732 F.3d 584 (6th Cir. 2013), 11-2582, Equal Employment Opportunity Commission v. Peoplemark, Inc.

Docket Nº:11-2582.
Citation:732 F.3d 584
Opinion Judge:McKEAGUE, Circuit Judge.
Party Name:EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. PEOPLEMARK, INC., Defendant-Appellee.
Attorney:P. David Lopez, United States Equal Employment Opportunity Commission, Washington, D.C., for Appellant. Edward R. Young, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, Tennessee, for Appellee. P. David Lopez, Donna J. Brusoski, United States Equal Employment Opportunity Commission, ...
Judge Panel:Before: BOGGS and McKEAGUE, Circuit Judges; CARR, District Judge. [*] McKEAGUE, J., delivered the opinion of the court, in which BOGGS, J., joined. CARR, D.J. (pp. 595-628), delivered a separate dissenting opinion. CARR, District Judge, dissenting.
Case Date:October 07, 2013
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 584

732 F.3d 584 (6th Cir. 2013)

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant,

v.

PEOPLEMARK, INC., Defendant-Appellee.

No. 11-2582.

United States Court of Appeals, Sixth Circuit.

October 7, 2013

Argued: Dec. 6, 2012.

Page 585

[Copyrighted Material Omitted]

Page 586

ARGUED:

P. David Lopez, United States Equal Employment Opportunity Commission, Washington, D.C., for Appellant.

Edward R. Young, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, Tennessee, for Appellee.

ON BRIEF:

P. David Lopez, Donna J. Brusoski, United States Equal Employment Opportunity Commission, Washington, D.C., for Appellant.

Edward R. Young, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, Tennessee, for Appellee. Rae T. Vann, Norris, Tysse, Lampley & Lakis, LLP, Washington, D.C., for Amici Curiae.

Before: BOGGS and McKEAGUE, Circuit Judges; CARR, District Judge. [*]

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McKEAGUE, J., delivered the opinion of the court, in which BOGGS, J., joined. CARR, D.J. (pp. 595-628), delivered a separate dissenting opinion.

OPINION

McKEAGUE, Circuit Judge.

The Equal Employment Opportunity Commission (" Commission" ) filed a complaint against Peoplemark, alleging that Peoplemark had a blanket, companywide policy of denying employment opportunities to persons with felony records and that this companywide policy had a disparate impact on African Americans. As it turned out, the alleged companywide policy did not exist. Eventually, the Commission dismissed its claim through joint motion of the parties. Peoplemark moved for costs and attorney's and expert fees. The district court awarded Peoplemark fees and costs totaling $751,942.48. This award included attorney's fees from October 1, 2009, through the end of the litigation, finding that as of October 1 the Commission's claim was unreasonable to maintain. The award also included all of Peoplemark's expert fees. The Commission appeals the district court decision and argues that the district court abused its discretion when it imposed attorney's and expert fees. Alternatively, the Commission argues the fees were excessive.

We affirm the district court's decision.

FACTS

Defendant-appellee Peoplemark is a temporary-employment agency with offices in Michigan, Tennessee, Kentucky, and Florida. Peoplemark uses an application form that asks applicants whether they have a felony record. Peoplemark also conducts an independent investigation into the criminal records of all applicants.

In 2005, Sherri Scott, an African American with a felony conviction, submitted an application to Peoplemark's Grand Rapids office. Peoplemark did not refer Scott for employment. Because of this refusal, Scott filed a charge of discrimination with the Commission. She alleged that Peoplemark denied her application because of her race and felony record.

The Commission launched an investigation in light of Scott's allegations. As part of the investigation, the Commission communicated with Judd F. Osten, Peoplemark's Vice President and Associate General Counsel. Osten informed the Commission that Peoplemark had a companywide policy of rejecting felon applicants. Osten indicated that Peoplemark's policy was not the result of a request from its clients. However, he did state that Peoplemark's clients knew of the policy and that some had told Peoplemark not to refer felons.

As part of the investigation, the Commission also subpoenaed, and Peoplemark provided, more than 18,000 documents. According to Peoplemark, the documents proved that Peoplemark did not have a companywide policy of rejecting felon applicants because the documents showed that Peoplemark had referred felons to job opportunities.

