Petition for Writ of Certiorari — Masciopinto v. Whatley

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OFFICE OF THE CLERK

No.

— eee —[— -

IN THE

Supreme Court of the United States

OcToreER TerRM, 1990

PAUL A. MASCIOPINTO,

Petitioner.

v.

MARIAN J. WHATLEY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Maurice J. McCartuy

Counsel of Record

ABRAMSON & FOX

One East Wacker Drive

Suite 3800

Chicago, Illinois 60601-2060

(312) 644-8500

Attorney for Petitioner

— —— — — - — — — — — — — —

Midwest Law Printing (o., Chicago WWI. (412) 321.0220

i

QUESTIONS PRESENTED

1. Whether, where the parties have stipulated that a

plaintiff's compensatory damages are limited to $1,210, and

where an offer of judgment in the amount of $5,000 has

been presented and refused, a prevailing defendant should

be entitled to recover costs under Fed.R.Civ.P. 68 as a

matter of sound public policy?

2. Whether the 1983 amendment to Fed.R.Civ.P. 11,

which allows a court to review and sanction offers intended

for tactical advantage rather than reasonable settlement.

constitutes a change of circumstances that requires a re-

evaluation of the holding in Delta Air Lines, Inc. v. Au

gust, 450 U.S. 346, 67 I. Ed 2d 287, 101 S. Ct. 1146 (1981),

i.e. that Fed.R.Civ.P. 68 does not apply if a plaintiff

recovers a judgment that it take nothing?

3. Whether a revision of this Court's holding that Fed.

R.Civ.P. 68 does not apply to take nothing judgments

would result in a greater number of settlements, the easing

of crowded court dockets, and savings to litigants and the

judicial system?

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED .................- i

TABLE OF AUTHORITIES ................. iv

Denn... 1

. .. . ... 2

STATUTES AND RULES INVOLVED ...... 2

STATEMENT OF THE CASE ............... 4

REASONS FOR THE ALLOWANCE

OF THE WRIT:

— Must Be Solved =, 7

Settlements Must Be Encouraged ......... s

Rule 68 Has Been Interpreted Too Restric-

TTT 8

A Revised View Of Rule 68 Is Consistent

With Other Federal Rules ............ 90

r

G . „„„„%/%/%/ ½ 10

™\jcbsonied one

Rule 68 Is Intended To Be Impartial ..... 12

A Of The Rule 68 Offer In This Case

ould Have Benefitted All Parties .... 13

A Change Of Circumstances Has Occurred.

Amended Rule 11 Can Be Used To Pre-

vent Or Sanction Predatory Offers .... 14

. UmUmt—“‘_O OiéOSOSOS;CCTCC

Rule 68 Can Be An I t Part of Civil Jus-

tice Expense And Reduction Plans 15

I ... 16

APPENDIX

APP.

PAGE

Order and Judgment of the Court of Appeals,

e 1

Minute Order, Findings of Fact, Conclusions of Law,

and Judgment of the District Court, March 30,

UA A 0˙ 01 00 cececes 8

Minute Order and Memorandum Opinion and Order

of the District Court, May 23, 1990 ....... 16

Minute Order of the District Court Amending the

May 23, 1990 Memorandum Opinion and Order,

en 20

iv

TABLE OF AUTHORITIES

Cases PAGE

Delta Air Lines Inc. v. August, 400 U.S. 346, 67

L.Ed.2d 287, 101 S. Ct. 1146 (1981) ........ 8

Grosvenor v. Brienen, 801 F. 2d 944 (7th Cir. 1986) .. 15

ae v. Euclid Manor Nursing Homes, Inc, 367

2d

ern. 12

Marek v. Chesny, 473 U.S. 1, 87 L. Ed. 2d 1, 105

, ͤ 12. 13

Pavelic & Le Flore v. Marvel Group, 493 U. S

107 L.Ed.2d 438, 110 S. Ct. 456 (1989) ..... 15

Statutes and Rules

. 2

c 2. 7

42 U.S.C. Sec. 2000e-A nl) 4

42 U.S.C. See. 2000-5 )))) 2.4

Public Law 101-650, Sec. 102 (App'd. 12190,

10C U.S. Cong. News, 1900) ꝙfcch 8

Public Law 101-650, Sec. 103 (App'd. 12/1/90;

10C U.S. Cong. News, 1900) nm.. 8

hhô·/ĩů ĩ 3, 4. 15. 16

JJ ED Sucaducudoantensascuueeetes ”

POO. GO ccasccevecdccucccescocseceses passim

In THE

Supreme Court of the United States

Kronen Term, 1990

PAUL A. MASCIOPINTO,

Petitioner,

V.

