Spencer v. Wal Mart Stores Inc ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
11-22-2006
Spencer v. Wal Mart Stores Inc
Precedential or Non-Precedential: Precedential
Docket No. 05-2143
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________________
Nos. 05-2143, 05-3436, 05-3471
_________________
LILY SPENCER,
Plaintiff–Appellant/Cross Appellee
v.
WAL-MART STORES, INC.,
Defendant–Appellee/Cross Appellant
________________
Appeal from the
United States District Court for the
District of Delaware
(D.C. No. 03-cv-00104)
District Judge: The Honorable Kent Jordan
________________
Submitted Under Third Circuit LAR 34.1(a)
September 29, 2006
________________
Before: MCKEE and AMBRO, Circuit Judges, and
RESTANI*, Judge
(Filed: November 22, 2006)
________________________
*Honorable Jane A. Restani, Chief Judge of the United
States Court of International Trade, sitting by designation.
Alan B. Epstein, Esquire
Nancy Abrams, Esquire
Spector, Gadon & Rosen, P.C.
1635 Market Street
Philadelphia, PA 19103
Counsel for Plaintiff–Appellant/Cross Appellee
David S. Fryman, Esquire
Farrah I. Gold, Esquire
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Counsel for Defendant–Appellee/Cross Appellant
______________
OPINION OF THE COURT
______________
RESTANI, Judge.
This appeal arises from a discrimination action brought
under the Americans with Disabilities Act (“ADA”) by Lily
Spencer (“Spencer”) against her former employer, Wal-Mart
Stores, Inc. (“Wal-Mart”). Spencer appeals the orders of the
District Court vacating her back pay award and reducing her
award of attorney’s fees to reflect her limited success at trial.
Wal-Mart cross-appeals, arguing that Spencer is not the
prevailing party and thus is not entitled to any attorney’s fees.
We will affirm the orders of the District Court.
I. Procedural and Factual Background
Spencer, who is hearing impaired, brought a
discrimination action against Wal-Mart, alleging that it did not
reasonably accommodate her disability and subjected her to a
hostile work environment. The case proceeded to a jury trial on
October 4, 2004. The jury rejected Spencer’s first claim, finding
2
that Wal-Mart had reasonably accommodated Spencer’s
disability. The jury, however, decided in favor of Spencer on
her hostile work environment claim and awarded her $15,000
for lost wages, also known as back pay, and $12,000 for
emotional distress. The jury did not award punitive damages to
Spencer.
Afterward, Wal-Mart filed a motion for judgment as a
matter of law (“JMOL”), arguing that Spencer failed to establish
a claim of hostile work environment and that, even if she had
established such a claim, she was still not entitled to back pay.
Simultaneously, Spencer filed a motion to amend the judgment
to include injunctive relief, as well as a motion for
reimbursement of attorney’s fees and costs.
The District Court granted Wal-Mart’s motion for JMOL
in part and denied it in part. The Court upheld the jury finding
as to a hostile work environment, but concluded that the back
pay issue should not have been presented to the jury. Spencer
v. Wal-Mart Stores, Inc., No. 03-104-KAJ, 2005 U.S. Dist.
LEXIS 4373, at *7 (D. Del. Mar. 11, 2005). The Court found
that this issue was “solely within the province of the court,”
because back pay is an equitable remedy. Id. The Court then
declined to award back pay, noting that Spencer had not
requested it from the Court. Id. The Court further stated that,
even if Spencer had requested back pay, the Court would not
have granted it because she did not allege constructive
discharge. Id. As a result, the District Court vacated the jury’s
back pay award of $15,000. Id.
The District Court also denied Spencer’s request for
injunctive relief and for reimbursement of attorney’s fees. Id. at
*11, *15. Specifically, the Court found that injunctive relief
was inappropriate because Spencer had not established a pattern
of discrimination by Wal-Mart and because Spencer would not
benefit from an injunction (as she was no longer an employee of
Wal-Mart). Id. at *11–*12. The Court also found that Spencer
did not receive any benefit from litigation, because her back pay
award had been vacated, and because her emotional distress
3
award was offset by a prior settlement agreement.1 Id. at *15.
