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1st Circuit awards firm attorneys’ fees in frivolous Title VII claim

by Timothy K. Baldwinhr-hero

The U.S. Court of Appeals for the 1st Circuit (whose rulings apply to all Rhode Island employers) recently affirmed an attorneys’ fee award in favor of an employer, holding that the employee’s case became frivolous during the discovery (pretrial fact-finding) phase. The 1st Circuit upheld the district court’s award of $53,662.50 in attorneys’ fees from the point the employee should have been aware that her case was frivolous.

In American courts, the default rule is that all litigants must pay their own attorneys’ fees. Title VII of the Civil Rights Act of 1964 overrides that rule in employment discrimination cases and provides that district courts may, in their discretion, award reasonable attorneys’ fees (including expert fees) to the prevailing party. While the text of Title VII seems to say that both employees and employers are on equal footing in receiving attorneys’ fees, courts have interpreted the fee-shifting provision to award reasonable attorneys’ fees to employees as a matter of course. By contrast, a prevailing employer is not awarded attorneys’ fees unless the employee’s claim is frivolous, unreasonable, or groundless or the employee continued to litigate even after her claim clearly became frivolous.

Deposition is the turning point

The employee began working as an attorney for the employer in 2009, but the employer terminated her in 2011 after receiving reports of poor working relationships with coworkers, substandard performance, and failure to comply with company rules. The employee filed suit in federal court against her employer and several individuals based on Title VII and state-law theories. The district court dismissed the individuals from the suit, leaving the employer as the sole defendant. The employer moved for summary judgment (dismissal without a trial) on all of the remaining claims. The district court granted the motion and entered final judgment in favor of the employer.

The employer then requested attorneys’ fees as a prevailing party under Title VII’s fee-shifting provision. The district court granted the motion, reasoning that the employee continued to litigate the case even after she had been duly apprised that her claims had no merit during discovery.

In the district court’s view, the turning point was the employee’s deposition testimony. Shortly after the deposition, the employer wrote a letter to the employee pointing out the disastrous implications of the deposition, but she soldiered on. The district court deemed the employee’s quest quixotic and awarded the employer $53,662.50 in attorneys’ fees accrued from the date of the letter, reasoning that the employee should have been aware of the frivolousness of her claim from that point.

1st Circuit affirms

On appeal, the 1st Circuit upheld the district court’s award of attorneys’ fees to the employer, methodically rejecting each of the employee’s claims. First, the 1st Circuit pointed out that the employee failed to make any merit-based argument against the district court’s finding that her suit was frivolous. To the contrary, the court observed that she continued to vexatiously and unreasonably litigate after the employer put her on notice that the lawsuit was frivolous.

Next, the 1st Circuit noted that after the district court apprised the employee that it might award attorneys’ fees, she offered to dismiss her suit with prejudice (meaning she could never file another lawsuit based on the same allegations) on the condition that she would not be liable for attorneys’ fees. The court explained that amounted to an empty offer to “continue to litigate these frivolous claims unless the defendants surrender any argument that [the] litigation of the claims to date has been frivolous.” The 1st Circuit held that the district court did not abuse its discretion in refusing to dismiss the lawsuit without awarding fees. Finally, the 1st Circuit rejected the employee’s contention that the employer’s use of in-house counsel to defend the lawsuit disqualified it from collecting attorneys’ fees.

While the case represents a win for employers, the 1st Circuit stressed that the outcome should not be interpreted as loosening Title VII’s existing standard in attorneys’ fee cases. The court reiterated that awarding attorneys’ fees to prevailing employees in Title VII cases is “the rule,” while fee-shifting in favor of employers is “the exception” because excessive generosity to prevailing employers would substantially undercut congressional efforts to promote vigorous enforcement of Title VII. The court also took pains to point out that district court decisions granting attorneys’ fees to employers should be “rare” and that the mere fact that an employee fails to establish a prima facie (minimally sufficient) case at the summary judgment stage does not mean the case is frivolous. Fontanillas-Lopez v. Bauzá Cartagena, No. 15-1326, 2016 U.S. App. LEXIS 14425 at *1 (1st Cir., Aug. 5, 2016).

What this case means for you

When an employee files a frivolous lawsuit, it can be difficult to challenge the case at the outset. But as the suit moves forward and you learn more about the evidentiary or legal basis for the employee’s allegations, it can become clear to everyone that the case is frivolous. When that happens—particularly when the lack of evidence or legal basis is established by the employee’s deposition—consider sending a letter to put the employee on notice that her claim is frivolous.

Attorneys’ fee awards in favor of employers are rare, but they are possible when an employee’s Title VII claim has no factual or legal basis. Employers should remain vigilant in assessing the case throughout the life of the lawsuit.

To discuss this further with Tim Baldwin, email or call him at tbaldwin@whelancorrente.com or 401-270-0330.

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