Opinion
CASE NO. 02-20891-CIV-PCH
November 26, 2003
REPORT AND RECOMMENDATION
This Cause was referred to the undersigned for a Report and Recommendation on Defendant Ryder System, Inc.'s: (1) Motion for Sanctions Under 28 U.S.C. § 1927 (D.E. 114); and (2) Verified Motion to Tax Costs (D.E. 116). For the reasons stated below, both Motions should be denied.
BACKGROUND
During the period of time from April 1997 through April 2001, Ryder System Federal Credit Union ("Credit Union") employed Plaintiff as an accounting clerk. However, due to what Plaintiff perceived to be a violation of her rights under the Family Medical Leave Act ("FMLA"), on March 22, 2002, Plaintiff instituted the present suit against Defendant Ryder System, Inc. ("Ryder"). (D.E. 1.) Ryder did not respond to the Complaint until May 6, 2002 (D.E. 10), when it filed its Answer. Therein, Ryder unequivocally denied that it was Plaintiff's employer and, as a result, maintained that it could not be held accountable under the FMLA. (D.E. 10.)
On August 20, 2002, Plaintiff filed a Motion for Leave to Amend the Complaint (D.E. 19). In particular, Plaintiff sought to include Credit Union as a defendant, claiming that "[u]pon information and belief, the Plaintiff may have been employed by the Credit Union rather than Ryder System, Inc., or alternatively, the Credit Union may be the joint employer of the Plaintiff." (D.E. 19.) The Court granted Plaintiffs Motion in part, permitting her to include Credit Union as a defendant. (D.E. 29.)
On November 29, 2002, Ryder filed a Motion for Summary Judgment, which Credit Union subsequently joined (D.E. 44 and 45). Pursuant to same, both Ryder and Credit Union claimed entitlement to judgment as a matter of law because neither was Plaintiff's "employer" within the meaning of the FMLA. Significantly, Credit Union admitted to being Plaintiff's employer, but claimed that it did not employ a sufficient number of individuals to qualify as an "employer" under the FMLA. Conversely, Ryder claimed that it was not — and had never been — Plaintiff's employer. In response to both Ryder's and Credit Union's claims, Plaintiff maintained that Ryder and Credit Union comprise a "joint" or "integrated" employer, whereby Ryder and Credit Union could be deemed to be parts of a single employer for purposes of the FMLA. See 29 C.F.R. § 825.104(c)(1).
Defendant's first Motion for Summary Judgment (D.E. 21), filed August 30, 2002, was denied without prejudice (D.E. 28), in light of the Court's Order granting Plaintiff's Motion to Amend. (D.E. 29).
On February 21, 2003, this Court granted both Ryder and Credit Union's Motion for Summary Judgment, on the basis that neither qualified as an "employer" under the FMLA. (D.E. 107.) The Court also entered Final Summary Judgment on this date. (D.E. 108.) As a result, Ryder moved the Court for an award of Attorney Fees and Costs. (D.E. 114, 116.) Therein, Ryder maintained that it is entitled to: (1) fees as a sanction pursuant to either 28 U.S.C. § 1927 or the Court's inherent powers; and (2) costs, as a matter of course pursuant to Fed.R.Civ.P. 54(d) and Local Rule 7.3. As discussed below, the undersigned disagrees with Ryder's arguments.
ANALYSIS
I. Ryder's Motion for Sanctions Pursuant to 28 U.S.C. § 1927
Section 1927 states that any 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 attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. To impose sanctions under Section 1927, the Court must find that: (1) the attorney engaged in unreasonable and vexatious conduct; (2) the conduct multiplied the proceedings; and (3) the sanction bears a financial nexus to the excess proceedings. Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir. 1997),
Although Eleventh Circuit case law does not provide clear factors that define unreasonable and vexatious conduct, several courts have applied an objective standard to determine whether conduct is unreasonable and vexatious. See Pacific Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 119 (7th Cir. 1994) ("acted in an objectively unreasonable manner by engaging in a serious and studied disregard for the orderly process of justice" or "where a claim [is] without a plausible legal or factual basis and lacking in justification."); O'Rear v. American Family Life Assurance Co. of Columbus, Inc., 144 F.R.D. 410, 413-414 (M.D. Fla. 1992) (showing of subjective bad faith is not required).