MARIAN J. WHATLEY.

Respondent.

=

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Paul A. Masciopinte (“Masciopinto”) respectfully peti-

tions for a writ of certiorari to review the judgment of

the United States Court of Appeals for the Seventh Cir-

cuit in this case.

OPINIONS BELOW

The opinion of the Court of Appeals for the Seventh

Circuit is unreported. It is reprinted as App. 1-7 hereto.

The opinions of the United States District Court for the

Northern District of Illinois are unreported. The judg-

ment and the opinions are reprinted as App. 815 and

16-20 hereto.

—2—

JURISDICTION

Jurisdiction in the District Court was founded on Title

42 United States Code, Section 2000e-K(f\3). Jurisdiction

in the Court of Appeals was founded on Title 28 United

States Code, Section 1291. The opinion and judgment of the

Court of Appeals for the Seventh Circuit were entered on

December 7, 1990. No rehearing was sought. This Court's

jurisdiction is invoked under Title 28 United States Code,

Section 1254(1).

STATUTES AND RULES INVOLVED

Rule 68 of the Federal Rules * Civil Procedure reads

as follows:

Offer of Judgment

At any time more than 10 days before the trial be-

gins, a party defending against a claim may serve

upon the adverse party an offer to allow judgment to

— taken against the defending party for the money

a or to the effect in the offer,

wit costs then accrued. If wi 10 days after the

service of the offer the adverse * serves written

notice that the offer is accepted, either party may

then file the offer and notice of acceptance together

22 An oiler Sit aunty

8 enter nt. er not

deemed — and evidence thereof is not admis-

sible except in a proceeding to determine costs. If

the judgment finally obtained by the offeree is not

more favorable than the offer, the offeree must pay

the costs incurred after the making of the offer.

*

erna

4 t offer. ility of one

party to another has been determined by verdict or

order or t, amount or extent of the

8

z

as follows:

of a

represented by an shall be by at least

one attorney of record in the

name, whose address shall be stated. A party who is

r erified or

accompanied by affida rule in equity that the

averments of an answer under oath must be overcome

8 IAA, 8

corroborating circumstances

The signature of an attorney or party constitutes a

certificate by the signer that the r has read the

pleading, motion, or other paper; that to the best of

the signer’s knowledge, information, and belief formed

after reasonable inquiry it is well grounded in fact

and is warranted by existing law or a good faith ar-

gument for the extension, modification, or reversal

of existing law, and that it is not interposed for any

improper purpose, such as to harass or to cause un-

delay or needless increase in the cost of

necessary

litigation. If a pleading, motion, or other paper is not

0

fe

;

f

+f

72

i

nis

4.

1

iif

17

;

2

i

STATEMENT OF THE CASE

CONTAINING FACTS MATERIAL

TO CONSIDERATION OF

THE QUESTIONS PRESENTED

The plaintiff-respondent Marian J. Whatley (“Whatley”),

brought suit under Title 42 United States Code, Section

2000e-2(aX 1), basing jurisdiction on Section A -NH of

the same Title. Her complaint, filed in the United States

District Court for the Northern District of Illinois on April

14, 1989, consisted of four counts. Count I alleged discharge

from employment because of plaintiff's sex. Count II al-

leged a pendent claim for discharge in retaliation for fil-

ing a worker's compensation claim. Count III alleged a

pendent claim for slander. Count IV alleged a pendent

claim for intentional infliction of emotional distress. The

complaint named as defendants the corporate employer

(which is a grocery store in Elmwood Park, Illinois) and

four individuals who have ownership interests in the gro-

cery store. The complaint also named as a defendant the

petitioner, Paul Masciopinto (“Masciopinto”), who is not

—5—

an owner but was the head butcher at the store and

Whatley’s supervisor. Whatley was a meat wrapper.

ola

After the rulings on the motions, all defendants, includ-

ing Masciopinto, served an “Offer of Judgment Pursuant

To Rule 68” (the “Offer’’) upon the attorney for Whatley.

