Tipton v. Directory Concepts, Inc. , 2014 Ohio 1215 ( 2014 )

[Cite as Tipton v. Directory Concepts, Inc., 2014-Ohio-1215.]
COURT OF APPEALS
RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JOHN C. TIPTON : JUDGES:
:
: Hon. W. Scott Gwin, P.J.
Plaintiff - Appellant : Hon. John W. Wise, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
DIRECTORY CONCEPTS, INC., ET AL. : Case No. 13CA61
:
:
Defendants - Appellees : OPINION
CHARACTER OF PROCEEDING: Appeal from the Richland County
Court of Common Pleas, Case No.
2009-CV-1853
JUDGMENT: Reversed
DATE OF JUDGMENT: Marc h 21, 2014
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees
J.C. RATLIFF JAY D. WAGNER
JEFF RATLIFF Wagner Law Firm, P.L.L.
ROCKY RATLIFF P.O. Box 576
Ratliff Law Offices 118 Harding Way West
200 West Center Street Galion, OH 44833
Marion, OH 43302
Richland County, Case No. 13CA61 2
Baldwin, J.
{¶1} Plaintiff-appellant John Tipton appeals from the December 10, 2012 and
June 12, 2013 Judgment Entries of the Richland County Court of Common Pleas.
STATEMENT OF THE FACTS AND CASE
{¶2} Appellant John Tipton, an African-American man, was employed as a
sales representative with appellee Directory Concepts, Inc. from September of 2007
until he was terminated in December of 2008. On December 24, 2009, appellant filed a
complaint against appellee Directory Concepts, Inc, appellee Thomas Hickox, in his
individual capacity and/or in his capacity as the President and/or Statutory Agent for
appellee Directory Concepts, Inc. and Marc Hyser, appellant’s supervisor. Appellant, in
his complaint, alleged that he was subject to racial discrimination during his
employment. Appellant, in his complaint, alleged, in part, that he was not given a
computer for approximately thirty days after he was hired while his white
contemporaries, were, that he did not receive commissions on his sales and that he was
subject to disparate treatment based upon his race.
{¶3} Appellees Directory Concepts, Inc. and Thomas Hickox filed an answer on
January 25, 2010. Mark Hyser filed an answer on March 24, 2010 and, on March 28,
2011, filed a Motion for Summary Judgment. Appellees, on the same date, filed a
Motion for Summary Judgment. Appellant filed a memorandum in opposition to both
Motions for Summary Judgment on May 17, 2011 and appellees filed a reply on June
2011.
{¶4} As memorialized in a Judgment Entry filed on August 15, 2011, the trial
court granted both Motions for Summary Judgment. The trial court, in its Judgment
Richland County, Case No. 13CA61 3
Entry, found that appellant had failed to provide direct evidence of discrimination by
appellees and that he also failed to establish a prima facie case of racial discrimination
through indirect evidence because he had not shown that he was replaced by a non-
protected person or that his sales position remained opened after he was terminated.
According to the trial court, “[i]n fact, the evidence is clear that Defendant, Directory
Concepts, Inc., terminated additional sales representatives shortly after the Plaintiff was
terminated and did not replace them.”
{¶5} Subsequently, on September 14, 2011, appellees filed a Motion for
Attorney Fees and Other Reasonable Expenses pursuant to R.C. 2323.51. Appellees
alleged that appellant and his counsel had engaged in frivolous conduct. On
September 15, 2011, Marc Hyser also filed a Motion for Award of ‘Fees and Expenses.
Appellant filed a memorandum in opposition to both motions on October 14, 2011.
Thereafter, on November 15, 2011, Hyser withdrew his motion.
