Adams et al v. Austal, U.S.A., L.L.C.

Filing 749

ORDER denying Motion for Attorney Fees and request for sanctions as set out in order re: 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 Signed by Judge Kristi K. DuBose on 3/14/2012. (cmj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
EARATON ADAMS, et al.,
Plaintiffs,
vs.
AUSTAL, USA, LLC,
Defendant.

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CIVIL ACTION NO 08-0155-KD-N

ORDER
This matter is before the Court on Defendant Austal, USA, LLC’s 22 motions for
approximately $1,919,572.00 in attorneys’ fees and non-taxable expenses against the Plaintiffs1
pursuant to Rules 11 and 54(d)(2) of the Federal Rules of Civil Procedure, S.D. ALA. LOCAL RULE
54.3, 42 U.S.C. § 1988, 42 U.S.C. § 2000e-5, and 28 U.S.C. § 1927. (Docs. 722-743).2
I.

42 U.S.C. § 1988 and 42 U.S.C. § 2000e-5
Austal contends that because it has been awarded some relief in this case (via summary

judgment and trials) it is a prevailing party and that by statute -- Sections 1988 and 2000e-5 -- it is
accordingly authorized to recover attorneys’ fees and expenses. The award of such fees and expenses
remains a discretionary award. Under Section 706(k) of Title VII, “[i]n any action or proceeding
under this subchapter the court, in its discretion, may allow the prevailing party…a reasonable
attorney's fee (including expert fees) as part of the costs….” 42 U.S.C. § 2000e-5(k). See, e.g.,
Howard v. Roadway Exp., Inc., 726 F.2d 1529 (11th Cir. 1984). Section 1988 provides that “[i]n any
action or proceeding to enforce a provision of sections 1981…of this title…title VI of the Civil

1 With the exception of Plaintiff Gloria Sullivan; Austal’s motion relating to her (Doc. 628) has already been denied
by separate Order (Doc. 744).

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Rights Act of 1964…the court, in its discretion, may allow the prevailing party…a reasonable
attorney's fee as part of the costs…” However, while district courts are afforded discretion in
awarding attorneys’ fees to prevailing parties in civil rights actions, “[t]he equitable considerations
involved depend…upon whether the prevailing party is the defendant or the plaintiff. Policy
concerns militate against awarding attorney’s fees to defendants in civil rights cases because such
practice may discourage plaintiffs from brining civil rights lawsuits.” Sayers v. Stewart Sleep
Center, Inc., 140 F.3d 1351, 1353 (11th Cir. 1998).
This case has been intensely litigated by counsel for each party. Both sides have expended
considerable resources in support of their positions. Austal has been successful with regard to all of
the plaintiffs’ claims. However, in order to recover fees and expenses Austal must establish that
plaintiffs’ claims were “frivolous, unreasonable or without foundation even though not brought in
subjective bad faith.” Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417, 98 S.Ct. 694, 698
(1978). As explained by the Eleventh Circuit in Head v. Medford, 62 F.3d 351, 355 (11th Cir. 1995):
Ordinarily, a prevailing plaintiff “is to be awarded attorney's fees in all but special
circumstances.” Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417, 98 S.Ct. 694,
698, 54 L.Ed.2d 648, 654 (1978) (Title VII). By contrast, a more stringent standard applies
to prevailing defendants who may be awarded attorney's fees only when a court finds that the
plaintiff's claim was “frivolous, unreasonable, or without foundation, even though not
brought in subjective bad faith.” Christiansburg Garment Co., 434 U.S. at 421, 98 S.Ct. at
700, 54 L.Ed.2d at 657. This standard applies equally to awards of attorneys' fees sought
under 42 U.S.C. § 1988 by prevailing civil rights defendants. Hughes v. Rowe, 449 U.S. 5,
14, 101 S.Ct. 173, 178, 66 L.Ed.2d 163, 172 (1980).
But, the Supreme Court has cautioned that
[i]n applying these criteria, it is important that a district court resist the understandable
temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not
ultimately prevail, his action must have been unreasonable or without foundation. This kind
of hindsight logic could discourage all but the most airtight claims ... Even when the law or
the facts appear questionable or unfavorable at the outset, a party may have an entirely
2 The Court notes that Austal has also filed a Bill of Costs as to all Plaintiffs. (Doc. 721). This filing will be
addressed separately and as provided for under the Local Rules.

