Smith v. Psychiatric Solutions, Inc.

• Decision Date: 06 May 2014
• Docket Number: No. 13–12785.,13–12785.
• Citation: 750 F.3d 1253
• Parties: Leslie SMITH, Plaintiff–Appellant, v. PSYCHIATRIC SOLUTIONS, INC., Premier Behavioral Solutions, Inc., Gulf Coast Treatment Center Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

750 F.3d 1253

Leslie SMITH, Plaintiff–Appellant,

v.PSYCHIATRIC SOLUTIONS, INC., Premier Behavioral Solutions, Inc., Gulf Coast Treatment Center Inc., Defendants–Appellees.

No. 13–12785.

United States Court of Appeals,Eleventh Circuit.

May 6, 2014.

Melissa Horwitz, Richard Errol Johnson, Law Office of Richard E. Johnson, Tallahassee, FL, for Plaintiff–Appellant.

Alfred Benjamin Gordon, William L. Martin, III, Keefe Anchors & Gordon, PA, Fort Walton Bch, FL, for Defendants–Appellees.

Appeal from the United States District Court for the Northern District of Florida. D.C. Docket No. 3:08–cv–00003–MCR–EMT.

Before TJOFLAT, COX, and ALARCÓN,^* Circuit Judges.

ALARCÓN, Circuit Judge:

This appeal concerns a fee dispute that arose between the parties after the underlying case was resolved on the merits. Leslie Smith, a former employee of Gulf Coast Treatment Center, brought a retaliatory-discharge action against Gulf Coast and its parent companies, alleging violations of both the Sarbanes–Oxley Act of 2002 and the Florida Whistle–Blower Act. The district court dismissed Smith's claims at summary judgment, and this Court affirmed.

Several motions for attorneys' fees and sanctions followed. When the dust settled, the district court had awarded the appellees nearly $54,000 in attorneys' fees under the Florida Whistle–Blower Act and over $5,000 for the costs they incurred opposing Smith's unsuccessful motion for sanctions. The district court also denied Smith leave to seek sanctions under 28 U.S.C. § 1927. Smith now appeals these fee awards and the denial of her motion for leave to seek sanctions. We affirm.

I

For approximately four months in 2006, Leslie Smith worked as a mental-health counselor at Gulf Coast Youth Academy, a court-ordered residential-treatment program for delinquent youths that is owned and operated by Gulf Coast Treatment Center. Gulf Coast Treatment Center is owned by Premier Behavioral Solutions, which, in turn, is a subsidiary of Psychiatric Solutions, Inc., a publicly traded corporation. All three companies are party to this appeal, and we refer to them collectively as “Appellees.”

Smith alleges that during her tenure at Gulf Coast Youth Academy, she uncovered instances of child abuse and evidence of Medicaid fraud, falsification of medical forms, and several reporting violations. She maintains that she reported all of this to the facility's management and was fired as a result.

Smith subsequently brought a retaliatory-discharge action against the Appellees in state court, alleging that her termination violated the Florida Whistle-Blower Act (the “FWA”) and the Sarbanes–Oxley Act of 2002 (“Sarbanes Oxley”). Appellees removed the case to federal court, and an extended and highly contentious period of discovery ensued. Appellees then moved for summary judgment, which the district court granted. As is relevant here, the district court concluded that Smith could not establish a prima facie FWA claim because she had offered no admissible evidence of the alleged abuses and no evidence that the remaining conduct she complained of would be covered under the state statute.¹ Smith appealed the district court's summary judgment order, and this Court affirmed. Smith v. Psychiatric Solutions, Inc., 358 Fed.Appx. 76 (11th Cir.2009).

After the district court entered summary judgment, Appellees moved for attorneys' fees under the FWA. The district court referred the matter to the magistrate judge. While Appellees' motion was pending, Smith filed two motions of her own: first, she moved for leave to file a § 1927 sanctions motion, and second, she moved separately for sanctions under Rule 11 of the Federal Rules of Civil Procedure. The magistrate judge denied Smith's motion for leave to seek § 1927 sanctions because she filed it nearly 21 months after the deadline for fee motions had passed. The magistrate judge issued a report and recommendation on the remaining motions. She recommended that Smith's Rule 11 motion be denied and that Appelleesbe awarded attorneys' fees for the expenses they incurred in opposing the motion. The magistrate judge also recommended the district court grant Appellees' motion for attorneys' fees under the FWA.

The district court adopted the magistrate judge's report and recommendation. It directed Smith to pay Appellees $53,925.98 in attorneys' fees under the FWA and ordered Smith's counsel to pay Appellees $5,338.20 in attorneys' fees in connection with Smith's failed motion for Rule 11 sanctions.

II

Smith contends the district court erred in awarding Appellees attorneys' fees for the costs they incurred in defending against Smith's FWA claim. She argues the FWA's fee provision conflicts with Sarbanes–Oxley's fee provision and is therefore preempted. She further contends that fees are improper under the FWA, regardless of whether the statute is preempted by Sarbanes–Oxley.

