Pacheco v. Mineta

United States Court of Appeals

Fifth Circuit

F I L E D

IN THE UNITED STATES COURT OF APPEALS

May 5, 2006

FOR THE FIFTH CIRCUIT

Charles R. Fulbruge III

Clerk

Nos. 04-51160 & 05-50129

CARLOS PACHECO,

Plaintiff-Appellant,

versus

NORMAN Y. MINETA, ETC., ET AL.,

Defendants,

NORMAN Y. MINETA, SECRETARY, DEPARTMENT OF TRANSPORTATION,

Federal Aviation Administration,

Defendant-Appellee.

CARLOS PACHECO,

Plaintiff-Appellee,

versus

NORMAN Y. MINETA, ETC., ET AL.,

Defendants,

NORMAN Y. MINETA, SECRETARY, DEPARTMENT OF TRANSPORTATION,

Defendant-Appellant.

Appeals from the United States District Court

for the Western District of Texas

Before GARWOOD, PRADO, and OWEN, Circuit Judges.

GARWOOD, Circuit Judge:

Appellant Carlos Pacheco filed this suit against Norman

Mineta, the Secretary of the United States Department of

Transportation, pursuant to Title VII of the Civil Rights Act of

1964, section 717(c), 42 U.S.C. § 2000e-16(c). Pacheco alleged

both disparate-treatment and disparate-impact discrimination. The

district court entered summary judgement against Pacheco on his

disparate-treatment claim, dismissing that claim with prejudice.

The court dismissed Pacheco’s disparate-impact claim for lack of

subject-matter jurisdiction, pursuant to Rule 12(b)(1), citing his

failure to exhaust his administrative remedies. Pacheco appeals

only the second ruling, challenging the district court’s dismissal

for failure to exhaust administrative remedies. The government

cross appeals the district court’s failure to award it costs

pursuant to Rule 54(d)(1). We affirm the district court’s 12(b)(1)

dismissal and we vacate and remand the district court’s ruling with

respect to costs.

FACTS AND PROCEEDINGS BELOW

Carlos Pacheco is an Air Traffic Controller Specialist with

the Federal Aviation Administration (“FAA”) in Corpus Christi,

Texas. In December 1999, the Corpus Christi Air Tower announced a

supervisor-level vacancy. Pacheco applied, but was ultimately

passed over for promotion by a less-experienced applicant.

Air Traffic employees who have bid on a vacancy are subject to

2

a two step selection process. In the first step, a human resources

personnel specialist from the Federal Aviation Administration (FAA)

Human Resource Management Division (HRMD) determines which of the

candidates is qualified for the position, and submits the names of

the qualified candidates to the selecting official, which in this

case was the Corpus Christi Facility manager, Warren Meehan. In

this case, HRMD forwarded seven names, including Pacheco’s, to

Meehan. In the second step, the selecting official chooses among

the candidates referred to him or her by HRMD.

Warren Meehan had recently implemented a promotion system

based, not on years of experience, but on twenty-three specified

employee attributes, such as initiative, loyalty and integrity.

The idea for this system came to him while at a 1999 manager’s

conference, at which the FAA Regional Manager had described the

twenty-three employee attributes that he deemed important in future

FAA leaders. Upon his return from the conference, Meehan decided

that all future promotions at Corpus Christi would consider these

factors.

Meehan’s new system was used for the first time in February

2000, for the Operations Supervisor December 1999 vacancy at the

Corpus Christi air tower, the promotion that is the subject of

1

Pacheco’s suit. The supervisors of all seven employee candidates

1

Since then Meehan’s new system was used only on one other

occasion.

3

whose names had been forwarded by HRMD were interviewed and asked

to rate their supervisee, on a scale of one to ten, in each of

these twenty-three attributes. The supervisor interviews were

conducted by a three-member panel, which included a Hispanic FAA

employee from outside the facility. After the interview results

were compiled, the panel reported them to Warren Meehan, who made

the final employment decision. Pacheco, who was ranked sixth out

the seven employees, was notified on February 28, 2000 that he did

not get the promotion.

Pacheco timely contacted an equal opportunity counselor,

alleging that he was passed over for promotion on the basis of his

race.2 Unsatisfied with the counselor’s advice, Pacheco timely

filed a formal administrative complaint on April 29, 2000 with the

Equal Opportunity Office (EEO) of his employer, the Department of

Transportation (DOT).3 On June 2, 2000, the DOT’s Office of Civil

2

A federal employee who is alleging unlawful discrimination

on the basis of race must contact a counselor within 45 calendar

days of the alleged discriminatory action, or, in the case of a

personnel action, within 45 calendar days of the effective date

of the action, before they may file a formal administrative

charge with their agency’s Equal Opportunity Office. See 42

U.S.C. § 2000e-16; 29 C.F.R. § 1614.105.

