Jones v. Continental Corp., 85-5489

Citation789 F.2d 1225
Decision Date06 May 1986
Docket NumberNo. 85-5489,85-5489
Parties40 Fair Empl.Prac.Cas. 1343, 40 Empl. Prac. Dec. P 36,108 Gwendolyn E. JONES, Plaintiff-Appellant, v. The CONTINENTAL CORPORATION; the Continental Insurance Company; Bud Meulemans; and R.R. Barsanti, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Avon N. Williams Jr., Williams and Dinkins (argued), Richard H. Dinkins, Ronald W. McNutt, Nashville, Tenn., for plaintiff-appellant.

Cornelia A. Clark, Farris, Warfield & Kanaday, Nashville, Tenn., Lloyd Sutter (argued), King & Spalding, Atlanta, Ga., for defendants-appellees.

Before KRUPANSKY and MILBURN, Circuit Judges, and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

This appeal of an employment discrimination case, brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq. (1982 and Supp.1985), and under 42 U.S.C. Sec. 1981 (1982), seeks reversal of awards of costs against the plaintiff-appellant, and of attorney's fees against the plaintiff-appellant and her counsel. Appellant argues that in authorizing these awards of attorney's fees and costs, the district court abused its discretion. For the reasons that follow, we affirm the award of costs against appellant, but reverse both awards of attorney's fees, and remand for further proceedings the award of fees against appellant's counsel.

I

Plaintiff-appellant Gwendolyn E. Jones (Jones) brought this action against defendant-appellee The Continental Insurance Company (employer) alleging employment discrimination under Title VII and Sec. 1981. 1 After a bench trial on the merits, the district court entered judgment for the employer on all claims in the complaint. Jones v. Continental Corporation, No. 82-3572, slip op. (M.D.Tenn. June 29, 1984).

The evidence showed that Ms. Jones, a black woman, had been employed from May, 1977 to August, 1983 at the employer's Nashville office. She had been steadily promoted from her starting position as a rate and code clerk, to senior rate and code clerk (Aug. 14, 1978), to underwriter trainee (Aug. 13, 1979), to associate underwriter (Nov. 3, 1980), and to underwriter (May 4, 1981). There is no dispute that the plaintiff's employment was terminated in August of 1983, following receipt of a letter written by her to the employer's largest local client, an insurance agency, accusing employees of the latter of "hate and prejudices" to Ms. Jones.

Ms. Jones sought to prove that, in several actions taken towards her during the period of her employment, her employer was motivated by racial (and secondarily by sexual) prejudice. She claimed to have been repeatedly denied promotions, and to have been denied promotional opportunities--to attend professional workshops and to socialize with clients--that routinely were enjoyed by similarly-situated white employees. She claimed to have been singled-out for showing Amway products on work time, when white employees were permitted to sell goods. She claimed that she was deliberately placed at an inadequately-lighted desk, with her back to all white employees, and that her employer was unresponsive to her requests for better lighting or a new desk location. She claimed to have been the object of racially-motivated profanity by white employees and clients, about which her employer allegedly did nothing. She claimed to have been passed over for promotion to supervising underwriter in favor of a less-qualified white employee (Carol Brown) who transferred from the San Francisco office. While these claims were pending, Jones was discharged, ostensibly for writing an insulting letter to a major client. She then amended her complaint to add the final claim that her termination was racially-motivated, and that the proffered excuse was mere pretext.

The district court found that Jones's proof was so insubstantial that she had established a prima facie case of illegal discrimination only as to the Carol Brown transfer. The court found

against the plaintiff because of her lack of credibility. The plaintiff assumed her knowledge of her work place was omniscient. Many of her complaints were never communicated to her superiors. Many that were, were picayune. In short, the plaintiff could be a quite petty person who assumed that anything that did not suit her was a product of racial prejudice.

Jones v. Continental Corporation, No. 82-3572, slip op. at 4 (M.D.Tenn. June 29, 1984). Jones appealed the district court's dismissal on the merits in a companion case, alleging that the court's failure to find disparate treatment was clear error. We have previously affirmed the district court's judgment on the merits. Jones v. Continental Corporation, 785 F.2d 308, (6th Cir.1986).