{¶6} A hearing on appellees’ motion commenced on January 19, 2012 before a
Magistrate. On February 2, 2012, appellant filed a motion asking that the testimony of
Jeff Heck, counsel for Marc Hyser who had testified on January 19, 2012 as to the
reasonableness of attorney fees, be excluded. Appellant, in his motion argued that Heck
was not a disinterested party because he had represented one of the defendants in this
case. Appellees filed a memorandum contra such motion on February 13, 2012. The
Magistrate, in a Decision filed on March 7, 2012, recommended that such motion be
denied. The Magistrate found that neither Heck nor his client had any interest in the
attorney fee dispute, that Heck was a disinterested witness and that the case cited by
appellant was not applicable. The Magistrate ordered that the hearing resume on March
Richland County, Case No. 13CA61 4
29, 2012. A Judgment Entry adopting the Magistrate’s Decision was filed on April 3,
2012. The hearing was later continued to May 10, 2012.
{¶7} The Magistrate, in a Decision filed on December 10, 2012, recommended
that appellant be ordered to pay appellees $12,547.80 in legal fees along with court
costs. The Magistrate further found that appellees had not sufficiently demonstrated the
expenses that they alleged that they had incurred as a direct and identifiable result of
this case. Appellant filed objections to the Magistrate’s Decision on December 31, 2012.
{¶8} Pursuant to a Judgment Entry filed on June 12, 2013, the trial court
overruled appellant’s objections to the Magistrate’s Decision. The trial court, in its
Judgment Entry, found that appellant’s objections were untimely, that appellant’s
counsel did not submit an affidavit of his own or from his office staff stating that his
office did not receive the decision until December 27, 2012 as was alleged and that
appellant did not request an extension of time to file objections. The trial court also
found that there was no error of law or other defect on the face of the Magistrate’s
Decision and adopted the same.
{¶9} Appellant now raises the following assignments of error on appeal:
{¶10} “I. THE TRIAL COURT ERRED WHEN IT FAILED TO DISMISS
APPELLEE’S MOTIONS FOR SANCTIONS PURSUANT TO OHIO R.C. §2323.51 AND
RULE 11 BECAUSE THEY WERE NOT SUPPORTED BY EVIDENCE FROM A
DISINTERESTED PARTY THAT THE LEGAL SERVICES FOR WHICH HE SOUGHT
COMPENSATION WERE NECESSARY AND THE FEES CHARGED FOR THOSE
SERVICES WERE REASONABLE.”
Richland County, Case No. 13CA61 5
{¶11} “II. THE TRIAL COURT ERRED WHEN IT FOUND THAT
APPELLANT’S COMPLAINT WAS FRIVOLOUS AND FAILED TO DISMISS
APPELLEE’S MOTIONS FOR SANCTIONS PURSUANT TO OHIO R.C. §2323.51 AND
RULE 11 BECAUSE THERE WAS A GOOD-FAITH ARGUMENT FOR THE
EXTENSION OF EXISTING LAW THAT WOULD HAVE JUSTIFIED BRINGING – AND
MAINTAINING – A DISCRIMINATION CLAIM AGAINST APPELLEES OUT OF THE
FACTS OF THIS CASE.”
I
{¶12} Appellant, in his first assignment of error, argues that the trial court erred
in failing to dismiss appellees’ Motion for Attorney Fees pursuant to R.C. 2323.51.
Appellant specifically argues that appellees failed to offer testimony from a disinterested
party to corroborate the reasonableness of the requested attorney fees and that the
testimony at the hearing was insufficient to establish the reasonableness of the fees
requested.
{¶13} Appellant did not file a timely objection to the Magistrate's Decision. On
June 12, 2013, the trial court overruled appellant’s objections to the Magistrate’s
Decision finding, in part, that appellant’s objections were untimely, that appellant’s
counsel did not submit an affidavit of his own or from his office staff stating that his
office did not receive the decision until December 27, 2012 and that appellant did not
request an extension of time to file objections. The trial court overruled the objections.
{¶14} When a party fails to file objections to a magistrate's decision, Civ.R.
53(D)(3)(b)(iv) provides that “a party shall not assign as error on appeal the court's
adoption of any factual finding or legal conclusion * * * unless the party has objected to
Richland County, Case No. 13CA61 6
that finding or conclusion as required by Civ.R. 53(D)(3)(b).” Postel v. Koksal, 5th Dist.
Richland No. 08–COA–0002, 2009–Ohio–252, ¶ 25.
{¶15} We note, however, that authority exists in Ohio law for the proposition that
appellant’s failure to object to the Magistrate's decision does not bar appellate review for
“plain error.” In re Lemon, 5th Dist. Stark No. 2002 CA 00098, 2002–Ohio–6263. The
doctrine of plain error is limited to exceptionally rare cases in which the error, left
unobjected to at the trial court, “rises to the level of challenging the legitimacy of the
underlying judicial process itself.” See Goldfuss v. Davidson, 79 Ohio St.3d 116, 122,
1997–Ohio–401, 679 N.E.2d 1099.