3

In this administrative charge, Pacheco asserts that he was

discriminated against because of his race, Hispanic, and that

“[t]he latest incident [on 2/28/2000]was non-selection

for a supervisor’s job opening at this facility. Once

again, the ‘good old boy’ was selected even though I

was more qualified having been with the agency since

1978. This being my seventh facility (my third level 4

facility). The incident before this occurred the

summer of 1999 when I had a bid at Orlando in the

4

Rights notified Pacheco by mail that it was accepting the following

claim for investigation: “Whether the FAA treated you differently,

based on your national origin (Hispanic), when you were not

selected for a supervisor’s job on February 28, 2000.” The letter

notified Pacheco that if he objected to the way his claim was

stated, he should contact the Office within five days. Pacheco did

not respond.

Unsatisfied with the EEO’s resolution of his complaint,

Pacheco filed this suit in the court below on November 14, 2002,

against Norman Mineta, Secretary of the DOT, pursuant to Title VII

of the Civil Rights Act of 1964, section 717(c).4 Pacheco’s suit

Southern Region. I was told by the chief that the

Southern Region doesn’t pick out of region. Three

months later, a white controller from our facility was

picked up for Atlanta (in the Southern Region). This

person hadn’t been here two years with the FAA. I

asked the chief about the aforesaid policy, he had no

comment. An incident before this occurred in 1998,

someone defaced a picture of my son on my mail tray (no

others were touched). I presented the incident to the

chief who in turn told me he would write me a formal

letter of apology. It must have slipped his mind

because I have yet to receive it.”

4

Only the Title VII claims against Secretary Mineta are at

issue here. However, the Title VII claims were not the only

claims brought by Pacheco in this suit, nor is Secretary Mineta

the only party he sued. Pacheco’s original complaint named

Secretary Mineta as a defendant for Title VII discrimination and

for the depravation of his First Amendment and Equal Protection

rights under the color of law, pursuant to § 1983. Pacheco then

amended his complaint to add as a defendant the manager of the

Corpus Christi facility in which he worked, Warren Meehan.

Pacheco then amended his complaint for a second time, specifying

that he was suing Secretary Mineta, in his official capacity,

under Title VII and was suing Warran Meehan, in his individual

5

alleges both disparate-treatment discrimination and

disparate-impact discrimination.5 The district court entered

summary judgment against Pacheco on his disparate-treatment claim,

and dismissed Pacheco’s disparate-impact claim for lack of subject

matter jurisdiction pursuant to Rule 12(b)(1). The court held that

Pacheco had failed to exhaust his administrative remedy before the

EEO with respect to his disparate-impact claim. Pacheco does not

appeal the summary judgment dismissal of his disparate-treatment

claim. His only issue before this court is whether he exhausted

his administrative remedies with respect to his disparate-impact

claim.

Despite the DOT’s summary judgment victory, the district

capacity, under § 1983. After the government reminded Pacheco’s

attorney that § 1983 applies to state, not federal, officials,

Pacheco asked the district court for leave to file a third

amended complaint, replacing references to “section 1983” with

“section 1981.” Citing Federal Rule of Civil Procedure 15(a),

the court noted that such an amendment would be “futile” because

Pacheco’s exclusive remedy for employment discrimination lies

under Title VII, against Secretary Mineta in his official

capacity. The court then dismissed with prejudice all claims

against Warren Meehan, a ruling that Pacheco does not appeal.

5

Pacheco’s disparate impact allegations are wholly

conclusional. His second amended (and final) complaint merely

alleges: “The application and selection process utilized by the

Defendant disparately impacts Plaintiff in that Hispanic

applicants in the Southwest Region of the Federal Aviation

Administration are disproportionately not selected for

supervisory and management positions as compared to Anglo

applicants.” There is no suggestion of in what manner the

process operated so as to disadvantage Hispanics nor is there

identified any particular feature or aspect of the process which

allegedly had such an effect on Hispanics generally or on Pacheco

in particular; nor does the complaint even allege what the

application and selection process consists of.

6

court, without explanation, ordered that each party bear its own

costs pursuant to Rule 54(d)(1). FED.R.CIV.P. 15(d)(1). The DOT

filed a motion for a new trial and to amend judgment on the ground

that the court erred in denying an award of costs to the prevailing

party without any explanation. The district court then ruled that

the losing party “brought this action in good faith” and

accordingly denied the DOT’s motion. The DOT has cross-appealed on

the issue of costs.

DISCUSSION

I. Exhaustion of the Disparate-Impact Claim

Pacheco appeals the district court’s Rule 12(b)(1) dismissal

of his disparate-impact claim, arguing that he did, in fact,

exhaust his administrative remedies before the EEO. Because we

find that the scope of Pacheco’s administrative charge is too

narrow to have exhausted a claim for disparate-impact

discrimination, we affirm.