In September 2007, based upon the investigation, the Commission sent a letter to Peoplemark stating that the Commission had reason to believe that Peoplemark had violated Title VII. The Commission relied on the statements of Osten and its belief that Peoplemark had a blanket, companywide policy of rejecting felon applicants, a policy which the Commission argued had a disparate impact on African Americans. The parties' attempts to conciliate failed, and on September 29, 2008,

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the Commission filed the current action on behalf of Scott and a class of similarly situated persons. The complaint alleged that

[s]ince at least May 2005, Defendant Employer has engaged in unlawful employment practices at all of its facilities in violation of Section 703(a) of Title VII, 42 U.S.C. § 2000e-2(a). The Defendant's unlawful employment practices include maintaining a policy which prohibits the hiring of any person with a criminal record. Such policy has had and continues to have a disparate impact on African American applicants.

R. 1, Compl. at 2, Page ID # 2.1

The district court held a scheduling conference in January 2009. The subsequent case management order required the Commission to disclose its experts by the end of June 2009, and to submit its expert reports by the end of August 2009.

The Commission eventually identified 286 individual class members. The records provided by Peoplemark to the Commission indicated, however, that some of the class members did not have felony convictions and others who had felony convictions obtained employment through Peoplemark despite their criminal records.

In April 2009, Peoplemark formally informed the Commission for that first time that Peoplemark denied having a companywide policy of rejecting felon applicants.

The Commission asked for two extensions to the expert deadlines, one each in June and July 2009. Peoplemark opposed both motions. In response to the first request, the court extended both the date to name experts and the report deadline, though the court did not grant as long an extension as the Commission had requested. The court denied the second motion to extend.

In July 2009, Peoplemark provided the Commission with a copy of its e-database. The database again indicated that Peoplemark did not have a companywide policy of rejecting all felon applicants.

By the end of August 2009, Peoplemark had produced over 176,000 documents. In September, Peoplemark produced about two thousand previously unknown documents.

In September 2009, the Commission yet again filed a motion to extend the time to file expert reports. The Commission claimed that its statistical expert would be unable to finalize her report by the deadline and requested that the court extend the deadline to February 2010. The court ordered additional argument about whether the Commission's statistical expert's testimony was even necessary to determine if Peoplemark employed a categorical, companywide policy of refusing to refer felons.

On October 23, 2009, the Commission filed a supplemental brief, which responded to the court's request for additional argument on the issue of whether the Commission's statistical expert's report was even necessary. The brief disavowed the theory of the case that Peoplemark had a discriminatory categorical companywide policy. The Commission argued that the case hinged on the possibility that Peoplemark's consideration of felony convictions when assessing applications had a disparate impact on African Americans. To determine if the case was viable, the Commission, through its expert, would need to analyze flow data and current work force data and conduct an adverse-

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impact analysis. This, the Commission contended, could establish that Peoplemark's actual policy had a disparate impact on African Americans.

The magistrate judge eventually granted in part and denied in part the Commission's third motion for extension of time to file expert reports. The judge found that the Commission was dilatory in prosecuting the case. The magistrate judge extended the deadline for filing expert reports to December 31, 2009. The district judge affirmed.

Peoplemark timely filed its expert report in February 2010.

Though Peoplemark brought a motion for summary judgment on February 25, 2010, the parties agreed to voluntarily dismiss the case with prejudice on March 24, 2010. The dismissal provided that Peoplemark would be the prevailing party for purposes of determining who was entitled to fees under § 706(k) of Title VII, as amended at 42 U.S.C. § 2000e-5(k). The court granted the joint motion and dismissed the action on March 29, 2010.

Peoplemark thereafter moved for attorney's fees, expert fees, sanctions, and costs.

PROCEDURAL HISTORY

A. Magistrate Judge's Report and Recommendation

On March 31, 2011, the magistrate judge recommended that Peoplemark be awarded fees in the amount of $751,942.48, which included $219,350.70 in attorney's fees, $526,172.00 in expert witness fees, and $6,419.78 in other expenses.

The magistrate judge found that " the complaint turned out to be without foundation from the beginning." The magistrate judge recommended that the Commission should be held to the gravamen of its complaint— that Peoplemark had a blanket, companywide policy of refusing to refer felons to employment opportunities and that this policy had a disparate impact on African Americans. The magistrate judge then sought to determine when the Commission should have known that the case as pleaded was groundless.

The magistrate judge recommended that the Commission should have known the case was groundless as of October 1, 2009. The magistrate judge chose this date because it provided the Commission a little over a month to have reviewed the vast majority of the documents produced by Peoplemark. The magistrate judge found that " [i]t was certainly unreasonable to continue this burdensome litigation" after October 1 because the Commission should have known that the claim was groundless by that date. The magistrate judge also added that it was unreasonable for the Commission to maintain the litigation after the Commission knew it could no longer present an expert report.

The magistrate judge...

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