Thus, the District Court denied Spencer’s request for attorney’s
fees. Spencer then filed a motion to alter and amend judgment
and a motion for relief from judgment, arguing that it was
appropriate for the jury to consider the back pay issue because
back pay is not an equitable remedy. Spencer also contested the
denial of attorney’s fees. Spencer argued that the settlement
agreement did not affect her status as a prevailing party because
she signed the agreement after the jury rendered its decision.
The District Court upheld its ruling as to the back pay
issue but reconsidered its decision on attorney’s fees. Spencer
v. Wal-Mart Stores, Inc., No. 03-104-KAJ, 2005 U.S. Dist.
LEXIS 39038, at *3–*5 (D. Del. June 24, 2005). The Court
agreed that the settlement agreement did not affect Spencer’s
status as the prevailing party because it was signed after trial.
Id. at *5. The Court reasoned that the timing of the agreement
was important because it indicated whether Spencer “had gone
into the trial having already bargained away her potential
recovery.” Id. The Court, however, found that Spencer had
achieved limited success at trial, and thus, it reduced her
lodestar2 by 75% and awarded her $38,569.34 in attorney’s fees.
Id. at *12.
1
Wal-Mart and Spencer reached an agreement to settle
a worker’s compensation action filed by Spencer with the
Industrial Accident Board of Delaware. The settlement
agreement includes a provision providing Wal-Mart with a
“set-off/credit” for a portion of the recovery obtained in this
litigation. The amount of the “set-off/credit” is $11,754.32.
(S. App. 8.)
2
The “lodestar” is the amount of attorney’s fees
calculated by multiplying the reasonable number of hours
spent on the case by a reasonable attorney’s rate. Washington
v. Phila. County Ct. Com. Pl., 89 F.3d 1031, 1035 (3d Cir.
1996). Here, the District Court indicated that the lodestar was
$154,277.34. Spencer, 2005 U.S. Dist. LEXIS 39038, at *11.
The parties do not contest this amount.
4
Spencer appeals both orders of the District Court, arguing
that the Court erred in vacating her back pay award and reducing
her award of attorney’s fees. Wal-Mart cross-appeals, arguing
that Spencer is not the prevailing party and that she is not
entitled to any attorney’s fees. We first examine the parties’
arguments as to the back pay award, and then we turn to their
arguments as to the attorney’s fees award.
II. Jurisdiction and Standard of Review
The District Court had subject matter jurisdiction
under the ADA, 42 U.S.C. § 12101 et seq. We have appellate
jurisdiction under 28 U.S.C. § 1291 (2000).
While we exercise plenary review over a district
court’s grant of judgment as a matter of law, Delli Santi v.
CNA Ins. Cos., 88 F.3d 192, 200 (3d Cir. 1996), we review an
award of attorney’s fees for abuse of discretion, E.E.O.C. v.
L.B. Foster Co., 123 F.3d 746, 750 (3d Cir. 1997). “We must
defer to the district court’s fee determination unless it has
erred legally, or the facts on which the determination rests are
clearly erroneous.” Quiroga v. Hasbro, Inc., 934 F.2d 497,
502 (3d Cir. 1991) (citation omitted).
III. Discussion
A. Back Pay
In this case, the District Court found that back pay was an
equitable remedy reserved for the Court and that it had erred in
presenting the issue to the jury. It then vacated the back pay
award, noting that Spencer had not requested back pay from the
Court. It further stated that even if Spencer had requested back
pay, it would have denied the request because Spencer did not
allege constructive discharge at trial. Spencer argues that the
District Court should not have vacated the back pay award
because it is not an equitable remedy but rather is a decision for
the jury. We disagree with Spencer.
Back pay is available to a successful Title VII plaintiff
5
under the Civil Rights Act of 1964.3 42 U.S.C. § 2000e-5(g)(1);
Landgraf v. USI Film Prods., 511 U.S. 244, 252 (1994).
Specifically, the 1964 Act provided that a successful Title VII
plaintiff can collect “reinstatement . . . , with or without back
pay . . . , or any other equitable relief as the court deems
appropriate.” 42 U.S.C. § 2000e-5(g)(1) (emphasis added).
Consistent with this language, we have treated back pay as a
form of equitable relief awarded at the discretion of the court.