A. Disparate Impact versus Disparate Treatment

Title VII creates a federal cause of action for two largely

separate theories of discrimination, disparate treatment and

disparate impact. International Brotherhood of Teamsters v.

United States, 97 S.Ct. 1843, 1854 n.15 (1977). Disparate-

treatment discrimination addresses employment actions that treat

an employee worse than others based on the employee’s race,

color, religion, sex, or national origin. In such disparate-

7

treatment cases, proof and finding of discriminatory motive is

required. Id.

Disparate-impact discrimination, on the other hand,

addresses employment practices or policies that are facially

neutral in their treatment of these protected groups, but, in

fact, have a disproportionately adverse effect on such a

protected group. Hebert v. Monsanto, 682 F.2d 1111, 1116 (5th

Cir. 1982). In disparate-impact cases, proof or finding of

discriminatory motive is not required. Id. The defendant,

however, can rebut a prima facie showing of disparate impact by

proving that the challenged policy is a business necessity.

Griggs v. Duke Power Co., 91 S.Ct. 849, 853–54, (1973).

B. The Exhaustion Requirement

Section 717 of the Civil Rights Act of 1964, 42 U.S.C. §

2000e–16(c), permits most federal employees to seek relief from

proscribed discriminatory employment practices in Federal

District Court. As a precondition to seeking this judicial

relief, however, complaining employees must exhaust their

administrative remedies by filing a charge of discrimination with

the EEO division of their agency.6 Brown v. General Servs.

6

Instead of the EEO, private sector employees must file an

administrative charge with the Equal Employment Opportunity

Commission (EEOC). 42 U.S.C. § 2000e-(5)(b) (2005). Because the

presently relevant scope of the exhaustion requirement is the

same for both federal and private employees, we freely cite to

both federal and private-sector employment-discrimination cases

here. See Dollis v. Rubin, 77 F.3d 777, 781 (5th Cir. 1995)

8

Admin., 96 S.Ct. 1961, 1967–68 (1976); Martinez v. Dep’t. of U.S.

Army, 317 F.3d 511 (5th Cir. 2003); 29 C.F.R. § 1614.105–107

(2005). We review de novo a district court’s determination of

whether the exhaustion requirement is satisfied.7 Martinez, 317

(treating the scope-of-investigation question the same for both

private and public employees).

7

There is disagreement in this circuit on whether a Title-

VII prerequisite, such as exhaustion, is merely a prerequisite to

suit, and thus subject to waiver and estoppel, or whether it is a

requirement that implicates subject matter jurisdiction. The

Supreme Court has held that the EEOC or EEO filing deadlines are

not jurisdictional. Zipes v. Trans World Airlines, Inc., 102

S.Ct. 1127, 1133(1982); Irwin v. Dep't of Veterans Affairs, 111

S.Ct. 453, 457–58 (1990). See also Coke v. Gen. Adjustment

Bureau, 640 F.2d 584 (5th Cir. 1981) (en banc); Henderson v.

United States Veterans Admin., 790 F.2d 436, 440 (5th Cir. 1986).

However, the reasoning in Zipes, which cites our en banc holding

in Coke with approval, relies heavily on legislative history and

Supreme Court precedents that characterize the filing deadlines

as statutes of limitations. See, e.g., Henderson v. U.S.

Veterans Admin., 790 F.2d 436, 440 (5th Cir. 1986) (“The filing

deadlines are in the nature of statutes of limitations which are

subject to waiver, estoppel, and equitable tolling.”). Neither

the Supreme Court nor this court sitting en banc has ruled that

the exhaustion requirement is subject to waiver or estoppel, and

our panels are in disagreement over that question. Compare

Tolbert v. United States, 916 F.2d 245, 247 (5th Cir. 1990)

(“[I]t is the well-settled law of this circuit that each [Title

VII] requirement is a prerequisite to federal subject matter

jurisdiction.”) and Porter v. Adams, 639 F.2d 273, 276 (5th Cir.

1981) (“The exhaustion requirement ... is an absolute

prerequisite to suit”) and Randel v. Dep’t. of U.S. Navy, 157

F.3d 392, 395 (5th Cir. 1998) (“If the claimant fails to comply

with either of these [Title VII] requirements then the court is

deprived of jurisdiction over the case.”) with Young v. City of

Houston, Tex., 906 F.2d 177, 180 (5th Cir. 1990) (“A failure of

the EEOC prerequisite does not rob a court of jurisdiction.”) and

Fellows v. Universal Restaurants, Inc., 701 F.2d 447, 449 (5th

Cir. 1983) (“The basic two statutory requirements (although these

are not necessarily "jurisdictional") for a Title VII suit are .

. . .”). Because neither party has a winning waiver or estoppel

9

F.3d at 512; Randel v. Dep’t. of U.S. Navy, 157 F.3d 392, 395

(5th Cir. 1998).