{¶16} Appellant initially argues that the trial court erred in not excluding the
testimony of Attorney Jeffrey Heck, who was the attorney for Mark Hyser. Heck
testified, over objection, that the legal services that appellees’ counsel, Jay Wagner,
had provided were appropriate and necessary in defense of appellees, that Attorney
Wagner’s hourly rate of $175.00 to $195.00 per hour was reasonable, and that
$12,547.80 in legal fees was reasonable and necessary for the services that Attorney
Wagner provided in this case.
{¶17} Appellant specifically relied on the case of National City Bank v. Semco,
Inc., 3rd Dist. Marion No. 9-10-42, 2011-Ohio-172 for the proposition that testimony
from a disinterested witness regarding the reasonableness of attorneys’ fees is
required. However, in Grove v. Gamma Center, et al., 3rd Dist. Marion No. 9-12-41,
2013-Ohio-1734, the Third District stated that its decision in the Semco case did not
stand for the proposition that such testimony was required and also held that the trial
court erred in concluding that a shareholder could not prevail on a motion for attorney
Richland County, Case No. 13CA61 7
fees solely because he failed to provide evidence from a disinterested witness. The
court held that the trial court’s reliance on such case was misplaced. In Grove, the court
stated, in relevant part, as follows:
{¶18} “This Court also recently addressed the issue of attorneys' fees in Jack's
Heating, 2013–Ohio–1441. In that case, we recognized ‘that merely submitting an
attorney's itemized bill is insufficient to establish the reasonableness of the amount of
work billed.’ Id. at ¶ 24, citing Whitaker v. Kear, 123 Ohio App.3d 413, 424, 704 N.E.2d
317 (4th Dist.1997). This Court acknowledged that ‘[o]ften, parties offer expert
testimony to establish that the hours charged was reasonable in light of the litigation's
particular facts.’ Jack's Heating at ¶ 24, citing Hawkins v. Miller, 11th Dist. No.2011–L–
036, 2011–Ohio–6005, ¶ 28 and Whitaker at 424–425, 704 N.E.2d 317. However, we
also stated that ‘in some matters, the requesting party refrains from offering expert
testimony from other individuals to corroborate the attorney's self-serving testimony that
the fee request is reasonable’ Jack's Heating at ¶ 24, citing Koblenz & Koblenz v.
Summers, 8th Dist. No. 94806, 2011–Ohio–1064, ¶ 14 and Shottenstein, Zox & Dunn
Co., L.P.A. v. Reineke, 9th Dist. No. 10CA0138–M, 2011–Ohio–6201, ¶ 26–28. Thus,
this Court has recognized that testimony from a disinterested person may be the better
practice when establishing the reasonableness of attorneys' fees, but we have not gone
so far as to hold that this testimony is a threshold requirement in all circumstances….
{¶19} “After reviewing the applicable law, this Court disagrees with the trial
court's conclusion that Singh cannot prevail on his motions for attorneys' fees solely
1
The complete cite is United Assn. of Journeyman and Apprentices of the Plumbing and Pipe Fitting
Industry v. Jack's Heating, Air Condition & Plumbing, Inc., 3d Dist.Hardin No. 6–12–06, 2013–Ohio–144.
Richland County, Case No. 13CA61 8
because he failed to provide evidence from a disinterested witness regarding the
amount of hours spent and the hourly rate charged.” Id at paragraphs 31-32.
{¶20} Based on the foregoing, we find that the trial court did not commit plain
error in not excluding the testimony of Jeffrey Heck.
{¶21} As noted by appellees, although not specifically assigned as error,
appellant also argues that appellees should have submitted evidence as to their
counsel’s experience in litigation or racial discrimination cases, his reputation, the
difficulties or peculiarities of racial discrimination litigation or evidence that Attorney
Wagner possessed the skill required to perform the legal services properly.
