Opinion
CIVIL ACTION NO. 06-3712.
April 16, 2010
MEMORANDUM OPINION AND ORDER
I. BACKGROUND
Plaintiff Ralph Deyo brought suit against his former employer, St. Luke's Hospital, alleging violations of the Age Discrimination in Employment Act, 29 U.S.C.A. § 621 et seq. (the "ADEA"), and the Pennsylvania Whistleblower Law, 43 P.S. §§ 1421et seq. Defendant moved for summary judgment on all counts in Plaintiff's amended complaint. The Honorable Edmund Ludwig granted summary judgment in favor of Defendant. Defendant subsequently filed a Bill of Costs (Doc. No. 27) and Motion for Attorneys' Fees (Doc. No. 31). On February 3, 2009, the Clerk of Court entered costs in favor of Defendant in the amount of $2,257.16. (Doc. No. 37). Presently before this court is Defendant's Motion for Attorneys' Fees and Plaintiff's Response in Opposition.
On April 13, 2010, the parties proceeded with oral argument of the motion before this court. The parties agreed to a bifurcated posture, whereby the court would address liability first and, if applicable, the court would assess proof of attorneys' fees at a later date. For the reasons set forth below, I deny Defendant's motion.
II. LEGAL ARGUMENT
Defendant seeks an award of attorneys' fees pursuant to the ADEA, the Federal Cost statute, 28 U.S.C. § 1927, and 42 Pa.C.S.A. §§ 2503(7) (9). As to an award under the ADEA, Defendant concedes that the ADEA does not specifically authorize an award to a prevailing defendant, but argues that numerous courts have held such an award proper in instances where plaintiff's claims were unfounded at the initiation of proceedings or where it became clear at a later stage that plaintiffs claims were unsupported by evidence.
As Defendant argues, courts in several circuits have awarded attorneys' fees to a prevailing defendant where there was a finding that plaintiff's claims were brought in bad faith or were vexatious. See Davis v. Target Stores Div. Of Dayton Hudson Group, 87 F. Supp.2d 492 (D.Md. 2004); Gray v. New England Tel. Tel., 792 F.2d 251 (1st Cir. 1986). Under a second test, which has been applied by the Third Circuit, a prevailing defendant may be awarded fees where plaintiff's actions were frivolous, unreasonable, or without foundation. See EEOC v. L.B. Foster Co., 123 F.3d 746 (3d Cir. 1997). Under L.B. Foster, the following factors may be considered in determining whether a fee award is appropriate to a prevailing defendant: (1) whether the plaintiff established a prima facie case; (2) whether the defendant offered to settle; and (3) whether the trial court dismissed the case prior to trial or held a full-blown trial on the merits. Id. at 750-51. Additionally, Defendant notes that the court may award fees to a prevailing defendant where plaintiff continued to litigate after it became clear that the claims were frivolous, unreasonable, or without foundation. See Rompola v. Lehigh Valley Hospital, 2004 WL 1508533, *1 (E.D. Pa. 2004).
Applying the above factors to the instant case, Defendant claims that Plaintiff could not establish a prima facie case of age discrimination and that Judge Ludwig recognized that Plaintiff's only evidence of discrimination was his age. Defendant further argues that Plaintiff never offered to settle his case and that the case was dismissed on summary judgment as there were not factual or legal issues in dispute. Thus, Defendant concludes that an award of attorneys' fees is appropriate under the ADEA.
Defendant further argues an award of attorneys' fees is proper under the Federal Cost statute, 28 U.S.C. § 1927. Pursuant to § 1927, the court may award costs, expenses, and attorneys' fees where the following requirements have been established: (1) there exists a multiplication of proceedings by an attorney; (2) the attorney's conduct must be characterized as unreasonable and vexatious; and (3) the attorney's conduct results in an increase in the cost of the proceedings. Campana v. Muir, 615 F. Supp. 871, 874 (M.D. Pa. 1985). The Third Circuit has clarified that the imposition of fees pursuant to § 1927 requires a finding of bad faith on the part of counsel. See Gaiardo v. Ethyl Corp., 835 F.2d 479, 484 (3d Cir. 1987). Defendant points out that, as with an award under the ADEA, courts have awarded a prevailing defendant attorneys' fees under § 1927 where the action was frivolous from the start and where plaintiff proceeded with the case even in the face of factual or legal infirmities. See Ford v. Temple Hospital, 790 F.2d 342, 348 (3d Cir. 1986); Stefanoni v. Board of Chosen Freeholders County of Burlington, 180 F.Supp. 2d 623, 633 (D.N.J. 2002). Applying the above, Defendant claims that Plaintiff's counsel vexatiously proceeded with claims in bad faith, in that counsel knew, prior to filing suit, that there was no evidence to support the claims. Defendant further argues that, following discovery, Plaintiff's counsel could not support the claims made and, yet, continued to pursue litigation.