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reasonable ground for bringing suit. Christiansburg, 434 U.S. at 421-22, 98 S.Ct. at 700, 54
L.Ed.2d at 657.

Moreover, “[a]llegations that, upon careful examination, prove legally insufficient to require
a trial are not, for that reason alone, “groundless” or “without foundation” as required by
Christiansburg. Hughes v. Rowe, 449 U.S. 5, 15-16, 101 S.Ct. 173, 179 (1980). Further, “a
plaintiff's claim should not be considered groundless or without foundation for the purpose of
awarding fees to a prevailing defendant when the claims are meritorious enough to receive careful
attention and review.” Walker v. NationsBank of Fla., N.A., 53 F.3d 1548, 1559 (11th Cir. 1995).
While recognizing the need for a case-by-case approach to frivolity determinations, in
Sullivan v. School Bd. of Pinellas Cty., 773 F.2d 1182, 1189 (11th Cir. 1985) the Eleventh Circuit
also provided general guidelines for a court’s inquiry into whether a plaintiffs’ case meets the
Christiansburg criteria: 1) whether the plaintiff established a prima facie case, 2) whether a
defendant offered to settle, and 3) whether the court dismissed the case before trial or held a fullblown trial on the merits.
The case was initiated as a potential class action on behalf of 23 plaintiffs. The primary basis
for each claim was the treatment by Austal of its African-American employees. The claims included
disparate pay, failure to promote, failure to train, disparate discipline, constructive discharge,
retaliation, hostile work environment and disparate impact.
Class action certification was ultimately not sought, and thereafter the case proceeded on the
individual claims. The disparate impact claims were not pursued on summary judgment, although
Plaintiffs engaged an expert who prepared an extensive report in an attempt to provide support for
these claims.
Austal now seeks, as the prevailing party, attorney fees and non-taxable expenses for
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defending the class action and disparate impact claims and asserts that these claims were frivolous
because they were not pursued by Plaintiffs. However, considered in the context of the remaining
claims, and with the benefit of almost four (4) weeks of trial testimony spanning three (3) trials
(including a retrial on several claims wherein the jury was unable to reach a verdict), hundreds of
pages of briefing and thousands of pages of documents and deposition testimony, the Court does not
find the plaintiffs’ claim of a potential class action or the claim of disparate impact to have been
made frivolously. Specifically, there was substantial testimony and other evidence that AfricanAmericans as a whole endured a significant amount of racial hostility from co-employees and
supervisors, particularly in Austal’s initial years in Mobile, Alabama.3 Moreover, there was
evidence that in those initial years Austal lacked structure in determining pay and promotions for all
of its employees, and that this lack of structure most negatively affected the African-American
employees (i.e., very few African-Americans were promoted to supervisory positions). The fact that
these claims were not pursued after extensive discovery and investigation does not mean that they
were initially groundless.
Austal also seeks attorneys’ fees and non-taxable expenses for each of the Plaintiffs’ claims
that were dismissed on summary judgment.4 As support, Austal has reiterated its position that made
them the prevailing party on summary judgment and concluded that because the undersigned found
Austal’s argument persuasive the Plaintiffs’ positions were necessarily frivolous. The undersigned
cannot agree. The issues on summary judgment were, for the majority of the claims, well briefed
and not easily decided; that is they were meritorious enough to receive careful attention and review.

3 It is the undersigned’s opinion that the evidence presented at trial by Austal regarding its effort in recent years to
address racial issues was Austal’s strongest defense to the charges.
4 Of the 23 plaintiffs, 14 plaintiffs survived summary judgment with at least one (1) claim remaining.