{¶22} In the case sub judice, appellees sought attorneys’ fees as a sanction
pursuant to R.C. 2323.51. R.C. 2323.51 states, in relevant part, as follows: “(5)(a) In
connection with the hearing described in division (B)(2)(a) of this section, each party
who may be awarded reasonable attorney's fees and the party's counsel of record may
submit to the court or be ordered by the court to submit to it, for consideration in
determining the amount of the reasonable attorney's fees, an itemized list or other
evidence of the legal services rendered, the time expended in rendering the services,
and whichever of the following is applicable:…
{¶23} “(ii) In all situations other than those described in division (B)(5)(a)(i) of
this section, the attorney's fees associated with those services.”
{¶24} At the hearing, appellees presented their itemized bill for legal fees and
the testimony from Jeffrey Heck in support of their motion. Nothing additional was
required.
{¶25} Appellant’s first assignment of error is, therefore, overruled.
Richland County, Case No. 13CA61 9
II
{¶26} Appellant, in his second assignment of error, argues that the trial court
erred in finding his complaint frivolous.
{¶27} As is stated above, because appellant did not timely object to the
Magistrate’s Decision, we will apply the plain error standard of review.
{¶28} R.C. 2323.51 provides a court may award court costs, reasonable attorney
fees, and other reasonable expenses incurred in connection with the civil action or
appeal to any party to the civil action or appeal who was adversely affected by frivolous
conduct. R.C. 2323.51(A)(2)(a) defines “frivolous conduct” as follows:
{¶29} “(i) * * * [conduct that] serves merely to harass or maliciously injure
another party to the civil action or appeal or is for another improper purpose, including,
but not limited to, causing unnecessary delay or a needless increase in the cost of
litigation.
{¶30} “(ii) * * * [conduct that] is not warranted under existing law and cannot be
supported by a good faith argument for an extension, modification, or reversal of
existing law.
{¶31} “(iii) * * * [conduct that] consists of allegations or other factual contentions
that have no evidentiary support or, if specifically identified, are not likely to have
evidentiary support after a reasonable opportunity for further investigation or discovery.”
{¶32} A motion for sanctions pursuant to R.C. 2323.51 requires a three-step
analysis by the trial court: (1) whether the party engaged in frivolous conduct, (2) if the
conduct was frivolous, whether any party was adversely affected by it, and (3) if an
award is to be made, the amount of award. Ferron v. Video Professor Inc., 5th Dist.
Richland County, Case No. 13CA61 10
Delaware No. 08–CAE–09–0055, 2009–Ohio–3133. The question of what constitutes
frivolous conduct may be either a factual determination, or a legal determination. Pingue
v. Pingue, 5th Dist. Delaware No. 06–CAE–10–0077, 2007 WL 2713763 (Sept. 18,
2007), citing Wiltberger v. Davis, 110 Ohio App.3d 46, 673 N.E.2d 628 (10th Dist.1996).
A determination that the conduct is not warranted under existing law and cannot be
supported by a good faith argument for an extension, modification, or reversal of
existing law requires a legal analysis. Lable & Co. v. Flowers, 104 Ohio App.3d 227,
661 N.E.2d 782 (9th Dist.1995).
{¶33} Appellant, in the case sub judice, filed a complaint alleging that he was
subject to racial discrimination, including disparate treatment. In order to prove a prima
facie case of race discrimination, the plaintiff must establish the following: (1) that he or
she is a member of the protected class; (2) that he or she was subject to an adverse
employment action; (3) that he or she was qualified for the position; and (4) that
someone outside the class either replaced him or her or was treated more favorably.
Shepard v. Griffin Services, Inc., 2nd Dist. Montgomery No. 19032, 2002–Ohio–2283,
citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d
668 (1973) and Mitchell v. Toledo Hosp., 964 F.2d 577, 582 (6th Cir.1992). See also
Janezic v. Eaton Corp., 8th Dist. No. 99897, 2013-Ohio-5436.
{¶34} Appellees, in their Motion for Summary Judgment, argued, in part, that
appellant could not meet the fourth prong because he was never replaced by a non-
protected person after his termination. The trial court, in its August 15, 2011 Judgment
Entry granting appellees’ Motion for Summary Judgment, found that appellant failed to
meet the fourth prong of the above test because he “provided absolutely no evidence
Richland County, Case No. 13CA61 11
that he was replaced by another individual or that his sales representative position was
left open for another individual.”