The scope of the exhaustion requirement has been defined in

light of two competing Title VII policies that it furthers. On

the one hand, because “the provisions of Title VII were not

designed for the sophisticated,” and because most complaints are

initiated pro se, the scope of an EEOC complaint should be

construed liberally. Sanchez v. Standard Brands, Inc., 431 F.2d

455, 463 (5th Cir. 1970); Fellows v. Universal Restaurants, Inc.,

701 F.2d 447, 451 (5th Cir. 1983).8 On the other hand, a primary

purpose of Title VII is to trigger the investigatory and

conciliatory procedures of the EEOC, in attempt to achieve

non-judicial resolution of employment discrimination claims.

Id. at 466. Indeed, “[a] less exacting rule would also

circumvent the statutory scheme, since Title VII clearly

contemplates that no issue will be the subject of a civil action

until the EEOC has first had the opportunity to attempt to obtain

voluntary compliance.” Sanchez, 431 F.2d at 467. See also Ong

v. Cleland, 642 F.2d 316, 319 (9th Cir.1981) (“[a]llowing a

argument, we need not take sides in this dispute.

8

See also Pettway v. American Cast Iron Pipe Co., 411 F.2d

998, 1005 (5th Cir. 1969) ("an individual drafting his charge as

best he can without expert legal advice . . . a single, poor

ignorant employee with a grievance, not a sling shot in his hand,

faces a huge industrial employer in this modern day David and

Goliath confrontation.") (Brown, C.J.).

10

federal court complaint to proceed despite its loose ‘fit’ with

the administrative charge and investigation . . . is precluded if

it would circumvent . . . agency efforts to secure voluntary

compliance before a civil action is instituted.”). With that

balance in mind, this court interprets what is properly embraced

in review of a Title-VII claim somewhat broadly, not solely by

the scope of the administrative charge itself, but by the scope

of the EEOC investigation which “can reasonably be expected to

grow out of the charge of discrimination.” Sanchez, 431 F.2d at

466. We engage in fact-intensive analysis of the statement given

by the plaintiff in the administrative charge, and look slightly

beyond its four corners, to its substance rather than its label.

Fellows, 701 F.2d at 451; Fine v. GAF Chemical Corp., 995 F.2d

576, 578 (5th Cir. 1993); Ong, 642 F.2d at 319.9

So, for example, in Fellows, this court held that an entire

class of plaintiffs had exhausted their administrative remedies,

9

The administrative charge is construed “liberally,” see

Fellows, 701 F.2d at 451, but, at least for the most part, the

desired liberality is achieved by application of the rule that

courts will look beyond the scope of the charge’s language to the

scope of the EEO investigation which can reasonably be expected

to grow out of the charge. Furthermore, this liberal

construction applies even in cases brought against the federal

government, despite the Supreme Court’s admonition that Title

VII’s conditions on the waiver of sovereign immunity be strictly

construed. Compare Library of Congress v. Shaw, 106 S.Ct. 2957

(1986) (holding that Title VII conditions on waiver must be

strictly construed); with Irwin v. Dep't of Veteran Affairs, 111

S.Ct. 453, 457 (1990) (“[W]e must be careful not to assume the

authority to narrow the waiver that Congress intended . . . .”)

(citation omitted).

11

even though the administrative charge complained only of

individual discrimination. Fellows, 701 F.2d at 447. See also

Sanchez, 431 F.2d 455 (same). Later, in Gamble v. Birmingham

Southern Railroad Co., this court held that black railroad

workers who had filed an administrative charge complaining of

discrimination in promotions to conductor had also exhausted

their administrative remedies with respect to claims of

discrimination in promotions to higher supervisory positions.

514 F.2d 678 (5th Cir. 1975).

On the other hand, in Fine v. GAF Chemical Corp., this court

held that a plaintiff’s administrative remedies were not

exhausted with respect to an incident of sexual discrimination

because the incident sued upon was separate from the one raised

in her administrative charge. 995 F.2d 576, 577–78 (5th Cir.

1993). And, in Young v. City of Houston, this court held that a

sex discrimination claim had not been exhausted by the

plaintiff’s charge of race and age discrimination. 906 F.2d 177

(5th Cir. 1990).

This court has not faced a question on appeal like

Pacheco’s: whether a disparate-impact claim was exhausted by the

plaintiff’s administrative charge.10 Thus, we have yet to

10

The only exception is that we addressed this question in

one unpublished opinion. Stith v. Perot Systems Corp., 122 Fed.

Appx. 115 (5th Cir. 2005). However, because of the

fact-intensive nature of this analysis, Stith’s reasoning is too

12

consider what facts in an administrative charge might be

reasonably expected to trigger an EEO disparate-impact

investigation. However, other circuits, as well as some federal

district courts, have addressed the question.

