E.E.O.C. v. L.B. Foster Co.

• Citation: 123 F.3d 746
• Decision Date: 25 August 1997
• Docket Number: No. 96-3469,96-3469
• Parties: 78 Fair Empl.Prac.Cas. (BNA) 485, 72 Empl. Prac. Dec. P 45,263 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Jo Ann Wilson, Intervenor, v. L.B. FOSTER COMPANY Equal Employment Opportunity Commission, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 746

123 F.3d 746

78 Fair Empl.Prac.Cas. (BNA) 485,

72 Empl. Prac. Dec. P 45,263

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Jo Ann Wilson, Intervenor, v. L.B. FOSTER COMPANY Equal Employment Opportunity Commission, Appellant.

No. 96-3469.

United States Court of Appeals Third Circuit.

Argued April 30, 1997.

Decided Aug. 25, 1997.

Robert J. Gregory (argued), C. Gregory Stewart, General Counsel, Gwendolyn Young Reams, Associate General Counsel, Lorraine C. Davis, Attorney General Counsel, Equal Employment Opportunity Commission, Washington, DC, for appellant.

Elizabeth A. Malloy (argued), Jill M. Lashay, Klett Lieber Rooney & Schorling, Philadelphia, PA, for appellees.

Before: MANSMANN, McKEE, Circuit Judges, and VANARTSDALEN, ^* District Judge.

OPINION OF THE COURT

McKEE, Circuit Judge.

In this appeal, we are asked to review the district court's order awarding attorney's fees pursuant to section 706(k) of Title VII to L.B. Foster Co. as the prevailing defendant in the Title VII action brought by the Equal Employment Opportunity Commission ("EEOC") against that company. For the reasons explained below, we will reverse.

I.

L.B. Foster manufactures and sells rail construction and tubular products. In 1980, Jo Ann Wilson was hired in the company's Houston office. She was later promoted to credit manager. In 1986, following the reorganization of the company's credit department, Wilson relocated to Foster's headquarters in Pittsburgh, Pennsylvania.

A year after her transfer to Pittsburgh, Wilson began expressing a desire to return to Houston. However, Wilson changed her mind after David Minor, the corporate credit manager, was promoted to Assistant Treasurer in December 1987. Minor's promotion created a vacancy in his former position that Wilson was interested in filling. The corporate credit manager is responsible for the implementation of the company's credit policies and therefore had to possess the "ability to understand and ... interpret financial and credit information, ... correspond with customers and salespeople under difficult circumstances ... [and had to have a] complete knowledge of uniform commercial codes, financing arrangements, commercial contracts, bankruptcy, international trade, bond and lien laws, and various credit instruments, [the] ability to manage as well as motivate subordinates and the ability to interact with management." App. at 565.

In January 1988, Wilson approached Minor and expressed an interest in his old position. She was disappointed to learn that Minor was also considering Steven Hahn for the promotion. Hahn had also transferred to the company's headquarters after the reorganization of its credit department, and, like Wilson, he was a regional credit manager in the Pittsburgh office. Minor supervised both Hahn and Wilson and, although he regularly interacted with both of them, he was more familiar with Hahn's work. Minor considered Hahn's management style very professional, his credit presentations well constructed, his financial analysis very strong, and his interactions with customers and sales representatives courteous and professional.

Minor interviewed Wilson and Hahn for the position. During her interview, Wilson criticized Hahn and challenged Minor to identify her shortcomings. Minor had criticized Wilson's credit presentations on several prior occasions because information and documents had been missing. Minor was also critical of Wilson's long lunches and telephone mannerisms. Overall, however, Minor regarded Wilson as a valued employee. Wilson did not acknowledge any of these deficiencies in her interview. Instead, she only discussed problems she perceived in Hahn. Minor was generally disappointed by Wilson's interview and regarded her criticism of Hahn as unprofessional.

After considering the qualifications of both candidates, Minor recommended that Hahn receive the promotion because Minor thought that Hahn's analytical, management, and interpersonal skills were superior to Wilson's. Minor also thought that Hahn had demonstrated greater dedication to the company. After Human Resources approved Minor's recommendation, Hahn was informed, and, two days later, Wilson resigned from her position and told Minor that she intended to file a sex discrimination suit against him and the company. However, Wilson apparently had second thoughts about doing so, and, the very next day, she told Minor that, while her resignation was still effective, she had changed her mind about suing.

