Barnes v. Dalton , 158 F.3d 1212 ( 1998 )

United States Court of Appeals,
Eleventh Circuit.
No. 97-3140.
Non-Argument Calendar.
Sammy D. BARNES, and Ray C. Dunlin, et al., Plaintiffs,
v.
John H. DALTON, Secretary, Department of the Navy, Defendant-Appellee,
Mark Evan Frederick, Appellant.
Oct. 29, 1998.
Appeal from the United States District Court for the Northern District of Florida. (No. 94-
50372/LAC), Lacey A. Collier, Judge.
Before TJOFLAT, EDMONDSON and CARNES, Circuit Judges.
CARNES, Circuit Judge:
In the underlying case which gives rise to this appeal, the plaintiffs asserted claims that they,
and a class of persons they purported to represent, were discriminated against by the defendant on
the basis of their race. The district court granted summary judgment for the defendant on both the
plaintiffs' individual and class claims. Following the entry of judgment for the defendant, he moved
to sanction plaintiffs' counsel, Mark Evan Frederick and Sadie Stewart, under 28 U.S.C. § 1927 and
the court's inherent power. The district court granted defendant's motion in part, awarding the
defendant $70,620.20 as sanctions against Frederick. After a rehearing on that issue, the court
reduced the award against Frederick to $10,000.00. He appeals from that decision. We affirm.
Frederick filed this suit in November of 1994. The complaint alleged that the plaintiffs and
a putative class had been the victims of a pattern and practice of racial discrimination and/or facially
neutral practices which had an adverse impact on black workers. Additionally, the complaint
specifically alleged that the plaintiffs had exhausted their administrative remedies. The defendant
moved to dismiss the suit contending, among other things, that the plaintiffs had failed to exhaust
their administrative remedies. In May of 1995, the district court dismissed the suit on other grounds,
finding that none of the named plaintiffs had alleged any injury in fact and that service of process
had never been perfected upon the defendant to begin with.
Frederick filed an amended complaint on behalf of the plaintiffs later that month. The
amended complaint included the same allegations contained in the initial complaint, but added
disparate treatment claims on behalf of the named plaintiffs. However, Frederick again failed to
properly serve the defendant who again moved to dismiss the complaint. In response, Frederick
filed a motion for a default judgment to which the defendant was forced to respond. Because service
had not been perfected upon the defendant, the court denied the motion for default. Instead of
dismissing the amended complaint, the district court gave the plaintiffs additional time to perfect
service upon the defendant. Frederick filed a second amended complaint in August of 1995, and
apparently perfected service upon the defendant within the requisite period. The second amended
complaint was substantially identical to the first.
In October of 1995, the defendant moved for summary judgment on both the plaintiffs'
individual claims and the class claims. To refute the plaintiffs' pattern and practice and disparate
impact claims, the defendant was forced to hire an expert, Dr. Mary Dunn Baker, to perform a
statistical analysis of the racial composition of defendant's workforce and to provide testimony.
Shortly after the defendant moved for summary judgment, Frederick withdrew as counsel for the
plaintiffs and Stewart was retained in his place. In July of 1996, the district court granted summary
judgment for the defendant on the class claims, finding that (1) no class representative had a
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cognizable claim; (2) at no time had a motion to certify the class been filed; and (3) in each of the
complaints the plaintiffs had failed to comply with local rule 23.1 which required them to set forth
detailed allegations of fact demonstrating that the prerequisites to the maintenance of a class action
(e.g., numerosity, commonality, typicality, and adequacy) had been met. Then, in August of 1996,
the court granted summary judgment to the defendant on the plaintiffs' individual claims, finding
that none of them had timely exhausted their administrative remedies.
Following the entry of summary judgment, the defendant moved the district court to sanction
Frederick and Stewart in the amount of $70,620.20, that amount being the cost to the defendant of
Dr. Baker's services and testimony. The court noted that it was not clear whether it could award
expert witness fees as a sanction under 28 U.S.C. § 1927, but that it could do so under its inherent
power if plaintiffs' counsel had acted in bad faith. The court found that the following constituted
bad faith conduct: (1) repeatedly filing a complaint containing claims which plaintiffs' counsel knew
or should have known was time-barred; (2) the repeated failure to perfect service upon the
defendant coupled with the filing and pursuit of a motion for default in spite of the knowledge that
service had not been perfected; (3) repeatedly filing a complaint which did not comply with local
rule 23.1; and (4) repeatedly filing a complaint containing claims of pattern and practice and
disparate impact racial discrimination without any evidence to support such theories of recovery.