For example, in Grace v. Bank of America, Judge Fitzwater

ruled that a plaintiff who filed an administrative charge of a

race-based firing did not exhaust her disparate-impact claim.

Grace v. Bank of America, No. Civ. A. 303CV 1294D, 2003 WL

23095993 (N.D. Tex. Dec. 23, 2003). In Grace, the plaintiff had

filed an administrative charge asserting that the bank

discriminated against her by terminating her employment. In

dismissing the plaintiff’s disparate-impact claim, the court

explained that “a claim for disparate impact is not ‘like or

related to’ the plaintiff’s EEOC charge nor could it reasonably

be expected to grow out of [it].” Id.

Judge Cote in the Southern District of New York issued a

similar ruling in Woodman v. WWOR-TV, holding that the

plaintiff’s administrative charge could be reasonably expected to

lead only to an investigation of age-based disparate treatment,

not age-related disparate impact. Woodman v. WWOR-TV, 293 F.

Supp. 2d 381, 390 (S.D.N.Y. 2003). In that case, the plaintiff

had filed an age-discrimination charge with the EEO alleging

that:

conclusory to be helpful here.

13

“[A]ll of my nine colleagues at BHC/WWOR who were fired,

except two, were over the age of 40. On the other hand, my

counterpart in Los Angeles, who is much younger, was not

fired. It seems, therefore, that age was a motivating

factor in my employment termination.”

Woodman, 293 F. Supp. 2d at 390. The court held that it was not

enough for the plaintiff to have alleged that other colleagues

were affected because she had failed to “identify a specific,

facially neutral employment practice.” Id. Furthermore, the

court reasoned that the plaintiff’s administrative charge had

complained of intentional age discrimination, a crucial element

in a disparate-treatment claim that is unnecessary in a

disparate-impact claim. Id.

In Gomes v. Avco, the Second Circuit held that the

plaintiff’s administrative charge had exhausted both a claim for

disparate-treatment and disparate-impact discrimination. 964

F.2d 1330, 1335 (2d Cir. 1992). There, plaintiff’s

administrative charge stated he was passed over for promotion

because of his Portuguese ancestry. He alleged that (1) he

applied for a promotion; (2) such promotions are governed by an

“eight-years experience” rule; (3) he arguably met this

eight-year experience requirement; (4) the promotion was given to

someone less qualified; and (5) he was the only Portuguese

employee in his job classification.

The court held that “[t]o be sure, this complaint most

naturally supports a claim of intentional discrimination . . .

14

nonetheless, once the EEOC investigated the case and found that

[the plaintiff] did not satisfy the eight year rule, it would

have been perfectly natural for the EEOC to question the

necessity of the eight year rule itself.” Id. at 1334. The court

reasoned that the plaintiff’s allegation that he was the only

Portuguese employee in his job classification would reasonably

lead the EEOC to consider disparate impact. Id. Furthermore,

the allegation that less-qualified people were promoted ahead of

him might lead the EEOC to question the business justification

for such a rule. Id. But most importantly, unlike Grace or

Woodman, the plaintiff in Gomes had identified a facially neutral

employment policy (the eight-year rule) that provided a

foundation for an EEO disparate-impact investigation. The court

recognized that the eight-year rule would have put the EEO on

notice of a possible disparate-impact claim, thus “an

investigation of [the plaintiff’s] disparate impact claim would

reasonably have flowed from an investigation of his disparate

treatment claim.” Id. at 1335.

C. Pacheco’s Administrative Charge

Pacheco’s administrative charge (see note 3, supra) lists

three incidents of discrimination:

(1) “The [February 28, 2000] incident was non-selection

for a supervisor’s job opening at this facility. Once

again, the "good old boy" was selected even though I was

more qualified having been in the agency since 1978. This

being my seventh facility (my third level 4 facility).”

15

(2) “The incident before this occurred the summer of 1999

when I had a bid at Orlando in the Southern Region. I was

told by the Chief that the Southern Region doesn’t pick out

of region. Three months later a white controller from our

facility was picked up for Atlanta(in the Southern Region).

This person hadn’t been here two years with the FAA. I

asked the Chief about the aforesaid policy, he had no

comment.”

(3) “An incident before this occurred in 1998, someone

defaced a picture of my son on my mail tray (no others were

touched). I presented the incident to the Chief who in turn

told me he would write me a formal letter of apology. It

must have slipped his mind because I have yet to receive

it.”

Only the first incident was accepted for investigation by

the EEOC. The second and third were rejected as time-barred.11

These two incidents (which are not the subject of the instant

suit) are relevant only to the extent that they provide context

to the first.