Following his judgment in favor of the employer, the district judge assessed some attorney's fees against Jones, as a losing party, under 42 U.S.C. Sec. 1988; and some against her counsel, for unreasonably and vexatiously multiplying the litigation, under 28 U.S.C. Sec. 1927, and under the court's inherent powers to punish those who litigate in bad faith, Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). The court also taxed costs against the plaintiff. While the court did not hold a hearing prior to these decisions awarding fees and costs, it did receive briefs from both parties, and filed a memorandum. Subsequently, the court by additional memorandum denied motions to alter or amend judgment. Ms. Jones and her counsel appeal the orders assessing fees and costs, and denying their motions to alter or amend judgment. 2

II

Although the "American Rule" has been and remains that parties to litigation must bear their own attorney's fees federal courts recognize several exceptions to this general rule. See generally Tarter v. Raybuck, 742 F.2d 977, 984-86 (6th Cir.1984). An award of attorney's fees, whether granted under 28 U.S.C. Sec. 1927, under 42 U.S.C. Sec. 1988, or under the court's "inherent powers," rests in the sound discretion of the trial court. See Bowers v. Kraft Foods Corp., 606 F.2d 816, 818 (8th Cir.1979) (Sec. 1988); United States v. Blodgett, 709 F.2d 608, 610 (9th Cir.1983) (Sec. 1927); Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980) (court's inherent powers). Similarly, while an award of costs against a losing party is "a normal incident of defeat," Delta Air Lines, Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 1150, 67 L.Ed.2d 287 (1981), a court may, of course, in its discretion, choose not to tax costs. Accordingly, our only inquiry as to each aspect of the instant appeal is whether the awards represent an abuse of the trial court's discretion. Tarter v. Raybuck, 742 F.2d 977, 986 (6th Cir.1984).

A

There is no doubt that a federal district court, in the sound exercise of its discretion, may assess attorney's fees against losing counsel, as well as against a losing party. In Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980), the Supreme Court, while finding no statutory authority for such an award, determined that it could be upheld under the court's "inherent powers," upon a finding that an attorney "willfully abuse[d] judicial processes" by conduct "tantamount to bad faith." Id. at 764-66, 100 S.Ct. at 2463-64. Congress subsequently amended 28 U.S.C. Sec. 1927 to grant statutory authority for an award of "the excess costs, expenses and attorney's fees reasonably incurred" due to conduct by an attorney that "multiplies the proceedings in any case unreasonably and vexatiously." 28 U.S.C. Sec. 1927 (1982) (as amended by Pub.L. 96-349, Sec. 3, 94 Stat. 1156 (Sept. 12, 1980)). The effect of the amendment was to nullify that part of Roadway Express which held that former Sec. 1927 permitted assessment against losing attorneys only of "costs," not of attorney's fees, thus adding a statutory power to the "inherent power" recognized in Roadway Express. 447 U.S. at 757-64, 100 S.Ct. at 2459-63.

In the instant case, the district judge based his conclusion that Ms. Jones's attorneys had unreasonably and vexatiously multiplied the litigation on two aspects of the attorneys' conduct. First, the court noted that Jones's counsel had failed to respond timely to the employer's motion to dismiss, which was twice renewed in the course of the proceedings. Appendix 97-98. The original motion was accompanied by a brief, noting inter alia that Jones's complaint failed to specify under which statute (Title VII or Sec. 1981) the individual defendants were being sued, under which statute the sex (as opposed to race) discrimination claims were being brought, and under which statute damages were being requested. Id. 3 The motion to dismiss was accompanied by a letter indicating a willingness to withdraw the motion if Jones would amend her pleadings to eliminate certain defendants, and would "omit the claims discussed in our brief which are not subject to litigation here." Appendix 42. Jones never amended her complaint (except to add parties and claims), and in her eventual response to the motion to dismiss, did not address the motion's request for more specific pleadings. Appendix 284. This last omission took on importance, in the eyes of the court, when Jones's counsel refused to sign a pretrial order that would have simplified the issues for trial. Appendix 97-98.

In awarding attorney's fees, the district court concluded that counsel's original "sloppy" pleading, together with their failure to cure it by amendment, was a basis for an award of fees under Sec. 1927. The court also found that the reason Ms. Jones's counsel had refused to sign the pretrial order--purportedly the product of an all-day negotiating session between both sides--was unrelated to the substance of the proposed order, but rather was an attempt to pressure the employer's counsel into waiving rights to certain attorney's fees. Id. The district court...

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