The Offer was in the non-allocated sum of $5,000 and was

for all claims including costs and attorney fees. The Offer

was refused.

The case proceeded through the pretrial steps and even-

tually Mrs. Whatley amended her complaint to focus on

sexual harassment rather than dismissal. She had been

employed in another job very quickly and never sought

reinstatement. Masciopinto again answered and raised ju-

risdictional and other defenses.

On February 2, 1990 the Final Pretrial Order was en-

tered. The stipulated and itemized compensatory damages

of Whatley under Title VII are shown in the Final Pre-

trial Order to be the sum of $1,210. Plaintiff sought more

than $300,000 in compensatory and punitive damages on

the pendent counts.

The case proceeded to a combined trial. A jury was em-

paneled as to (pendent) Counts II, III and IV. At the

close of plaintiff's case a directed verdict of not guilty was

entered for all defendants as to Counts II and III, and

as to two of the owner/defendants as to Count IV. The

case was submitted to the jury on the balance of Count

IV. The jury was given a punitive damage instruction and

a punitive damage verdict form. The jury, however, re-

turned a not guilty verdict as to the remaining defendants,

including Masciopinto. Neither compensatory nor punitive

damages were awarded.

The District Court thereafter heard separate final argu-

ments as to Count I (the Title VII claim) and entered

judgment. The court found in favor of all defendants, and

against plaintiff, and entered judgment accordingly on March

30, 1990.

1

All defendants had made a Rule 68 Offer of $5,000 for

all claims, including all costs and fees, in December, 1989,

which offer was refused. After the judgment in their favor

all the defendants moved for an award of attorneys’ fees

and costs to them under Rule 68 Fed.R.Civ.P. and Title

42 United States Code, Section 2000e-K(k). Masciopinto's

attorney filed a detailed and itemized affidavit showing

fees of $13,512 and other costs of $725 occurring after re-

fusal of the Offer. The District Court denied the motion.

An appeal was taken from the denial of fees and costs

to Paul Masciopinto. The other defendants, who were rep-

resented by separate counsel throughout the proceedings,

did not appeal. Jurisdiction of the appeal was authorized

by Title 28 United States Code, Section 1291. The Seventh

Circuit Court of Appeals affirmed. The unpublished opin-

ions of the Court of Appeals (App. 1-7) and of the District

Court (App. 8-15 and 16-20) are attached hereto.

REASONS FOR THE

ALLOWANCE OF THE WRIT

The Increasing Burdens Of Litigation Create

Problems That Must Be Solved

There can be no doubt that the ever-increasing volume

of cases and the burgeoning expenses of litigation are pul-

verizing the civil justice system on every level—federal,

state and local. Recourse to litigation seems to be increas-

ing in popularity at the expense of out-of-court resolutions

of problems. It is also true that arbitration and alternative

dispute resolution are growing; but those mechanisms, by

and large, handle contract disputes among relatively so-

phisticated disputants. The civil justice system is the only

_™

available method for the great bulk of contested matters.

The Congressional findings in the Judicial Improvements

Act of 1990 (Public Law 101-650, sec. 102; approved Dec.

1, 1990, 100 U. S. Cong. News, 1990) and the mandate for

development and implementation of civil justice expense

and delay reduction plans (ibid., sec. 103) provide compelling

evidence of the facts.

Settlements Must Be Encouraged

It is also beyond cavil that compromise and settlement

are indispensable. Were it not for settlements, the prob-

lems in the courts would be exponentially worse. Yet, the

single tool in the Federal Rules of Civil Procedure work-

shop that is specifically designed to achieve settlements

is virtually unused: Rule 68. This lack of use has occurred

because the extant decision of this Court has had the ef

fect of discouraging lawyers and judges from its use.

Rule 68 Has Been Interpreted

Too Restrictively

In 1981 this Court decided that the phrase “. . judg-

ment finally obtained by the offeree . . * in Rule 68 Fed.

R.Civ.P. can only mean an affirmative judgment in favor

of that party. Delta Air Lines, Inc. v. August, 400 US.

346, 67 L.Ed.2d 287, 101 S. Ct. 1146. The facts of that

employment discrimination case were particularly harsh.

