Wastak v. Lehigh Valley Health Network, Inc.

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
4-27-2005
Wastak v. Lehigh Valley Health
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-3039
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-3039
JOHN R. WASTAK,
Appellant
v.
LEHIGH VALLEY HEALTH
NETWORK, INC.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
D.C. Civil No. 00-cv-04797
District Judge: The Honorable Herbert J. Hutton
Argued: April 6, 2005
Before: BARRY, AMBRO, and GREENBERG, Circuit Judges
(Opinion Filed: April 27, 2005)
Donald P. Russo, Esq. (Argued)
117 East Broad Street
P.O. Box 1890
Bethlehem, PA 18016
Counsel for Appellant
Anne N. Occhialino, Esq. (Argued)
Equal Employment Opportunity Commission
1801 L Street, N.W.
Washington, D.C. 20507
Counsel for Amicus-Appellant
Jonathan B. Sprague, Esq. (Argued)
Post & Schell
1600 John F. Kennedy Boulevard
Four Penn Center, 13 th Floor
Philadelphia, PA 19103
Counsel for Appellee
OPINION
BARRY, Circuit Judge
Appellant John Wastak (“Wastak”) challenges an order of the District Court which
granted his former employer’s petition for attorneys’ fees and costs following his
unsuccessful employment discrimination action. Because we conclude that the District
Court’s finding that Wastak litigated in bad faith was clearly erroneous, we will reverse.
I.
Wastak was fifty-seven years old when he was terminated by Lehigh Valley Health
Network (“LVHN”) on March 12, 1998. In exchange for thirty-six weeks of severance
benefits, Wastak executed a Separation Agreement and Release (“Release”) whereby he
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expressly waived all employment-related claims against LVHN, including claims under
the ADEA.
On the date of his termination, LVHN informed Wastak that it intended to hire a
replacement to fill his position. Some time later, Wastak learned that LVHN had in fact
replaced him with a younger woman. At that point, believing that he had been the subject
of age discrimination, Wastak secured legal counsel. On July 20, 1999 – 495 days after
his termination – Wastak filed a charge of age discrimination with the EEOC. On March
1, 2000, the EEOC dismissed the charge as untimely, citing 29 U.S.C. § 626(d)(2), which
required that Wastak file within 300 days of the accrual of the cause of action.
Wastak subsequently filed suit in Pennsylvania state court, claiming age
discrimination in violation of both the ADEA and the Pennsylvania Human Relations Act.
LVHN removed the action to federal court. On March 27, 2002, the District Court
granted LVHN’s motion for summary judgment on the basis of the Release. Notably, the
District Court had previously denied LVHN’s motion to dismiss the action as time-barred.
Rejecting a series of arguments advanced by Wastak to support his position that
the Release was either invalid or inapplicable to his ADEA claim,1 we affirmed the order
of the District Court. The District Court thereafter proceeded to consider LVHN’s
petition for costs and attorneys’ fees, which had been stayed pending appeal. Finding that
1
Wastak v. Lehigh Valley Health Network, 342 F.3d 281 (3d Cir. 2003). This decision
vacated an earlier decision as to which panel rehearing was granted.
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Wastak had litigated in bad faith, the District Court granted the petition.2 This appeal
followed.
II.
“[A] district court’s finding of bad faith or the absence of bad faith in a particular
case is a factual determination and may be reversed only if it is clearly erroneous.” Ford
v. Temple Hosp., 790 F.2d 342, 347 (3d Cir. 1986); see Fed. R. Civ. P. 52(a). Under this
standard, we must accept the District Court’s finding of bad faith unless “on the entire
evidence [we are] left with the definite and firm conviction that a mistake has been
committed.” United States v. Igbonwa, 120 F.3d 437, 440 (3d Cir. 1997). When a
litigant’s bad faith is established, “the appropriateness of assessing attorneys’ fees . . . is a
matter for the district court’s discretion.” Ford, 790 F.3d at 347. Accordingly, were we
to agree with the District Court that Wastak litigated in bad faith, we would review the
decision to award attorneys’ fees for abuse of discretion.
III.
The District Court offered two bases – and, perhaps, three, but it is far from clear –
for its finding that Wastak litigated in bad faith: (1) the fact that Wastak “knowingly
misrepresented to the Court” in a verified affidavit; and (2) the fact that Wastak pursued a
claim that he knew to be untimely. We conclude that neither basis was evidence of bad
2
A litigant’s bad faith is a recognized exception to the “American rule” of fee shifting
followed by the federal courts. See Alyeska Pipeline Serv. Co. v. Wilderness, 421 U.S. 240,
258-59 (1995) (“[A] court may assess attorneys’ fees . . . when the losing party has acted in bad
faith, vexatiously, wantonly, or for oppressive reasons.” (internal quotation omitted)).
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faith.
Having parsed the language of Wastak’s very brief affidavit and examined the
affidavit alongside his deposition testimony, we are unable to identify any statement in
the affidavit which is false, and the District Court was wholly nonspecific. To that extent
that the Court appears to have been suggesting that Wastak said one thing in his affidavit
about his mental state at the time of his termination and another thing at his deposition,
we reject that suggestion. While Wastak made clear in his deposition that he neither
sought treatment nor obtained a prescription before signing the Release, there is nothing
in his affidavit which states to the contrary and, indeed, there is no dispute that he sought
psychological treatment and was eventually prescribed medication.
We also reject the notion that Wastak manifested bad faith by pursuing an action
which he knew to be untimely. Wastak presented a non-frivolous argument for equitable
tolling, which was never considered on the merits in the underlying litigation. Moreover,
early on, the District Court denied LVHN’s motion to dismiss the action as time-barred,
which could well have led Wastak to believe that his tolling theory was meritorious.
IV.
Upon review of the record, we are convinced that a mistake has been committed
and that the District Court’s finding of bad faith was clearly erroneous. Accordingly, we
will reverse the January 7, 2004 and June 21, 2004 orders of the District Court.
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