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Many of the determinations, especially as to the hostile work environment claims, disparate pay, and
failure to promote, were made based on each individual plaintiff’s ability to have articulated the
evidence supporting his/her claim at his/her deposition. Even so, the evidence that was found not to
support the claims on summary judgment was not so inadequate as to support a finding of
frivolousness. Austal’s effort to parse each piece of evidence or point to each inadequate
comparator does not change this analysis. The Court has reviewed each order on summary judgment
for each Plaintiff and determines that the claims dismissed on the merits at the summary judgment
stage were not groundless.
Austal also seeks attorneys’ fees and non-taxable expenses for those Plaintiffs’ claims that
were abandoned either after Austal filed its motion for summary judgment, prior to trial, or during
the course of the trial. While the fact of abandonment weighs in Austal’s favor, abandonment –
standing alone -- is not sufficient grounds to support Austal’s request in this case. The abandoned
claims included disparate pay, failure to promote, constructive discharge and retaliation. The claims
that were abandoned post-summary judgment were claims that either the Court determined to be
sufficiently supported to proceed to trial, or that Austal failed to challenge on summary judgment.
In neither case can the Court find these abandoned claims to be frivolous. As to the remaining
abandoned claims, those that were not addressed by plaintiffs in response to summary judgment, the
Court finds that Austal has failed to sustain its burden to show that these claims were frivolous,
groundless, or without foundation.
In summary, this case is simply not an appropriate case to award attorneys’ fees and nontaxable expenses to Austal based on frivolity. While Austal was ultimately successful with regard to
all of the plaintiffs’ claims, it was not because Austal had an airtight defense with settled law and
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facts securely on its side. Accordingly, Austal’s motion, with regard to its request for prevailing
party attorneys’ fees and non-taxable expenses under Sections 1988 and 2000e-5 is DENIED.5
II.

Sanctions -- Section 1927 & Rule 11
Austal contends that attorneys’ fees and expenses should be awarded in its favor under

Section 1927 as a sanction, which provides that “[a]ny attorney…who so multiplies the proceedings
in any case unreasonably and vexatiously may be required by the court to satisfy personally the
excess costs, expenses, and attorney's fees reasonably incurred because of such conduct.” 28 U.S.C.
§ 1927. Section 1927 sets forth three (3) requirements to recover sanctions: 1) “unreasonable and
vexatious” conduct of plaintiffs’ counsel which 2) “multiplies the proceedings” and 3) the amount of
the sanction cannot exceed the costs occasioned by the objectionable conduct. See, e.g., Santhuff v.
Setiz, 385 Fed. Appx. 939, 946-947 (11th Cir. 2010); McMahan v. Toto, 256 F.3d 1120, 1128 (11th
Cir. 2001); Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir. 1997). Section 1927 “does
not distinguish between winners and losers, or between plaintiffs and defendants.... [t]t is concerned
only with limiting the abuse of court processes.” Roadway Exp., Inc. v. Piper, 447 U.S. 752, 762,
100 S.Ct. 2455, 2462 (1980). Additionally, Austal moves for Rule 11 sanctions against Plaintiffs’
counsel due to counsel’s filing of claims without substantial justification. Rule 11 permits imposing
sanctions on a party that files a pleading that 1) is in bad faith for an improper purpose, such as
harassment, delay, or needlessly increasing the cost of litigation, 2) has no reasonable factual basis,
or 3) is based on a legal theory with no reasonable chance of success and that cannot be advanced as
a reasonable argument to change existing law. FED.R.CIV.P. 11(b), (c). See, e.g., Boone v. JP

5 Moreover, as to Plaintiffs Bumpers, Cunningham, Reed and Slay, these Plaintiffs’ claims were voluntarily
dismissed with prejudice under Rule 41(a)(2), and as unopposed by Austal, with each party to bear its own costs.
(Docs. 722, 732, 737, 742).

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Morgan Chase Bank, 447 Fed. Appx. 961, 965 (11th Cir. 2001). The Court must then determine
first, whether a party's claims are “objectively frivolous” in view of the facts or law, and if so, must
next determine that the person who signed the pleading “should have been aware that they were
frivolous; that is, whether he would have been aware had he made a reasonable inquiry.” Id. (citing
Jones v. International Riding Helmets, Ltd., 49 F.3d 692, 695 (11th Cir. 1995)).
The Court has reviewed Austal’s contentions concerning the sanctions requests. The
evidence does not support a finding of unreasonable or vexatious conduct by Plaintiffs’ counsel and
thus, it is unnecessary to conduct an analysis of the other Section 1927 elements as Austal has not
met its burden. Additionally, as to Rule 11, there is certainly no basis for finding that Plaintiffs’
counsel filed any of the claims without substantial justification or that Plaintiffs’ claims were
objectively frivolous. Put simply, Austal has not established any conduct by Plaintiffs’ counsel
which warrants sanctions. Accordingly, Austal’s motion, with regard to its sanctions request, is
DENIED.
DONE and ORDERED this the 14th day of March 2012.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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