In reviewing the first incident, the question is whether a

disparate-impact investigation might reasonably be expected to

grow out of the facts that Pacheco did allege. In deciding this

question, a review of the prima facie case for disparate impact

11

According to Pacheco, the two earlier incidents occurred in

the Summer of 1999 and in 1998. His formal complaint with the

EEO is dated April 29, 2000. Generally, discrimination claims

alleging conduct that occurred more than 45 days before the

initiation of administrative action (contacting an EEO counselor)

are time barred in a subsequent action in federal court. 42

U.S.C. § 2000e-16; 29 C.F.R. § 1614.105. Furthermore, if the

complaint remains unresolved after counseling, the employee must

file a formal complaint with the EEO within 15 days of the last

counseling session. 29 C.F.R. § 1614.105(b); 29 C.F.R. §

1614.106(d).

16

is relevant. A disparate-impact plaintiff must show (1) a

facially neutral policy; (2) that, in fact, has a

disproportionately adverse effect on a protected class. Hebert,

682 F.2d at 1116. Furthermore, proof of discriminatory motive is

not required for disparate-impact claims. Id.

On its face, Pacheco’s administrative charge alleges none of

the elements of disparate impact. Instead, it is facially a

disparate-treatment claim, like those in Grace and Woodman,

alleging that he was singled out for intentional discrimination

because of his race. Pacheco complained that he was passed over

for promotion in favor of a “good old boy.”12 As the district

court below noted, this complaint “clearly supports claims for

unfair and intentional discrimination, but does not even suggest

claims under a disparate impact theory.”

In particular, we note that Pacheco’s administrative charge

fails to identify any neutral employment policy that would form

the basis of a disparate-impact claim. See Gomes,964 F.2d 1330,

12

Pacheco’s deposition testimony makes clear that his is a

complaint about intentional discrimination by his third-level

supervisor, Warren Meehan. When pressed for examples of this

discrimination, Pacheco said, “[I]t was just the way he acted

around me . . . I was just somebody that just happened to be

there and that he just had to contend with basically.” Pacheco

also remembered a racist joke that was told to him by Mr. Meehan

on a golf course.

Pacheco’s deposition also reflects that it was Meehan who

allegedly mislead him in 1999 by falsely telling him that the

Southern Region “doesn’t pick out of region” as asserted in this

administrative charge.

17

1335. A neutral employment policy is the cornerstone of any EEO

disparate-impact investigation, since the EEO must evaluate both

the policy’s effects on protected classes and any business

justifications for the policy.

Finally, we note that all three incidents mentioned in

Pacheco’s administrative charge are examples of disparate-

treatment discrimination. The two earlier incidents, where

Pacheco was allegedly lied to about the Southern Region’s hiring

policy and allegedly harassed by a co-worker who defaced a

picture of his son, though time barred, provide a context for

understanding Pacheco’s latest allegation. In his administrative

charge, Pacheco himself links all three incidents, suggesting

that they were part of a larger pattern of intentional

discrimination against him by the manager of the FAA’s Corpus

Christi facility.

To be clear, we do not require that a Title-VII plaintiff

check a certain box13 or recite a specific incantation to exhaust

his or her administrative remedies before the proper agency. See

Sanchez, 431 F.2d at 463–65. Nor do we require, for purposes of

exhaustion, that a plaintiff allege a prima face case before the

EEOC. See Id. Instead, the plaintiff’s administrative charge

will be read somewhat broadly, in a fact-specific inquiry into

13

Sanchez v. Standard Brands, Inc., 431 F.2d 455, 463 (5th

Cir. 1970) (“In the context of Title VII, no one—not even the

unschooled—should be boxed out”).

18

what EEOC investigations it can reasonably be expected to

trigger.

In this case, we hold that a disparate-impact investigation

could not reasonably have been expected to grow out of Pacheco’s

administrative charge because of the following matters taken

together: (1) it facially alleged disparate treatment; (2) it

identified no neutral employment policy; and (3) it complained of

past incidents of disparate treatment only.14 Accordingly, we

affirm the district court’s 12(b)(1) dismissal of Pacheco’s

disparate-impact claim.

II. Discovery

Because we hold that Pacheco did not exhaust his

administrative remedies with respect to his disparate-impact

claim, we need not decide whether, as Pacheco contends, the

district court abused its discretion by denying Pacheco certain

discovery on that claim. Nevertheless, we note that the record

indicates no such abuse of discretion. Atkinson v. Denton Pub.

Co., 84 F.3d 144, 147-48 (5th Cir. 1996) (reviewing for abuse of

discretion); Mayo v. Tri-Bell Indus., Inc., 787 F.2d 1007, 1012

(5th Cir. 1986) (declining to reverse trial court’s “discovery

rulings” unless they are “arbitrary or clearly unreasonable”).

14

Moreover, this is also supported by Pacheco’s statement on

the charge form that “I want to leave this hostile work

environment. A paid transfer to a facility of my choice, either

Orlando, Tampa, Pensacola or Jacksonville”, and by Pacheco’s

never having questioned DOT’s reasonable interpretation of the

charge as being only one of disparate treatment.

