Thomas v. Capital Sec. Services, Inc.

• Decision Date: 20 March 1987
• Docket Number: No. 86-4480,86-4480
• Citation: 812 F.2d 984
• Parties: 43 Empl. Prac. Dec. P 37,053, 7 Fed.R.Serv.3d 379 Patricia THOMAS, Bernadine Doss, Georgia Evans, and Rose Clark, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellees, v. CAPITAL SECURITY SERVICES, INC., Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 984

812 F.2d 984

43 Empl. Prac. Dec. P 37,053, 7 Fed.R.Serv.3d 379

Patricia THOMAS, Bernadine Doss, Georgia Evans, and Rose

Clark, Individually and on Behalf of All Others

Similarly Situated, Plaintiffs-Appellees, v. CAPITAL SECURITY SERVICES, INC., Defendant-Appellant.

No. 86-4480

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

March 20, 1987.

M. Curtiss McKee, Jackson, Miss., for defendant-appellant.

Deborah A. McDonald, Mary Brown, Natchez, Miss., Willie L. Rose, McComb, Miss., plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Mississippi (William H. Barbour, Jr.)

Before CLARK, Chief Judge, GARWOOD and HILL, Circuit Judges.

ROBERT MADDEN HILL, Circuit Judge:

Capital Security Services, Inc., (Capital) appeals complaining that the district court erred in denying it attorney's fees as sanctions against the plaintiffs Patricia Thomas, Bernadine Doss, Georgia Evans, and Rose Clark, and their attorneys. For reason stated below, we affirm in part and vacate in part and remand.

I.

This appeal springs from an employment discrimination action brought by the plaintiffs against their former employer Capital. The plaintiffs were all security officers for Capital when they were discharged from their positions in October 1983. Shortly after their discharges each plaintiff filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). An EEOC investigation was begun in February 1984, and plaintiffs were issued a right-to-sue letter in August 1984.

On October 19, 1984, the plaintiffs filed suit alleging that Capital carried out a wide variety of racially- and sexually-motivated discriminatory practices in such areas as hirings, promotions, terminations, and on-the-job treatment. The plaintiffs also alleged a class action in favor of all similarly-situated black women who were, had been, or would be employed by Capital. The plaintiffs' actions were based upon alleged violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq., 42 U.S.C. Sec. 1981, and the Thirteenth Amendment.

Following initiation of the action, the plaintiffs attempted some limited discovery in regard to the putative class action. After receiving Capital's responses to interrogatories, the plaintiffs' counsels chose not to request a class certification and the case proceeded as a consolidated action by four plaintiffs. In January 1986 the district court granted in part Capital's motion for summary judgment. The district court dismissed plaintiffs' Thirteenth Amendment claims and limited the plaintiffs' Title VII and section 1981 claims to whether they had been terminated or treated differently during employment on the basis of race or sex.

After a three-day trial, the district court found for Capital on all grounds. While the plaintiffs' Title VII and section 1981 claims survived Capital's motion for directed verdict, the district court found that Capital had established a non-discriminatory reason, i.e., economic downturn, to support the discharge of each plaintiff. Final judgment was entered March 7, 1986. The plaintiffs appealed this judgment, but we affirmed the district court's decision in an unpublished opinion. Thomas v. Capital Security Service, 802 F.2d 453 (5th Cir.1986) (mem.).

On April 7, 1986, after the plaintiffs had appealed the case-in-chief to this court, Capital requested an award of attorney's fees against the plaintiffs and their attorneys. Capital's motion was based upon Fed.R.Civ.P. 11, 28 U.S.C. Sec. 1927, 42 U.S.C. Sec. 1988, 42 U.S.C. Sec. 2000e-5(k), and the inherent equitable powers of the district court. Capital asserted that an award was appropriate because the plaintiffs and their attorneys had expanded their judicial allegations far beyond the scope of their EEOC complaints, filed a class action but failed to later certify the class, withdrew from settlement negotiations, and added seven new witnesses to the court's pretrial order two weeks before trial; Capital also asserted that plaintiffs' attorneys prosecuted the action in a mistaken belief that they were required to act in only subjective good faith and presented irrelevant evidence at trial.

On June 10, 1986, the district court denied the motion. While denying the motion, the court noted that the situation presented a close question. Most of the court's discussion centered upon whether the plaintiffs and their attorneys had violated Fed.R.Civ.P. 11. The court noted that the broad or "shotgun" allegations contained in the plaintiffs' complaint appeared to evidence a lack of inquiry by the plaintiffs' attorneys into the law and supporting facts. The court, however, stated that it was reluctant to impose sanctions because of the unsettled nature of the law in regard to the breadth of a judicial complaint based upon a narrower EEOC complaint. On July 8 Capital perfected an appeal to this court challenging the denial of its motion for attorneys fees.