The defendant served to plaintiff a formal offer of judg-

ment in the amount of $450. The plaintiff had sought, inter

alia, reinstatement and $20,000 in back pay. The plaintiff

refused the offer, went to trial and lost. The cost-shifting

of Rule 68 would have entitled a large corporate defen-

dant to recover its attorneys’ fees and costs from an out-

of-work individual. The District Court, clearly wanting to

—9—

avoid that result, held that the 8450 offer had not been

made in good faith”, while the Court of Appeals found

it was not a reasonable“ settlement offer. This Court,

while affirming, rejected both premises and ruled instead

that the “plain language of Rule 68 did not allow appli-

cation to a judgment where the offeree took nothing. It

is clear from the text of the opinion, however, that this

Court had serious reservations about the size of the offer

in relation to the injury suffered: witness references in

the opinion to “meaningless act”; nominal settlement of-

fer”; “token offer”; “sham offers“; utterly frivolous set-

tlement offer’; nominal settlement offers“; settlement

offer of one penny“. And yet the Court did not want to

engraft a reasonableness quotient onto the Rule.

A Revised View Of Rule 68 Is Consistent

With Other Federal Rules

Faced in Delta Air Lines with an example of what it

apparently considered overreaching by a defendant, the

five justice majority found that the use of “judgment”

in the Rule 68 phrase “judgment finally obtained by the

offeree . . not more favorable than the offer“ did not

apply to any judgment entered in favor of a defendant,

but only to a situation where a plaintiff recovered a judg-

ment, in favor of plaintiff, but in an amount less than the

offer.

As Justice (now Chief Justice) Rehnquist noted in dis-

sent, this “plain language” interpretation of “judgment”

is completely at odds with the definition of the term in

Rule 54(a) of the Federal Rules of Civil Procedure. In that

provision, “judgment” is defined to include a “decree and

any order from which an appeal lies.“ He then wrote:

—10—

Unquestionably, ndent “obtained” an “order from

which an appeal lies when the District Court entered

its judgment in this case. Certainly, respondent did

not subscribe to the Court’s reasoning use she

immediately sought review in the Court of Appeals

of the “‘ju nt” which had been entered against

her. Rule 68, when construed to include a traditional

“take nothing” judgment, see, Appendix to Fed. Rules

Civ. Proc. Forms 31 and 32, as well as a judgment

in favor of the plaintiff but less than the amount of

the offer, thus fits with the remaining parts of the

Federal Rules of Civil Procedure pertaining to judg-

ments and orders in a manner in which the drafters

of the Rule surely must have intended. To circum-

scribe Rule 68 in the manner in which the Court does

is to virtually cut it adrift from the remaining related

portions of the Federal Rules of Civil Procedure, a con-

struction which could be justified only by the strong-

est considerations of history and policy. Our cases «

not support the proposition that such a construction

will never be given to a rule or statute, but they do

indicate that only the strongest support in the legisla-

tive history warrants such a result. Chemehuevi Tribe

of Indians v. Federal Power Commission (Citation

omitted) Delta Air Lines, 450 U.S. at 371, 67 L.Ed.2d

at 304, 101 S. Ct. at 1159.

The Present Interpretation Of Rule 68

Does Not Encourage

Settlements In Problem Cases

The second reason adduced in Delta Air Lines was an

interpretation of the purpose of Rule 68. Finding that the

Rule was intended to encourage the settlement of litiga-

tion, the majority was concerned that defendants would

be given the power to deprive district judges of discre-

tion with respect to cost awards by making a penny offer,

thereby depriving plaintiffs of bargaining leverage. How-

ever, as the dissent noted, a rule designed to encourage

settlement should require plaintiff as well as defendant

to take a long hard look at his “hole card”.

The dissent agreed that Rule 68 is intended to facilitate

settlement but pointed out that the majority's restriction

of the use of Rule 68 to cases in which a judgment is en-

tered in favor of the plaintiff for an amount less than the

defendant's offer results in an anomaly: a plaintiff with a

case that is marginal to the point of frivolity has license to

run a bluff, while a plaintiff with potential winning cards

has to face a significant penalty if its hand is strong, but

not as strong as it thinks. As the Delta Air Lines dissent

noted, this can result in win-nothing cases clogging the

courts at no cost to those plaintiffs, while plaintiffs with

cards of some merit are burdened with significant expenses

if they win less than the amount offered by defendants.