See Craig v. Y & Y Snacks, Inc., 721 F.2d 77, 85 (3d Cir. 1983)
(stating that “back pay is itself considered a discretionary
remedy”); Gurmankin v. Costanzo, 626 F.2d 1115, 1119, 1123
(3d Cir. 1980) (referring to the trial court’s “exercise of
discretion . . . in granting or denying equitable relief” and stating
that back pay is classified appropriately as an “equitable
remedy”). Various of our sister Circuits are in agreement. See
Slack v. Havens, 522 F.2d 1091, 1094 (9th Cir. 1975) (“[T]he
award of back pay is an integral part of the equitable remedy of
reinstatement . . . .”); Johnson v. Ga. Highway Express, Inc.,
417 F.2d 1122, 1125 (5th Cir. 1969) (same), overruled on other
grounds by Griffin v. Dugger, 823 F.2d 1476 (11th Cir. 1987);
Smith v. Hampton Training Sch. for Nurses, 360 F.2d 577, 581
n.8 (4th Cir. 1966) (same).
The Civil Rights Act of 1991 expanded the recovery
allowed under the 1964 Act and permitted compensatory
damages. Landgraf, 511 U.S. at 252–53. Compensatory
damages include “‘future pecuniary losses, emotional pain,
suffering, inconvenience, mental anguish, loss of enjoyment of
life, and other nonpecuniary losses.’” Id. at 253 (quoting 42
U.S.C. § 1981a(b)(3)). Under the 1991 Act, plaintiffs seeking
compensatory damages may request jury trials. 42 U.S.C.
§ 1981a(c)(1). The 1991 Act does not have a provision stating
that parties seeking back pay may request a jury trial. See id.
§ 1981a(c). The 1991 Act further differentiates back pay from
compensatory damages, stating that “[c]ompensatory damages
. . . shall not include backpay, interest on backpay, or any other
3
A plaintiff alleging employment discrimination under
the ADA has the same remedies as provided by the 1964 Act.
42 U.S.C. § 12117(a).
6
type of relief authorized under section 706(g) of the Civil Rights
Act of 1964.” Id. § 1981a(b)(2). The Supreme Court explained
that “[this] new compensatory damages provision . . . is in
addition to, and does not replace or duplicate, the backpay
remedy allowed under prior law.” Landgraf, 511 U.S. at 253
(quotation marks omitted).
The Supreme Court also stated that the 1991 Act “allows
a plaintiff to recover in circumstances in which there has been
unlawful discrimination in the ‘terms, conditions, or privileges
of employment’ . . . even though the discrimination did not
involve a discharge or a loss of pay.” Id. at 254. Specifically,
this “new right to monetary relief [was available to plaintiffs].
. . who were victims of a hostile work environment but were not
constructively discharged.”4 Id. at 283. The 1991 Act thus
“created a ‘major expansion in the relief available to victims of
employment discrimination,’ allowing the recovery of
compensatory damages even where victims of the illegal
employment practice had not suffered workplace discrimination
sufficient to rise to the level necessary to constitute a
constructive discharge.” Mallinson-Montague v. Pocrnick, 224
F.3d 1224, 1236 (10th Cir. 2000) (quoting Landgraf, 511 U.S.
at 253–55)). The 1991 Act left “undisturbed the equitable
remedies available under Title VII.” Hertzberg v. SRAM Corp.,
261 F.3d 651, 659 (7th Cir. 2001). Given the statutory
language, and the language in Landgraf distinguishing the
4
Constructive discharge occurs when an “employer
knowingly permit[s] conditions of discrimination in
employment so intolerable that a reasonable person subject to
them would resign.” Goss v. Exxon Office Sys. Co., 747 F.2d
885, 887 (3d Cir. 1984).
A hostile work environment “will not always support a
finding of constructive discharge.” Marrero v. Goya of P.R.,
Inc., 304 F.3d 7, 28 (1st Cir. 2002). “To prove constructive
discharge, the plaintiff must demonstrate a greater severity or
pervasiveness of harassment than the minimum required to
prove a hostile working environment.” Landgraf v. USI Film
Prods., 968 F.2d 427, 430 (5th Cir. 1992), aff’d, 511 U.S.
244.
7
former remedial structure allowing back pay from the new
structure allowing compensatory damages, it is obvious that
back pay remains an equitable remedy to be awarded within the
discretion of the court.5 Accord Lutz v. Glendale Union High
Sch., 403 F.3d 1061, 1069 (9th Cir. 2005).