II.

Since federal courts are forums of limited jurisdiction, we first address, sua sponte, whether the district court had jurisdiction to consider the motion for attorney's fees/sanctions in light of the plaintiffs' prior appeal of the case-in-chief. As a general rule the effective filing of a notice of appeal transfers jurisdiction from the district court to the court of appeals with respect to all matters involved in the appeal. See Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58-59, 103 S.Ct. 400, 402, 74 L.Ed.2d 225, 228 (1982) (per curiam); Newball v. Offshore Logistics Int'l, 803 F.2d 821, 825 (5th Cir.1986). This general rule however is not absolute. See generally 9 Moore's Federal Practice p 203.11 (1987). One well-recognized exception is that even though the judgment on the merits has been properly appealed and is pending in the courts of appeal, the district court retains jurisdiction to entertain and resolve a motion requesting attorney's fees or sanctions. The basis for this exception is that attorney's fees/sanctions are matters collateral to the merits of the action. See West v. Keve, 721 F.2d 91, 95 n. 5 (3d Cir.1983) (en banc); Masalosalo v. Stonewall Insurance Co., 718 F.2d 955, 956 (9th Cir.1983); Jones v. Illinois Dept. of Rehabilitation Services, 689 F.2d 724, 731-32 (7th Cir.1982); Rothenberg v. Security Management Co., 677 F.2d 64, 66 (11th Cir.1982); Obin v. District No. 9, 651 F.2d 574, 583-84 (8th Cir.1981); Duane Smelser Roofing Co. v. Armm Consultants, 609 F.Supp. 823, 824 (E.D.Mich.1985); cf. Jackson Marine Corp. v. Harvey Barge Repair, Inc., 794 F.2d 989, 991 (5th Cir.1986) (motion pursuant to rule 11 requesting attorney's fees is collateral to merits of claim). See generally Wright, Miller & Cooper, Federal Practice & Procedure: Jurisdiction and Related Matters Sec. 3915, at 268-69 (Supp.1986).

Since Capital's motion requesting an award of attorney's fees came after the plaintiffs had appealed the district court's decision on the merits and the court's denial of the motion came while the plaintiff's appeal was pending before this court, the previously-mentioned exception applies. Therefore, the district court had jurisdiction to consider and rule on Capital's motion.

III.

We turn now to whether the district court erred in not awarding Capital attorney's fees. Since the parties' arguments on appeal and the district court's decision focused primarily on whether violations of Fed.R.Civ.P. 11 occurred, we address this matter first.

A.

Rule 11 provides, in part, that:

Every pleading, motion, or other paper of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated.... The signature of an attorney ... constitutes a certificate by him that he has read the pleading, motion, or other paper, that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation....

We have recently discussed the requirements of rule 11 in Robinson v. National Cash Register Co., 808 F.2d 1119 (5th Cir.1987). We recognized that the 1983 amendments to rule 11 broadened the reach of the rule and were "intended to reduce the reluctance of courts to impose sanctions ... by emphasizing the responsibility of the attorney." Id. at 1127 (quoting Advisory Committee Note to Rule 11, 97 F.R.D. 165 (1983)). While emphasizing that sanctions under the rule should not be cavalierly imposed so as "to chill an attorney's enthusiasm or creativity," we stated that rule 11 requires an attorney "to conduct himself in a manner consistent with the proper functioning of the judicial system." Id. at 1131.

Rule 11 compliance is measured generally by an objective standard of attorney performance. See Id. at 1127; see also Southern Leasing Partners, Ltd. v. McMullan, 801 F.2d 783, 789 (5th Cir.1986). Upon signing a pleading, motion, or other document, an attorney certifies that he has complied with the affirmative duties required by rule 11. These affirmative duties include (1) that the attorney has conducted a reasonable inquiry into the facts which support the document; (2) that the attorney has conducted a reasonable inquiry into the law such that the document embodies existing legal principles or a good faith argument "for the extension, modification, or reversal of existing law"; and (3) that the motion is not interposed for purposes of delay, harassment, or increasing costs of litigation. Rule 11 is violated if any of the above obligations are breached because each is an independent duty of a signing attorney. Robinson, 808 F.2d at 1129-31.

In deciding whether a reasonable inquiry into the facts...