The Present Interpretation Of Rule 68

Has Unintended Results

The other anomalies created by the ruling in Delta Air

Lines are abundant. The clearest example would be the

predicament of a plaintiff who had rejected an offer (whether

sham or not is irrelevant) and then succeeds in securing

a moral victory in the nature of a nominal judgment. Such

a plaintiff would be far worse off by having achieved a

moral victory rather than abject defeat. Less obvious, but

just as real a problem, is the reluctance of a District

Judge to award a moral victory, or even a small award,

out of concern that an offer of judgment (whether sham

or not is irrelevant) had been made and refused. What

has happened is that the opinion in Delta Air Lines has

simply rendered Rule 68 too dangerous and ambiguous

for regular use.

*

A startling example of one of these unintended results

can be seen in Hopper v. Euclid Manor Nursing Homes,

Inc, 867 F.2d 291 (6th Cir. 1989). In that case the District

Judge improperly vacated a nominal judgment for plaintiff

in order to invoke the rule of Delta Air Lines rather than

award costs to the defendant. The Sixth Circuit reversed

and remanded the case “for a determination of appropri-

ate costs under Rule 68”, Hopper, 867 F.2d at 296. The

Hopper case (supra) held that the correct precedent for

the District Judge to have applied was the only other re-

cent Rule 68 case decided by this Court, Marek v. Chesny,

473 U.S. 1, 87 L.Ed2d 1, 105 S. Ct. 3012 (1985). It is

fair to speculate that the District Judge in Hopper, now

familiar with the rule of Delta Air Lines, would be very

reluctant in the future to award nominal judgments or

moral victories. This surely is not a paradigm for our jus-

tice system.

Rule 68 Is Intended To Be Impartial

The decision in Marek v. Chesny, 473 U.S. 1, 87 L.Ed.2d

1, 105 S. Ct. 3012 (1985), recognizes that Rule 68 can be

an important factor in encouraging settlements. The Court

there made it clear that Rule 68 is intended to operate im-

partially. The Comt, ö . Justice Burger, wrote:

Merely sub ts plaintiffs to the settle-

ment provision Rule ‘does not curtail their ac-

cess to the courts or significantly deter them from

bringing suit. 11 of Rule 68 will serve as a

disincentive for s attorney to continue liti-

gation after the defendant makes a settlement offer

. Moreover, Rule 68's policy of encouraging set-

tlements is neutral, favoring neither tiffs nor de-

fendants; it expresses a clear poli favoring settle-

ment of all lawsuits. Civil rights plaintiffs—along with

other plaintiffs—who reject an offer more favorable

= =

than what is thereafter recovered at trial will not re-

cover attorney’s fees for services performed after the

offer is rejected. But, since the Rule is neutral, many

civil rights plaintiffs will benefit from the offers of

settlement encouraged by Rule 68. Some plaintiffs will

receive compensation in settlement where, on trial,

they might not have recovered, or would have recov-

ered less than what was offered. And, even for those

who would prevail at trial, settlement will provide

them with compensation at an earlier date without

the burdens, stress, and time of litigation. In short,

settlements rather than litigation will serve the in-

terests of plaintiffs as well as defendants. Marek, 473

U.S. at 10, 87 L.Ed.2d at 10, 105 S. Ct. at 3017.

In summary, the holding of Delta Air Lines has prac-

tical effects that are very undesirable; and yet it does not

preclude sham offers that are intended solely for tactical

advantage or psychological effect because it does not ad-

dress the nature and amount of the offer at all. The only

way to cure the unscrupulous use of Rule 68 to achieve

an unfair advantage for a defendant is to focus on the

content of the offer itself. But the other side of the coin

is just as important. The only way to cure abject obsti-

nacy, or self-righteousness, or spiteful behavior by a plain-

tiff is to make sure there is a downside risk. At present

Rule 68 does not serve the full function of which it is ca-

pable since it does not focus on the terms of the offer.

It provides no downside risk in the weakest cases but

only in the middling cases.