With respect to the amount of sanctions sought by the defendant, the district court found that:
"Defendant incurred the fees and costs for Dr. Baker's declaration only because Plaintiffs, through
Mr. Frederick, filed frivolous allegations of adverse impact and a pattern and practice of
discrimination which were time-barred and/or had no basis in fact." The court found that the bad
faith conduct which caused the defendant to incur those costs was attributable to Frederick alone.
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Therefore, the court awarded the defendant $70,620.20 in sanctions against Frederick. After a
rehearing during which Frederick produced his financial records for in-camera inspection, the court
reduced the sanction to $10,000.00.
We review a district court's decision to impose sanctions under its inherent power for an
abuse of discretion. See Chambers v. NASCO, Inc., 501 U.S. 32, 55, 111 S.Ct. 2123, 2138, 115
L.Ed.2d 27 (1991). The key to unlocking a court's inherent power is a finding of bad faith. See In
re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995). "A finding of bad faith is warranted where an attorney
knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose
of harassing an opponent. A party also demonstrates bad faith by delaying or disrupting the
litigation or hampering enforcement of a court order." Primus Automotive Fin. Servs., Inc. v.
Batarse, 115 F.3d 644, 649 (9th Cir.1997) (internal quotation and citation omitted).
As noted above, the district court found that a number of Frederick's actions in this case
demonstrated bad faith. On appeal, he argues that none of the cited conduct supports the district
court's finding. Specifically, Frederick argues (1) that he had a good faith belief that the plaintiffs'
claims were not time-barred under a continuing violation theory and/or that the plaintiffs' claims
should have been construed as claims for relief under 42 U.S.C. § 1981, which does not have an
exhaustion of administrative remedies requirement, and (2) that a 1993 EEOC report finding a
manifest imbalance of minorities in high grade positions in defendant's workforce coupled with over
twenty complaints of racial discrimination from defendant's employees provided Frederick with a
good-faith basis for pursuing the disparate impact and pattern and practice claims. He does not,
however, provide an explanation for his decision to pursue a default judgment against the defendant
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in spite of the fact that he had not properly served the defendant. Nor does he explain his repeated
failure to comply with local rule 23.1.
Our review of the record convinces us that Frederick handled this case in an unprofessional
manner. It is clear that throughout his involvement in this case, Frederick frequently failed to follow
the local and federal rules. We focus our attention, however, on the allegedly frivolous disparate
impact and pattern and practice claims. Frederick's pursuit of those claims caused the defendant to
incur the expenses to which the district court tied its award of sanctions. Therefore, unless the
district court abused its discretion by finding that Frederick's pursuit of those claims demonstrated
bad faith, the award of sanctions is due to be affirmed.
If particularly egregious, the pursuit of a claim without reasonable inquiry into the
underlying facts can be the basis for a finding of bad faith. See Mroz, 65 F.3d at 1576. The district
court's explanation of its finding that Frederick had no basis in fact for repeatedly asserting the
disparate impact and pattern and practice claims was as follows:
[T]he court must conclude from Ms. Stewart's failure to adduce any evidence in opposition
to Defendant's summary judgment motions that neither of Plaintiffs' counsel ever had such
evidence. Because Mr. Frederick's response to the [motion for sanctions] contains no
showing to the contrary, there is no weight to his argument that he cannot be liable because
he filed the lawsuit in good faith upon information from his clients and withdrew prior to
discovery.
Frederick argues that such deductive reasoning is improper. If Frederick had not been given an
independent opportunity to demonstrate that he had a reasonable basis in fact for asserting the claims
in question, we might agree. However, Frederick was given such an opportunity but he failed to
make any "showing to the contrary." Frederick has pointed to nothing in the record that was before
the district court which convinces us that the court's conclusion was an abuse of discretion.
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Frederick also contends that it was not within the power of the district court to award the
defendant Dr. Baker's expert witness fees as a sanction. We disagree. In Chambers, the Supreme
Court stated: "Because of their very potency, inherent powers must be exercised with restraint and
discretion. A primary aspect of that discretion is the ability to fashion an appropriate sanction for
conduct which abuses the judicial process." 501 U.S. at 44-45, 111 S.Ct. at 2132-33 (internal
citation omitted) (emphasis added). See also Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23
F.3d 374, 377-78 (Fed.Cir.1994) (recognizing that under certain circumstances a court can award
expert witness fees as a sanction pursuant to its inherent power). Where, as here, the district court
fashions a sanction which is a direct response to the harm that the bad faith conduct of the attorney
causes, it is clearly acting within its discretion.
For the foregoing reasons, the order of the district court awarding sanctions in the amount
of $10,000.00 against Mark Evan Frederick is AFFIRMED.
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