19

Not until this suit has Pacheco finally alleged, albeit in

only the most conclusory fashion, disparate-impact

discrimination. His complaint alleges that he was the victim not

only of intentional discrimination but also of a facially-neutral

promotion “application and selection process” with an adverse

impact on Hispanics.15

Pacheco was eliminated in the new configuration of the

second stage of the selection process which was used for the

first time in February 2000 in the promotion to fill the Corpus

Christi Operations Supervisor vacancy which Pacheco was denied.

According to Meehan’s affidavit, the process has been used only

one other time since, and there is no contrary evidence. Despite

this, Pacheco’s interrogatory requested the identity “of all

persons who have been selected or promoted into a supervisory or

management position in the southwest region of the FAA between

1995 and the present . . . [including] their race and national

origin.”

The information sought through this interrogatory would have

15

Pacheco also introduced a newspaper article from the San

Antonio Express News reporting a Department of Labor study that

acknowledged a statistical underrepresentation of Hispanics in

Federal Agencies. This article is not relevant to the exhaustion

question because it was not submitted to the EEO, but was

produced by Pacheco, after suit was filed in district court, in

response to discovery requests. Further, the study has only the

very slightest relevance to Pacheco’s disparate-impact claim,

since it reported underrepresentation in employment, not

promotions, and was a survey of the entire executive branch as a

whole, not merely the FAA or its Southwest Division.

20

been of limited relevance to Pacheco’s suit. Pacheco requested

the discovery of FAA employee-promotion data dating back to 1995,

five years before the policy of which he apparently complains was

implemented. More importantly, Pacheco requested this data for

the entire Southwest region,16 even though he never alleged

discrimination by anyone but the Manager of the FAA’s Corpus

Christi facility.17 Accordingly, even if Pacheco had exhausted

his administrative remedies with respect to his disparate-impact

claim, we would decline to hold that the district court abused

its discretion by denying Pacheco such broad, and largely

irrelevant, discovery. See, e.g., Atkinson, 84 F.3d at 147

(holding, in an age discrimination suit, that the district court

did not abuse its discretion by denying discovery of past

employee records because there was no nexus between the

plaintiff’s claim and the records that the plaintiff sought);

Conboy v. Edward D. Jones & Co., L.P., 140 Fed.Appx. 510, 516

(5th Cir. 2005) (unpublished).

II. Cross Appeal on Rule 54(d)

The DOT argues that, as a matter of law, the good faith of

the plaintiff is, by itself, an insufficient reason to defeat the

cost-shifting provision in Rule 54(d). This question is a matter

16

The Southwest region comprises 480 facilities in Arkansas,

Louisiana, New Mexico, Oklahoma, and Texas.

17

The FAA responded to Pacheco's discovery requests with an

affidavit, objecting that the production of this information for

the last eight years would be unduly burdensome.

21

of first impression in this court, but all circuits that have

expressly considered the question agree with the DOT’s position.

Rule 54(d)(1) of the Federal Rules of Civil Procedure

provides that “costs, other than attorneys’ fees shall be allowed

as of course to the prevailing party unless the district court

otherwise directs . . . .” FED.R.CIV.P. 54(d)(1). Because the

Rule authorizes the district court to deny the award, we review

that exercise of authority for abuse of discretion. Schwarz v.

Folloder, 767 F.2d 125, 131 (5th Cir.1985). Only when a clear

abuse of discretion is shown can an award of cost be overturned.

Kinnear-Weed Corp. v. Humble Oil and Refining Co., 441 F.2d 631,

637 (5th Cir.1971).

However, Rule 54(d)(1) contains a strong presumption that

the prevailing party will be awarded costs. Schwarz, 767 F.2d at

131. Indeed, this court has held that “the prevailing party is

prima facie entitled to costs,” and has described the denial of

costs as “in the nature of a penalty.” Schwarz, 767 F.2d at 131.

As a result of this cost-shifting presumption, the general

discretion conferred by Rule 54(d)(1) has been circumscribed by

the judicially-created condition that a court “may neither deny

nor reduce a prevailing party’s request for cost without first

articulating some good reason for doing so.” Schwarz, 767 F.2d at

131 (citation omitted); cf. Delta Air Lines, Inc. v. August, 101

S.Ct. 1146, 1151 n.14 (1981) (assuming that costs are denied to

22

the prevailing party “only when there would be an element of

injustice in a cost award”).

The Fifth Circuit has little case law addressing this issue,

but in other circuits, “[a] wide range of reasons have been

invoked to justify withholding costs from the prevailing party.”