In the present case, Ryder maintains that sanctions should be imposed pursuant to Section 1927 because: (1) Plaintiff's counsel failed to properly investigate Plaintiff's claims under the standards set forth in Rule 11; (2) Plaintiff's counsel sought to amend the complaint on an improper basis and in an untimely fashion; (3) Plaintiff's counsel sought to strike Ryder's Motion for Summary Judgment as a result of his own failure to complete discovery on a timely basis; (4) Plaintiff's counsel utilized Ryder's Motion for Summary Judgment to question witnesses during depositions after the discovery cut off; (5) Plaintiff sought damages for lost wages after conceding that Plaintiff had no claim for discriminatory termination under the FMLA; (6) Plaintiff's counsel filed three untimely notices of supplemental authority in support of his response to Ryder's Motion for Summary Judgment; and (7) Plaintiff's counsel filed a frivolous appeal based upon one of his untimely notices of supplemental authority. As explained below, Ryder's arguments are insufficient to objectively establish that Plaintiffs counsel unreasonably and vexatiously multiplied the present proceedings.
A. Failure to Properly Investigate Claims Under the Standards Set Forth in Rule 11
Ryder first claims that sanctions are warranted because Plaintiff's counsel failed to properly investigate its claims under the standards set forth in Federal Rule of Civil Procedure 11. See Fed.R.Civ.P. 11. To that end, Ryder argues that any "rudimentary" inquiry into the veracity of Plaintiff's claims would have revealed that Ryder was not Plaintiff's employer. Further, Ryder claims that Plaintiff's counsel should have dismissed this cause voluntarily after being advised by Ryder's counsel that Ryder did not employ Plaintiff.
Sanctions under 28 U.S.C. § 1927 have indeed been imposed where a plaintiff continues to pursue a claim after discovery revealed it was meritless. See Avirgan v. Hull 932 F.2d 1572, 1582 (11th Cir. 1987). However, notwithstanding Ryder's arguments, the undersigned finds that Plaintiffs theory that Ryder and Credit Union comprise a "joint" or "integrated" employer under the FMLA was not entirely devoid of merit so as to require Plaintiff to voluntarily dismiss its cause against Ryder. Although Ryder and Credit Union are legally separate entities, this Court has previously noted that Credit Union relies upon Ryder for, inter alia: payroll processing, employee benefits, human resource services and office space. (D.E. 107 at 2.) In fact, in granting Ryder's Motion for Summary Judgment, the Court recognized that Plaintiff has made some showing of common ownership — in that Credit Union is owned by its members, which include employees of Ryder and its subsidiaries Moreover, Ryder admits in its Reply that "Ryder mistakenly processed the Ryder System Federal Credit Union's . . . W-2 Tax Forms with the incorrect employer identification number." Plaintiffs counsel has expressed to the court that he relied upon these erroneous W-2 Tax Forms in preparing the present Complaint.
Accordingly, although Plaintiff's counsel's diligence in researching the appropriate entity at issue was ultimately deficient, such a deficiency is not so blatant as to require sanctions in the present case. In Crenshaw v. City of Defuniak Springs, the court denied sanctions where a pro se plaintiff brought a questionable, but not frivolous, claim. 891 F. Supp. 1548, 1560 (N.D. Fla. 1995). Although the Plaintiff in this case is represented by counsel, the undersigned finds that this principle still applies. "As the plain statutory language makes clear, § 1927 is not a `catch-all' provision for sanctioning objectionable conduct by counsel." Peterson, 124 F.3d at 1396. The United States Supreme Court observed that 28 U.S.C. § 1927 is concerned "only with limiting the abuse of court processes." Roadway Express v. Piper, 447 U.S. 752, 762 (1979). As such, Defendant's Motion must be denied in this regard.
B. Attempts to Amend the Complaint on an Improper Basis and in an Untimely Fashion
Ryder next claims that sanctions are appropriate because Plaintiffs counsel improperly sought to amend the Complaint in an untimely fashion. Particularly, Ryder believes that Plaintiff's request to amend the Complaint was untimely because it was filed: three and one half months after the deadline to amend pleadings; after the close of discovery; and after the filing of Ryder's initial Motion for Summary Judgment Moreover, Ryder believes Plaintiff's request to amend the Complaint was improper because the facts upon which the amendment was based were known to Plaintiff at the time of filing the original complaint.
This Court has already ruled upon the timeliness and appropriateness of Plaintiffs Motion to Amend. (D.E. 29.) Furthermore, as discussed supra, the undersigned does not believe that Plaintiffs reliance upon a joint-employer theory was so devoid of merit as to warrant the imposition of sanctions. Defendant's Motion in this regard is therefore without merit.
C. Plaintiff's Attempts to Strike Ryder's Initial Motion for Summary Judgment as a Result of Plaintiff's Own Failure to Complete Discovery on a Timely Basis
The next argument posed by Ryder in support of its Motion for Sanctions, is that Plaintiff unnecessarily multiplied the present proceedings when it moved to strike Ryder's first Motion for Summary Judgment, rather than seeking an enlargement of the discovery period to conduct additional discovery that would enable the preparation of a sufficient response. Plaintiff's Motion to Strike was premised upon the argument that Ryder's counsel refused to produce Credit Union employees for deposition. Ryder claims that the "obvious problem" with Plaintiff's argument, is that Ryder had no authority to produce the Credit Union's employees for deposition.
