlongs to pay 10 percent back interest on a portion of the sanctions, and we, therefore, reverse that portion of the sanctions award too.

I.

The basic facts in the case are these: In May 1994, a former client introduced Miami attorney Debra Valladares to the plaintiff in this Title VII case, Floride Norelus, a Haitian immigrant. Norelus told Valladares that she had suffered a horrific pattern of sexual harassment, rape, and assault at the hands of Asif Jawaid, the manager of a Denny's restaurant where she worked. According to Norelus's second amended complaint, Jawaid repeatedly forced her to have oral, vaginal, and anal sex with him in the Denny's restaurant and at his home. Norelus claimed that when she refused Jawaid's sexual demands, Jawaid assigned her unpleasant duties or otherwise punished her. She added that the manager, Jawaid, extracted sexual favors in exchange for job advantages, refused to file paperwork reflecting her alien status, and threatened to report her to the immigration authorities. Norelus also said Jawaid forced her to have sex with his roommate, Raheel Hameed, at their home and at another Denny's restaurant that Hameed managed. On one occasion,

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Norelus recounted, Jawaid and Hameed took her to their home, restrained her, repeatedly raped her, and penetrated her vagina with an object. Norelus stated that she informed Denny's authorities of the abuse, but they failed to take proper remedial steps. Jawaid allegedly retaliated by reducing Norelus's work hours and changing her work schedule.

Attorney Valladares met with Norelus, along with Valladares's former client, David Hill, and two of Norelus's brothers, for three hours. During this meeting, according to Valladares's testimony during the sanctions hearing conducted by the magistrate judge, one of Norelus's brothers told Valladares that Jawaid had personally confessed to having abused Norelus. Valladares said she also visited the two Denny's restaurants where Norelus claimed to have been abused. Valladares said a Denny's employee told her (in Valladares's words) that Jawaid "definitely had a thing for [Norelus] and that she was like his property," and a Denny's patron told Valladares he had seen Jawaid mistreat Norelus. Neither individual, however, confirmed having witnessed sexual misconduct of the kind that Norelus alleged.

Valladares then sought assistance from another Miami attorney, Joseph Chambrot, and the two lawyers later sought out the Amlongs, who are well known South Florida Title VII lawyers. Working from a sample complaint the Amlongs provided from another case, Valladares and Chambrot filed Norelus's initial complaint in the United States District Court for the Southern District of Florida on December 19, 1994. The Amlongs' role was limited at that point, but in January 1995, they assumed formal representation of Norelus. The Amlong firm filed Norelus's first amended complaint in the district court on July 27, 1995, and then a second amended complaint on December 27, 1995. The Amlong firm assigned primary client contact responsibilities to a first-year associate, Lisa Stern (now Lisa Stern Taylor).

In the course of the pre-trial discovery process, Norelus was deposed over some eight days in January and February 1996. Taylor attended all the sessions, and Robin Hankins, another Amlong firm associate, attended some of them. Norelus had only limited facility with English, so an interpreter translated the questions into Haitian French Creole and translated Norelus's answers back into English. The language difficulties were not the only obstacle in the deposition; Norelus's behavior was highly emotional and erratic. Sometimes she answered questions sarcastically or otherwise failed to respond properly. Until her lawyers instructed her to correct her testimony, Norelus lied about matters related to her immigration status. Among other things, she claimed that she did not know Lavictore Remy, the person whose name she had falsely used to secure employment. Taylor, the Amlong associate, told the defendants that this testimony was false, and she instructed Norelus to tell the truth. Norelus then admitted that in fact, Lavictore Remy was a relative. The plaintiff's first deposition produced a voluminous transcript of more than 1200 pages.

Amlong associates Taylor and Hankins also attended the February 1996 depositions of ten Denny's employees. Notably, none of these witnesses corroborated Norelus's story. Hankins reported back to Karen Amlong and expressed doubts about the case, but Amlong decided to press on with the case. In her testimony at the evidentiary hearing conducted by the magistrate judge, citing her extensive experience in Title VII cases, Amlong explained that the absence of corroborating witness testimony was not unusual in cases of sexual harassment and assault, because such

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abuse often occurs outside the presence of witnesses. Moreover, Amlong said some of the witnesses' depositions contained inconsistencies of their own suggesting that the witnesses' testimony might not contain the whole story. Thus, for example, Amlong observed that Denny's manager Jawaid denied ever having had any physical relationship with Norelus, but some witnesses suggested Jawaid and Norelus might have had a consensual sexual relationship. Amlong said she hoped to exploit these inconsistencies at trial to cast doubt on the witnesses' veracity and draw out unrevealed facets of the story.

Nevertheless, Amlong testified, in order to test the veracity of the plaintiff's account of rape and sexual abuse, the firm retained the services of George Slattery, an experienced and respected polygraph examiner, to polygraph Norelus. The first of these examinations took place in January 1996, coinciding with Norelus's first deposition. Karen Amlong said that she wanted to conduct the examination earlier, but Norelus had become pregnant, and Slattery refused to administer a polygraph examination during her first trimester. The second polygraph examination took place on April 29, 1996. Slattery unambiguously concluded, after each examination, that Norelus was telling the truth about her core allegations of sexual abuse, rape, and assault. Norelus also received treatment from a Creole-speaking psychologist, Dr. Astrid Schutt-Aine, who advised the Amlongs that Norelus appeared to suffer from post-traumatic stress disorder.

Karen Amlong testified that despite the problems with Norelus's testimony she remained convinced that Norelus was telling the truth. Amlong also observed that her ethical duties prevented her from withdrawing her representation. Amlong decided to press on with the suit. Accordingly, after Norelus's deposition, on Karen Amlong's instructions, Taylor reviewed the deposition testimony with Norelus and prepared an errata sheet. Taylor testified that she read the questions in English and another person translated. For reasons of cost, according to Taylor, they did not use a professional interpreter -- at one point Norelus's brother translated, and at another point a friend of Norelus's translated. Taylor recorded the reasons Norelus provided for each change.

The process produced an unusually long errata sheet -- some 63 pages detailing a total of 868 changes to Norelus's deposition testimony. Some of the changes were inconsequential or even harmed Norelus's case. For instance, at one point in the deposition the defense attorney had shown Norelus a time card that appeared to undermine her story. At that time, Norelus claimed she could not confirm the time card's authenticity because the card was not signed. When the defense attorney pressed the point, Norelus testified that she could not recall whether she usually signed her time cards. On the errata sheet, however, Norelus changed her testimony so that she admitted unequivocally that she did not always sign her time cards. Other changes on the errata sheet, however, appeared to improve Norelus's case measurably by adding details that Norelus had not provided when she was deposed. Thus, for example, the testimony as...

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