Lastly, Defendant argues that an award of attorneys' fees is appropriate under 42 Pa.C.S. §§ 2503(7) and (9), which provides that a party may recover reasonable attorneys' fees where there has been "dilatory, obdurate or vexatious conduct" or where the conduct of another party was "arbitrary, vexatious, or in bad faith." Defendant claims that pursuit of the Whistleblower claim under state law was frivolous in that Plaintiff and his counsel knew at the time they filed suit that there was no evidence to support the claims, and also knew during litigation that no supporting evidence existed.
III. ANALYSIS
While Defendant seeks attorneys' fees under three distinct causes of action, this court has determined that the standard under each is essentially the same. This court must make a finding of vexatious conduct or bad faith on the part of Plaintiff or his attorney, either at the outset of litigation or during the course of litigation, in order to award Defendant attorneys' fees under the ADEA, § 1927, or § 2503.
First, we find it significant that Plaintiff amended his complaint after Defendant sought dismissal of two of Plaintiff's three claims. Indeed, in his amended complaint, Plaintiff presented only two claims, having dropped his claim of disparate impact age discrimination under the ADEA. This demonstrates that Plaintiff and his attorney reassessed the merits of the claims initially alleged and withdrew a claim that lacked foundation. We find this to be reasonable conduct which suggests that neither Plaintiff nor his attorney exhibited bad faith or vexatiousness from the outset of litigation.
As to whether Plaintiff and counsel proceeded to litigate claims they knew were baseless following the grant of summary judgment in favor of Defendant, we again find no vexatious conduct or bad faith. Where claims have been disposed of by summary judgment, and the prevailing defendant sought attorneys' fees, courts have assessed frivolity and vexatiousness within the framework of how the carefully the dismissing court reviewed the claims. See Rompola v. Lehigh Valley Hospital, No. 03-2993, 2004 WL 150833, at *3-4 (E.D. Pa. July 6, 2004); Tuthill v. Consol. Rail Corp., No. 96-6868, 1998 WL 321245. at *4 (E.D. Pa. June 18, 1998); Hughes v. Rowe, 449 U.S. 5, 15-16 and n. 13 (1980).
In the instant case, the court gave careful consideration to the merits of Plaintiff's claims. First, the court indicated that the summary judgment record consisted of "deposition testimony, answers to interrogatories and requests for admissions, documents produced by both parties, affidavits and the pleadings." The court then analyzed Plaintiff's ADEA claim with reference to the burden-shifting McDonnell-Douglas standard. In so doing, the court quoted extensively from Plaintiff's deposition testimony and also referred to specific documents, including unemployment records and termination letters. After review of the record, Judge Ludwig concluded that there was no evidence that Defendant's termination of Plaintiff was for any reason other than Plaintiffs insubordination at his place of employment. Although Plaintiff ultimately was mistaken as to whether the evidence was sufficient to sustain a claim of age discrimination under the ADEA, Judge Ludwig does not indicate that Plaintiff should have been aware at the time he filed suit that his claims would not succeed. Moreover, Judge Ludwig does not fault Plaintiff or his attorney for having proceeded with discovery. Indeed, Plaintiff was unsuccessful at the summary judgment stage; however, we cannot say that the claims were so baseless that Plaintiff and counsel acted unreasonably, vexatiously, or in bad faith in pursuing the litigation. See Christianburg v. EEOC, 434 U.S. 412, 421-22 (1978) (courts should "resist temptation to engage in post hoc reasoning by concluding that, because a plaintiff ultimately did not prevail, his action must have been unreasonable or without foundation). As to Plaintiff's ADEA claim, we cannot award Defendant attorneys' fees under either the ADEA, § 1927, or § 2503.
Similarly, based on Judge Ludwig's treatment of Plaintiff's Whistleblower claim, we cannot say that Plaintiff and counsel acted in bad faith. Judge Ludwig stated that, pursuant to state law, Plaintiff could prove retaliatory discharge by establishing that he made a good faith report of wrongdoing or waste, and that this report was made without malice. Judge Ludwig explained that the evidence of record, namely the termination letter issued by Defendant, the Unemployment Board decision, and Plaintiff's testimony, suggested that Plaintiff reported his supervisor out of ill will. Judge Ludwig further explained that Plaintiff did not provide evidence of a causal connection between reporting his supervisor's actions and Plaintiff's own termination. Again, Judge Ludwig made this determination only after considering the evidence of record, obtained through the discovery process, and did not state that Plaintiff or counsel should have known from the outset that he could not prove retaliatory discharge. Moreover, Defendant has not established that Plaintiff or counsel knew that the court would rule against Plaintiff on the Whistleblower claim and, nevertheless, chose to maintain the claim. That Plaintiff's Whistleblower claim was insufficient to survive summary judgment does not mean that it was unreasonable or litigated in bad faith. We deny an award of attorneys' fees as to this claim as well.