Again however, this argument raises the question of whether Plaintiffs theory of a joint or integrated employer was legally plausible. As noted above, Plaintiff's theory, while ultimately unsuccessful, was not so completely wanting of merit as to render it untenable. Moreover, in filing its Motion to Strike, Plaintiff explained that any delay in taking the depositions at issue emanated from confusion and/or misunderstandings between counsel as to the availability of witnesses. Therefore, Ryder has not presented an objective showing of conduct requiring the imposition of sanctions on this issue. D. Utilizing Ryder's Motion for Summary Judgment to Question Witnesses During Depositions Subsequent to the Discovery Cut Off
As yet another basis upon which Ryder believes sanctions are warranted, Ryder cursorily states that Plaintiff improperly used its Motion for Summary Judgment during a deposition, and thereby "necessarily multiplied the proceedings." However, Ryder fails to support this statement with any facts or authorities.
Clearly, the proceedings were extended as a result of the fact that Plaintiff sought and obtained a denial without prejudice of Ryder's original Motion for Summary Judgment, based upon the need to conduct additional discovery. However, without more information, Plaintiff's mere use of the Motion for Summary Judgment in conducting further discovery fails to demonstrate that Plaintiff "acted in an objectively unreasonable manner by engaging in a serious and studied disregard for the orderly process of justice." As Plaintiff has correctly noted in its Response, this Court's Order Setting Civil Jury Trial Date states that "the discovery cut-off is intentionally set after the dispositive motion deadline so that a party opposing summary judgment may take additional discovery necessary to respond to the motion." (D.E. 9.) Accordingly, Ryder's argument in this regard is likewise without merit.
E. Seeking Damages for Lost Wages After Conceding that Plaintiff had No Claim for Discriminatory Termination Under the FMLA
Ryder also argues that Plaintiff's counsel vexatiously multiplied the proceedings when he continued to pursue damages for lost wages after admitting on the record that Plaintiff's retaliatory termination claim had no merit in the face of Plaintiff's documented performance problems. Plaintiff's counsel, however, contends that he limited his claim to allegations under 29 U.S.C. § 2615(a)(1), which requires a finding of strict liability under the FMLA. Plaintiff's counsel further maintains that Plaintiff's documented performance problems are inapposite under this provision.
The FMLA imposes strict liability upon employers who deny an FMLA entitlement to any qualified employee. See 29 U.S.C.A. § 2615(a)(1);Kaylor v. Fannin Regional Hosp., Inc., 946 F. Supp. 988, 997 (N.D.Ga. 1996). Thus, a mere showing that the employee was entitled to the benefit and the employer refused to provide it suffices to establish liability under this provision of the FMLA; a plaintiff pursuing such a claim need only prove that the employer violated the statute and need not prove that the employer did so with any particular intent. Kaylor, 946 F. Supp. at 997. Ryder's Reply is silent on this issue, (D.E. 122.) As such, the undersigned cannot objectively conclude from the submissions that Plaintiff's pursuit of a strict liability claim unreasonably and vexatiously multiplied the present proceedings. Accordingly, Ryder's Motion must fail on this issue.
F. Untimely Notices of Supplemental Authority in Support of Plaintiffs Response to Ryder's Motion for Summary Judgment
After Ryder's Motion for Summary Judgment had been fully briefed by the parties. Plaintiff's counsel filed three additional Notices of Supplemental Authority in opposition to the same. (D.E. 96, 98, 106.) Ryder argues that because "convention dictates" that such submissions be premised upon "new authority which had not existed during the briefing schedule," such conduct unnecessarily multiplied the present proceedings.
However, although Plaintiff's submissions may have been untimely and therefore, inappropriately filed, Ryder has once again failed to demonstrate how this conduct multiplied the present proceedings. Indeed, the issues raised by Plaintiffs untimely Notices of Supplemental Authority were not briefed by the parties. Moreover, Ryder did not file any contradicting authorities or documents in opposition to Plaintiff's additional submissions. Furthermore, despite Plaintiffs additional submissions, the Court granted Ryder's Motion for Summary Judgment on February 21, 2003 — only nine days following Plaintiff's last Notice of Supplemental Authority. (D.E. 107.) Thus, while Plaintiff's counsel may have been somewhat overzealous in its furtherance of this cause, the undersigned cannot conclude that Plaintiff's conduct was objectively unreasonable and/or vexatious. Nor can the undersigned conclude that Plaintiff's conduct multiplied the proceedings at hand, where Ryder has failed to demonstrate any legitimate harm it incurred as a result of Plaintiff's Notices of Supplemental Authority.