We hold that a successful hostile work environment
claim alone, without a successful constructive discharge claim,
is insufficient to support a back pay award.6 Put simply, if a
hostile work environment does not rise to the level where one is
forced to abandon the job, loss of pay is not an issue. Here, the
District Court vacated the jury’s award of back pay, noting that
it is an equitable remedy and that Spencer had not requested it
from the Court. Spencer, 2005 U.S. Dist. LEXIS 4373, at *7.
5
Spencer has not made any valid arguments addressing
this issue. She cites Bates v. Board of Education of the
Capital School District, No. 97-394-SLR, 2000 U.S. Dist.
LEXIS 13234 (D. Del. Aug. 29, 2000), to argue that “the
amount of back pay . . . damages is left to the jury.”
(Appellant’s Br. 16–17 n.4.) In a prior opinion, however, the
Bates court indicated that “back pay is intended as an
equitable remedy.” Bates v. Bd. of Education of the Capital
Sch. Dist., No. 97-394-SLR, 2000 U.S. Dist. LEXIS
4873,*24–*25 (D. Del. Mar. 31, 2000) (citation omitted).
6
Several of our sister Circuits have held similarly that a
plaintiff alleging employment discrimination must show
either actual or constructive discharge in order to receive an
award of back pay. See Marrero, 304 F.3d at 28 (stating that
the plaintiff must show constructive discharge in order to hold
her employer responsible for the economic losses suffered);
Hertzberg, 261 F.3d at 659 (holding that a plaintiff seeking
back pay must show either actual or constructive discharge);
Mallinson-Montague, 224 F.3d at 1236–37 (holding that the
plaintiffs’ claim for back pay failed because they did not
allege constructive discharge); Caviness v. Nucor-Yamato
Steel Co., 105 F.3d 1216, 1219 (8th Cir. 1997) (holding that,
absent a showing of constructive discharge, plaintiffs alleging
employment discrimination are not entitled to back pay).
8
But, not only did Spencer fail to request back pay from the
Court, she had also waived a claim for constructive discharge.
(App. 74 n.1.) She instead sought back pay based only upon her
hostile work environment claim. This is insufficient to support
a claim for back pay.
Accordingly, the District Court did not err in ruling that
back pay is an equitable remedy and in vacating the jury’s award
of back pay.
B. Attorney’s Fees
The District Court awarded Spencer attorney’s fees after
finding that she and Wal-Mart had reached a settlement
agreement on her workers’ compensation claims after the jury
verdict, and that this did not affect her status as the prevailing
party. The Court, however, found that Spencer had limited
success at trial because: (1) she prevailed only on her emotional
distress claim; (2) she did not benefit in any other tangible way
from the litigation because she was not reinstated to her job but
had agreed to resign; and (3) her actual award of $12,000 was
far below her projected total damages of over $500,000.
Spencer v. Wal-Mart Stores, Inc., 2005 U.S. Dist. LEXIS 39038,
at *12. Thus, the Court reduced the lodestar by 75% and
granted Spencer $38,569.34 in attorney’s fees. Id.
Both parties argue that the District Court erred in
determining the attorney’s fees award. Wal-Mart argues that
Spencer is not entitled to any attorney’s fees because she is not
the prevailing party. Wal-Mart maintains this because the
settlement agreement completely offset her emotional distress
award7 and thus deprived her of any benefit from her suit. Wal-
Mart also argues, in the alternative, that if Spencer is the
prevailing party, the Court was correct in reducing the lodestar.
7
It appears that the settlement agreement offset a large
amount of Spencer’s emotional distress award, but not the
entire amount of the award. That is, $11,754.32 of the
$12,000 award was offset by the settlement agreement. (J.A.
97; S. App. 8.)
9
In contrast, Spencer argues that the Court erred in reducing the
lodestar because her reasonable accommodation claim is
interrelated with her successful hostile work environment claim.
Spencer also argues that the Court erred in finding that she had
achieved only limited success in her action because it
improperly compared her recovery to her projected damages.
Instead, she maintains, the Court should have compared her
recovery to the claim for damages she eventually presented to
the jury. We affirm the District Court’s decision.