A few months after Wilson left the company, a representative of Johnston Pump and Valve Co., one of L.B. Foster's largest customers, called Minor and requested a job reference for Wilson. Minor had provided such references in the past, but he refused to provide the requested reference for Wilson and instead referred the call to the personnel department. Personnel did not give Wilson a reference but merely furnished her dates of employment. Wilson did not receive a job offer from Johnston Pump.

The EEOC brought a Title VII action against the L.B. Foster Co. in 1990 alleging that Wilson had not been promoted because of sexual discrimination. The complaint also alleged that the company had refused to provide the job reference for Wilson in retaliation for her threat to sue after she resigned. Wilson later intervened in the action and asserted similar claims. L.B. Foster Co. moved for summary judgment but that motion was denied, and the case proceeded to a bench trial in the district court.

The EEOC presented evidence suggesting that L.B. Foster's proffered explanation for giving Hahn the promotion--that he was better qualified--was pretextual. That presentation included evidence that Hahn had been criticized for deficiencies prior to his promotion to Minor's former position and that L.B. Foster had reassigned certain territories to Wilson because of those deficiencies. After the close of the EEOC's evidence, the company moved for judgment as a matter of law, but the court deferred ruling on that motion. The court, however, ultimately found in favor of L.B. Foster on both the failure-to-promote and retaliation claims and entered judgment for the company. Thereafter, the company moved for attorney's fees as the prevailing party under section 706(k) of Title VII. The court awarded the requested fees based upon its conclusion that the EEOC's action was meritless, frivolous, unreasonable and without foundation. Both parties agreed that, if Foster were entitled to any counsel fees, the reasonable amount of those fees would be $142,628.50. Accordingly, the court entered judgment in that amount in favor of L.B. Foster. This appeal challenging only the court's determination that L.B. Foster was entitled to any attorney's fees followed.

The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1345. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II.

This Court reviews a district court's award of attorney's fees for abuse of discretion. See Washington v. Philadelphia County Court of Common Pleas, 89 F.3d 1031 (3d Cir.1996); Brown v. Borough of Chambersburg, 903 F.2d 274 (3d Cir.1990). "We must defer to the district court's fee determination unless it has erred legally, or the facts on which the determination rests are clearly erroneous." Quiroga v. Hasbro, Inc., 934 F.2d 497, 502 (3d Cir.1991) (citations omitted). The EEOC contends that the district court erred in finding that its suit was "frivolous, unreasonable, or without foundation" and awarding attorney's fees on that basis.

III.

42 U.S.C. § 2000e-5(k) provides:

In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the Commission or the United States, a reasonable attorney's fee (including expert fees) as part of the costs, and the Commission and the United States shall be liable for costs the same as a private person.

42 U.S.C. § 2000e-5(k). The "prevailing party" can be either the plaintiff or the defendant. However, in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Supreme Court clarified that the standard for awarding attorney's fees to prevailing defendants is not the same as the standard for prevailing plaintiffs.

In Christiansburg, the Court recognized that while a liberal fees standard should be used for those parties whose suits Congress wished to encourage, and who needed this encouragement to bring the suits, a stricter standard was appropriate for defendants, who needed no encouragement to defend suits against them and who were not vindicating an important public policy.

Dorn's Transp., Inc. v. Teamsters Pension Trust Fund, 799 F.2d 45, 49 (3d Cir.1986).

Prevailing plaintiffs "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Id. at 416-17, 98 S.Ct. at 697-98 (internal quotations omitted). The rationale for this rule is twofold. First, "the plaintiff is the chosen instrument of Congress to vindicate 'a policy that Congress considered of the highest priority.' " Id. at 418, 98 S.Ct. at 698. Second, "when a district court awards counsel fees to a prevailing plaintiff, it is awarding them against a violator of federal law." Id.

These considerations are wholly absent when the prevailing party is a defendant, and, therefore, a higher standard applies. In Christiansburg Garment, the Court defined that standard as follows:

[A] district court may in its discretion award attorney's fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith. ¹

Id. at 421, 98 S.Ct. at 700. "[F]rivolous, unreasonable, or without foundation," in this context, implies "groundless ... rather than simply that the plaintiff has ultimately lost his case." Id. "[I]t is important that a district court resist the understandable temptation to...