A

Both Sarbanes–Oxley and the FWA prevent employers from retaliating against employees who report allegations of specified corporate wrongdoing. See18 U.S.C. § 1514A (preventing publicly traded companies from discharging employees who report an employer's alleged violation of federal securities law); Fla. Stat. § 448.102 (prohibiting employers from taking retaliatory action against employees who have disclosed, threatened to disclosed, or refused to participate in an employer's illegal conduct). Not surprisingly, some legal and factual overlap often exists between claims brought under the two statutes. So it is here: some of the work performed by Appellees' counsel was relevant to developing defenses to both Smith's Sarbanes–Oxley claim and her FWA claim. The question we must answer is whether Appellees may recover attorneys' fees for this work. Sarbanes–Oxley does not authorize a court to award fees to a prevailing defendant. See18 U.S.C. § 1514A(c)(1). The FWA does. Fla. Stat. § 448.104. Smith argues that this demonstrates a conflict between the two statutes, such that Sarbanes–Oxley's fee regime preempts the FWA's.

“[I]t has long been settled that state laws that conflict with federal law are without effect.” Mut. Pharm. Co., Inc. v. Bartlett, ––– U.S. ––––, 133 S.Ct. 2466, 2473, 186 L.Ed.2d 607 (2013) (internal quotation marks omitted). “Such a conflict occurs when compliance with both federal and state regulations is impossible, or when the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hillman v. Maretta, ––– U.S. ––––, 133 S.Ct. 1943, 1950, 186 L.Ed.2d 43 (2013) (citations and internal quotation marks omitted).

Nothing on the face of either statute prevents compliance with the other. Sarbanes–Oxley's fee provision states that “[a]n employee prevailing in any action under [the statute] shall be entitled to all relief necessary to make the employee whole,” including “reasonable attorney fees.” 18 U.S.C. § 1514A(c)(1)-(2). The statute is silent as to whether similar relief is available for employers who successfully defend against an employee's Sarbanes–Oxley claim. We see no reason to construe this statutory silence as an implicit prohibition against awarding attorneys' fees to employers. Sarbanes–Oxley's fee provision requires courts to award fees to prevailing plaintiffs; it does not bar a defendant from recovering attorneys' fees that are authorized elsewhere. See Chang v. Chen, 95 F.3d 27, 28 (9th Cir.1996) (“[T]his provision [of the Racketeer Influenced and Corrupt Organizations Act] permits only prevailing plaintiffs to recover attorneys' fees. Courts, however, have never construed this provision as precluding a prevailing defendant from recovering attorneys' fees when authorized elsewhere.”); O'Ferral v. Trebol Motors Corp., 45 F.3d 561, 564 (1st Cir.1995) (rejecting the argument “that because RICO provides for an award of costs to plaintiffs, 18 U.S.C. § 1964(c), it implicitly bars costs for defendants even if elsewhere authorized”).

Accordingly, we are persuaded that when a prevailing defendant-employer has moved for attorneys' fees, Sarbanes–Oxley's fee provision has no application. It neither authorizes a defendant to recover attorneys' fees nor prevents a defendant from recovering fees that are elsewhere authorized. The statute in no way interferes with a court's ability to award a prevailing defendant attorneys' fees under the FWA.

Nor does the FWA's fee provision present an obstacle to accomplishment of Sarbanes–Oxley's purposes and objectives. “To determine whether a state law conflicts with Congress' purposes and objectives, we must first ascertain the nature of the federal interest.” Hillman, 133 S.Ct. at 1950. “If the purpose of the [federal] act cannot otherwise be accomplished—if its operation within its chosen field else must be frustrated and its provisions be refused their natural effect-the state law must yield to the regulation of Congress within the sphere of its delegated power.” Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 373, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000) (quoting Savage v. Jones, 225 U.S. 501, 533, 32 S.Ct. 715, 56 L.Ed. 1182 (1912)).

Congress enacted Sarbanes–Oxley in 2002 to address the faltering confidence in the American economy following a number of high-profile corporate scandals, such as the one at Enron Corporation. See generallyS.Rep. No. 107–146, at 10–11 (2002) (discussing the aftermath of Enron's collapse and the resulting call for reform).² “Of particular concern to Congress was abundant evidence that Enron had succeeded in perpetuating its massive shareholder fraud in large part due to a ‘corporate code of silence’; that code, Congress found, ‘discouraged employees from reporting fraudulent behavior not only to the proper authorities, such as the FBI and the SEC, but even internally.’ ” Lawson v. FMR LLC, ––– U.S. ––––, 134 S.Ct. 1158, 1162, 188 L.Ed.2d 158 (2014) (alterations omitted) (quoting S.Rep. No. 107–146, at 2 (2002)). To address this concern, Congress...