{¶35} Thereafter, appellees, in their Motion for Attorneys Fees, argued, in
relevant part, as follows:
{¶36} “As discussed above, there was no evidentiary support for the Plaintiff’s
civil proceeding against Defendants DCI and Hickox. Before the Plaintiff filed his
Complaint, neither the Plaintiff nor his counsel made any type of a reasonable inquiry to
determine whether or not the Plaintiff was ever replaced by another individual or
whether or not his position remained open. In fact, after the Plaintiff’s Complaint was
filed and extensive discovery was performed, Plaintiff’s counsel still made absolutely no
inquiry to determine whether or not the Plaintiff was replaced or whether Plaintiff’s prior
sales position remained open after he was terminated.” At the hearing, appellees
argued that appellant’s case against them was not warranted under existing law
because appellant had not provided evidence that he was replaced by a non-protected
person or that his position was left open after he was terminated. In short, the factual
basis for appellees’ motion was that appellant had not met the fourth prong of the test
set forth above.
{¶37} In the case sub judice, the Magistrate, in her December 10, 2012
Decision after the hearing on such motion, found that, prior to filing the lawsuit alleging
racial discrimination, appellant did not make any inquiry regarding whether appellant
had been replaced following his termination or whether his position had remained open.
The Magistrate further found that appellant’s complaint was frivolous because, by
Richland County, Case No. 13CA61 12
granting appellees’ Motion for Summary Judgment, the trial court clearly rejected
appellant’s claims of disparate treatment.
{¶38} However, as is stated above, the fourth prong can be met by providing
evidence that a non-protected person was treated more favorably. Appellant, in the
affidavit attached to his memorandum in opposition to appellees’ Motion for Summary
Judgment, set forth specific examples of how he alleged he was treated differently than
similarly situated white employees. The issue of disparate treatment was never
addressed by the trial court.
{¶39} We find that the trial court erred in granting appellees’ Motion for Attorney
Fees because there was no evidence that appellant’s complaint was frivolous. As is
discussed above, appellees argued that they were entitled to attorneys fees because,
before filing his complaint, neither appellant nor his counsel made any type of a
reasonable inquiry to determine whether or not the appellant was ever replaced by
another individual or whether or not his position remained open. Appellees argued,
therefore, that appellant did not meet the fourth prong of the test set forth in McDonnell
Douglas. However, in disparate treatment cases, the fourth element may be replaced
with the requirement that the plaintiff show he or she was treated differently from
similarly-situated individuals.
{¶40} Moreover, at the hearing, Attorney J.C. Ratliff, who was appellant’s
witness, testified that he was asked to review the case and did not think that it was a
frivolous action. He testified that he believed that his interview of appellant revealed
instances of disparate treatment in the terms and conditions of his employment. Ratliff
testified that there was “actual proof” that appellee made appellant make 50 calls while
Richland County, Case No. 13CA61 13
other employees had to do only 35, that appellant was terminated for performing below
goals while others, non-African American employees, were not, and that there was
evidence that while appellant was given less than a month of corrective action, non-
African American employees were given more. Ratliff testified that it was clear that
appellant “got disparate treatment in the terms and conditions of employment”.
Transcript at 66. When asked what he would have done if appellant had come to him
with this case, he testified as follows:
{¶41} A. I would have talked to him at length, maybe even met with him
twice. I would have taken what he said at face value, and then said okay, you’re saying
these things occurred, bring those documents in and show me that you, in fact, have
been (inaudible). Once he brought those documents in, based on the status of how my
office is now, I would have referred it to you or James down in Columbus, someone who
does these types of cases.” Transcript at 67.
{¶42} Finally, the fact that the trial court granted summary judgment to
appellees does not create sufficient grounds, alone, to constitute a frivolous filing under
R.C. 2323.51. Passmore v. Greene Cty. Bd. of Elections, 74 Ohio App.3d 707, 713, 600
N.E.2d 309 (9th Dist. Wayne 1991).
{¶43} Based on the foregoing, we find that the trial court committed plain error in
granting appellees’ Motion for Attorney Fees.
{¶44} Appellant’s second assignment of error is, therefore, sustained.
Richland County, Case No. 13CA61 14
{¶45} Accordingly, the judgment of the Richland County Court of Common Pleas
is reversed.
By: Baldwin, J.
Gwin, P.J. and
Wise, J. concur.