In an employment discrimination case, the district court
has the discretion to award the prevailing party a reasonable
attorney’s fee. 42 U.S.C. § 2000e-5(k). The prevailing party
can be either the plaintiff or the defendant. L.B. Foster Co., 123
F.3d at 750.8 The former must “‘succeed on any significant
issue in litigation which achieves some of the benefit . . . sought
in bringing suit.’” Hensley v. Eckerhart, 461 U.S. 424, 433
(1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278–79
(1st Cir. 1978)); Pub. Interest Research Group of N.J., Inc. v.
Windall, 51 F.3d 1179, 1185 (3d Cir. 1995).
Where a plaintiff has achieved only partial or limited
success, a district court may adjust the fee downward. Hensley,
461 U.S. at 434–36; Rode v. Dellarciprete, 892 F.2d 1177, 1183
(3d Cir. 1990). It may do so “even where the plaintiff’s claims
were interrelated, nonfrivolous, and raised in good faith.”
Hensley, 461 U.S. at 436. Although a court may consider the
amount of damages awarded compared to the amount of
damages requested as one indication of a plaintiff’s degree of
8
In L.B. Foster, we noted that, even though attorney’s
fees may be awarded to an employer in a Title VII suit where
it is the prevailing party, such awards should “be only
sparingly awarded,” because the employer, unlike the
employee, is not acting as a private attorney general in the
litigation. 123 F.3d at 750–51. It is merely defending against
an action it had no role in bringing. The plaintiff, however,
has brought an action which, if successful, advances the
public interest of eliminating discrimination from the
workplace. Id. at 750.
10
success, it “may not diminish counsel fees [in a civil rights
action] to maintain some ratio between the fees and the damages
awarded.” Washington, 89 F.3d at 1041.
Here, the District Court correctly held that Spencer was
the prevailing party because she was successful on her hostile
work environment claim. See Hensley, 461 U.S. at 433.
Spencer’s status as the prevailing party is not affected by the
settlement agreement that offset her emotional distress award.
See Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp.,
995 F.2d 414, 423–24 (3d Cir. 1993). In Gulfstream, we
reasoned that the reduction of a plaintiff’s net recovery due to
the offset of a jury verdict by prior settlements does not indicate
that plaintiff failed to prove any of its claims at trial. It may
merely reflect plaintiff’s skill as a negotiator with the other
defendants, and the circumstance [under which] those
negotiations occurred.
Id. Although Gulfstream was addressing whether a settlement
agreement affected plaintiffs’ success rate for purposes of
determining the amount attorney’s fees awarded under the
Clayton Act, and the plaintiffs in Gulfstream had entered a
settlement agreement before the jury rendered its verdict, the
rationale there remains applicable here. Here, the jury held that
Spencer was subjected to a hostile work environment and
awarded her $12,000 for emotional distress. The District Court
then affirmed this award. As in Gulfstream, the fact that
Spencer chose to enter a settlement agreement, at whatever time,
offsetting a large portion of her award does not mean that
Spencer did not succeed on a significant issue in litigation, or
that the jury or court had not granted Spencer some relief.
The District Court also correctly found that Spencer had
achieved limited success in her action. As previously stated, the
Court supported its finding with three reasons: (1) Spencer
prevailed only on her emotional distress claim; (2) Spencer did
not benefit in any other tangible way from the litigation because
she was not reinstated to her job but had agreed to resign; and
(3) Spencer’s actual award of $12,000 was far below her
projected total damages of over $500,000. Spencer v. Wal-
Mart Stores, Inc., 2005 U.S. Dist. LEXIS 39038, at *12. The
11
District Court has sufficiently supported its finding.
Furthermore, it does not appear that the Court sought to
maintain a ratio between Spencer’s awarded damages and her
fee. Accordingly, we hold that it did not abuse its broad
discretion in reducing Spencer’s attorney’s fees by 75%.
IV. Conclusion
The District Court correctly ruled that back pay is an
equitable remedy and correctly vacated the back pay award.
Furthermore, the Court did not abuse its discretion in reducing
Spencer’s attorney’s fees award after finding that she had
limited success at trial. Accordingly, we will AFFIRM the
District Court’s orders vacating Spencer’s award of back pay
and awarding attorney’s fees to Spencer.