10 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE §

2668, at 234 (1998). Among these are: (1) the losing party’s

limited financial resources; (2) misconduct by the prevailing

party; (3) close and difficult legal issues presented; (4)

substantial benefit conferred to the public; and (5) the

prevailing party’s enormous financial resources.18 Id. And,

according to Wright and Miller, courts also deny costs if “the

losing party prosecuted the action in good faith.” Id. at 238.

However, every case cited by Wright and Miller for this

proposition denies costs on the basis of both the losing party’s

good faith and some other one or more of the factors listed

above.

Every circuit to expressly address the question in a

published opinion—the Fourth, Sixth, Seventh, Ninth and Tenth—has

ruled that good faith, by itself, cannot defeat the operation of

Rule 54(d)(1). Teague v. Bakker, 35 F.3d 978, 996 (4th Cir.

1994) (“[T]he mere fact that a suit may have been brought in good

18

These reasons are enumerated only for the purpose of

exposition. We do not decide whether any of these is a

sufficient reason to deny costs.

23

faith is alone insufficient to warrant a denial of costs in favor

of a prevailing defendant”); Cherry v. Champion, 186 F.3d 442,

446 (4th Cir. 1999) (“[A] party’s good faith, standing alone, is

an insufficient basis for refusing to assess costs against that

party.”); White & White, Inc. v. American Hosp. Supply Corp., 786

F.2d 728, 731 (6th Cir. 1986) (“Good faith without more, however,

is an insufficient basis for denying costs to a prevailing

party”); Coyne-Delany v. Capital Development Board of Illinois,

717 F.2d 385, 390 (7th Cir. 1983) (“The losing party's good faith

and proper conduct of the litigation is not enough . . . .”);

National Information Services, Inc. v. TRW, Inc., 51 F.3d 1470,

1472-73 (9th Cir. 1995), overruled on other grounds by

Association of Mexican-American Educators v. State of California,

231 F.3d 572, 593 (9th Cir. 2000) (en banc) (overruling National

Information Systems but only to the extent it held that “only

misconduct may support the denial of costs to a prevailing

party”); AeroTech, Inc. v. Estes, 110 F.3d 1523, 1527 (10th Cir.

1997).

Here, even though the DOT was in all respects the prevailing

party, it has been denied costs by the district court.19 When

19

A dismissal with prejudice is tantamount to a judgment on

the merits and thus the prevailing party is entitled to costs.

Schwarz, 767 F.2d at 130–31. Furthermore, this court has held

that the more stringent Christiansburg standard, which used to

determine whether a defendant is a prevailing party for the

purpose of awarding attorneys’ fees under Title VII, does not

apply to an award of costs. Lewis v. NLRB, 750 F.2d 1266, 1279

24

the government pressed the court for a reason, which it was

required to give, the district court replied: “It is clear that

Plaintiff brought this action in good faith. He is represented

by an excellent lawyer who litigates in good faith. Under such

circumstances, each party should bear its own costs.”

Following our sister circuits, we hold that the losing

party’s good faith is alone insufficient to justify the denial of

costs to the prevailing party. All federal litigants, including

this plaintiff, have an obligation to bring suit in good faith.

FED.R.CIV.P. 11; WESTERN DISTRICT OF TEXAS LOCAL RULE AT-4, STANDARDS OF

PROFESSIONAL CONDUCT (adopting the standards of professional conduct

of the State Bar of Texas, including Rule 3.01, which requires

attorneys to bring suits in good faith). As the Ninth Circuit

has said, “It follows that noble intentions alone do not relieve

an unsuccessful litigant of the obligation under Rule 54(d) to

compensate his opponent for reasonable costs. ‘If the awarding

of costs could be thwarted every time the unsuccessful party is a

normal, average party and not a knave, Rule 54(d)(1) would have

little substance remaining.’” National Information Services,

Inc., supra, 51 F.3d at 1472-73.

The district court abused its discretion in denying costs to

the prevailing party on the basis of plaintiff’s good faith

alone. Out of respect for the district court’s statutory

(5th Cir. 1985).

25

discretion to shift costs, we vacate the award of costs and

remand for a re-determination of whether (or to what extent)

costs should be awarded to the prevailing party and, if not, the

reasons for that denial.

CONCLUSION

Because we hold that Pacheco failed to exhaust his

administrative remedies with respect to his claim for disparate-

impact discrimination, we affirm the district court’s Rule 12(b)(1)

dismissal of that claim. However, because the district court

abused the cost-shifting discretion granted to it under Rule

54(d)(1), we vacate the district court’s ruling on the award of

costs and remand for a re-determination of whether (or to what

extent) costs should be awarded to the prevailing party.

The judgment is AFFIRMED in all respects except as to costs;

the district court’s ruling as to costs is VACATED, and the cause

is REMANDED to the district court solely for a redetermination, not

inconsistent herewith, of whether (or to what extent) costs should

be awarded to the prevailing party.

26