G. Frivolity of Appeal Based Upon Untimely Notice of Supplemental Authority
Finally, Ryder argues that Plaintiffs filing of an appeal premised upon an estoppel argument raised by Plaintiff's untimely Notice of Supplemental Authority renders the appeal frivolous. In this vein, Ryder argues that Plaintiff has unreasonably multiplied the present proceedings, as "this is where the story should end." However, Ryder fails to present any legal authority which permits the District Court to deem an appeal of its own final order "frivolous," and award attorney fees on that basis. The alleged frivolity and/or illegitimacy of Plaintiff's appeal is therefore an issue that should be reserved to the Eleventh Circuit.
II. Ryder's Motion for Fees Pursuant to the Courts Inherent Powers
In addition to the foregoing, Ryder seeks sanctions under the inherent powers of the court. "The key to unlocking a court's inherent powers is a finding of bad faith." Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998) (citing In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995)). However, the Eleventh Circuit has expressly noted that "because of their potent nature, inherent powers must be exercised with restraint and discretion."Mroz, 65 F.3d at 1575 (quoting Chambers v. NASCO, 501 U.S. 32, 42-43 (1991)). For the reasons discussed supra, the undersigned finds that Ryder has failed to demonstrate bad faith on the part of Plaintiff's counsel. Accordingly, Ryder's request for sanctions under the Court's inherent powers should be denied.
III. Ryder's Verified Motion to Tax Costs
As the Court entered summary judgment in favor of Ryder it is plainly the prevailing party and entitled to recover the litigation costs incurred in defending this action. In its Motion, Ryder argues that it is entitled to an award of taxable costs in the amount of $12,594.00, representing a "fair estimate" of the taxable costs incurred by Ryder in this action. (D.E. 116.) To that end, Ryder attempts to break down the figure at issue as follows: (1) $3,630.00 in "deposition costs"; (2) $3,580.00 for service of subpoenas; and (3) $5,384.00 for exemplification and copies of papers necessarily obtained for use in the case. In response to Defendant's Motion, Plaintiff contends that Defendant's failure to provide any itemization of the claimed costs precludes its ability to determine whether any of the costs at issue are taxable pursuant to 28 U.S.C. § 1920. (D.E. 118.) The undersigned concurs.
Plaintiffs additional argument pertaining to timeliness of service is without merit. Local Rule 7.3 requires a party to file a motion for fees or costs within thirty (30) days of entry of final judgment. In this case, the Court entered final summary judgment on February 21, 2003. (D.E. 108.) The thirtieth day following the judgment date fell on Sunday, March 23, 2003. Therefore, March 24, 2003, the next business day, was the appropriate deadline for serving and filing the within Motions.
Although Defendant's Motion presents detailed legal argument on the categories of costs that are awardable pursuant to 28 U.S.C. § 1920, and provides a lump sum of the costs it believes are attributable to each category, Defendant fails to supply a Bill of Costs, or any supporting documentation or itemization of the costs at issue. As such, the undersigned cannot conclusively determine whether any of the stated costs are indeed recoverable pursuant to 28 U.S.C. § 1920.
Section 1920 permits an award of the following costs to the prevailing party as a matter of course: (1) fees of the clerk and marshal; (2) fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in this case; (3) fees and disbursements for printing and witnesses; (4) fees for exemplification and copies of papers necessarily obtained for use in the case; (5) docket fees; and (6) compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services. 28 U.S.C. § 1920.
When Plaintiff raised this very issue in its Response (D.E. 118), Ryder replied that Local Rule 7.3 does not require it to state its costs with particularity; rather, Ryder contends that the only standard imposed by the Local Rules is one of "a fair estimate of the amount sought." (D.E. 118.) in fact, in addition to providing a fair estimate of the amount sought, Local Rule 7.3 also mandates that any request for costs be "supported with particularity." Without the requisite particularity, the Court is unable to assess, inter alia, whether the purported costs are reasonable, and were necessarily incurred in furtherance of the present litigation.
Recommendation
Accordingly, having reviewed the Motions and the record, and being otherwise duly advised,
IT IS HEREBY RECOMMENDED that
(1) Defendant Ryder System, Inc's Motion for Sanctions Under 28 U.S.C. § 1927 (D.E. 114), be DENIED; and
(2) Defendant Ryder System, Inc's Verified Motion to Tax Costs (D.E. 116), be DENIED without prejudice, with the Court granting Defendant leave to file a sufficiently documented request for taxable costs.
Pursuant to S.D. Fla. Magistrate Rule 4(b), the parties may serve and file written objections with the Honorable Paul C. Huck, United States District Judge, on or before December 10, 2003. Failure to file timely objections shall bar the parties from attacking on appeal any factual findings contained herein. RTC v. Hallmark Builders, Inc., 996 F.2d 1144, 1149 (11th Cir. 1993); LoConte v. Dugger, 847 F.2d 745 (11th Cir. 1988).
RESPECTFULLY RECOMMENDED.