Acceptance Of The Rule 68

Offer In This Case

Would Have Benefitted All Parties

The amount offered in the instant case was neither a

sham nor an unrealistic offer. It exceeded by 300% the

stipulated Title VII compensatory damages. It was made

*

in good faith and in accordance with the requirements of

the Rule. The Offer was made after discovery and after

Masciopinto had done everything possible to get the Dis-

trict Judge to dismiss the case without further expendi-

tures of time. Masciopinto is simply a working man. He

is not a moneyed corporation, nor even an owner of the

food store. It was obvious that he had been forced by

his employer to get his own attorney. He was kept in

the case only by the increasingly expansive reading that

is being given to the definition of “employer” in Title VII

litigation. To deny Masciopinto costs (including attorneys’

fees) under Rule 68 would be both illogical and unjust, and

would leave the Rule in a confusing and ineffective pos-

ture. Had Whatley prevailed to the extent of one dollar,

or even one cent, under the Delta Air Lines holding she

would have been liable for costs under Rule 68. Had no

Rule 68 offer been made, she and her attorney would

surely apply for fees regardless of how nominal the judg-

ment might be and despite a minuscule principal award.

She should have taken the offer and saved Masciopinto

and the other defendants, as well as the District Court,

the substantial expenses of time and money that were in-

curred after her refusal. She sought a windfall rather than

a reasonable adjustment of the dispute. But Whatley is

hardly alone in that attitude. At present there is every

incentive for a plaintiff to pursue litigation to the very

end, especially if there is a possibility of punitive damages

or enhanced damages or fees (e.g. “lodestar” fees). There

simply are no disincentives at all.

A Change Of Circumstances Has Occurred.

Amended Rule 11 Can Be Used To

Prevent Or Sanction Predatory Offers

At the time the Delta Air Lines opinion was written

in 1981, there was no effective provision in the civil rules

==

to dissect the content of an offer of judgment and subject

it to careful analysis. In 1983, however, the amendment

of Fed.R.Civ.P. 11 gave to the parties and judges that

ability. While this Court has never ruled on whether or

not an offer of judgment must be in writing and signed

by an attorney, it seems clear that the requirements in

Rule 68 of serving and filing the offer necessarily imply

that the offer must be written. Cf. Grosvenor v. Brienen,

801 F.2d 944, 948 (7th Cir. 1986). Likewise the provision in

Fed.R.Civ.P. 11 that “{elvery pleading, motion, and other

paper .. shall be signed by at least one attorney of rec-

ord . . surely means that an offer of judgment must be

signed by counsel. Thus, if relief under Rule 68 becomes

an issue, the court has the power to analyze the content

of the offer to determine whether or not it, for instance,

was interposed for an “improper purpose” in the context

of the facts and the law pertinent to the particular case.

An “appropriate sanction” for a predatory offer could be

denial of costs and fees to the represented party, or could

be more comprehensive depending upon the extent of the

individual attorney's breach of the personal and non-dele-

gable responsibility of Rule 11. Cf. Pavelic & LeFlore v.

Marvel Group, 493 U.S. . 107 L.Ed.2d 438, 110 8.

Ct. 456. (1989).

Rule 68 Can Be An Important Part

Of Civil Justice

Expense And Delay Reduction Plans

No one can accurately predict how well a settlement

procedure will work. Rule 68, however, has proved to

have little impact as now structured and interpreted. If

the “take nothing” judgment were reinstated to Rule 68

coverage, that action alone would send a very strong mes

sage to the bench and bar that Rule 68 is intended to

be used and will be enforced. Then, if other settlement

x=

attempts were not fruitful, a conscientious lawyer, who

had learned the facts of the case and the applicable law

as required by Rule 11, could help the judicial system by

making a well grounded and warranted offer of judgment.

A litigant who received such an offer would have to con-

sult carefully before rejecting it. Very likely the number

of settlements would increase. Most importantly, the very

marginal cases would no longer be in a “shoot the moon”

posture since there would be a downside risk.

CONCLUSION

For the special and important reasons set forth herein,

this petition for a writ of certiorari should be granted and

the case should be set for briefing and oral argument.

Respectfully submitted,

Mavrice J. McCartuy

Counsel of Record

ABRAMSON & FOX

One East Wacker Drive

Suite 3800

Chicago, Illinois 60601-2060

(312) 644-8500

Attorney for Petitioner

APPENDIX

App. I

[Unpublished Order Not To Be Cited

Per Circuit Rule @]

IN THE

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, IIlinois 60604

Argued November 13, 1990

Decided December 7, 1990

Before

Hon. Wittiam J. Baver, Chief Judge

Hon. Watter J. Cumines, Cirewit Judge

Hon. Frank H. Easternroox, Cirewit Judge

MARIAN J. WHATLEY,

Plaintiff- Appellee,

No. 90-2406 v.

PAUL MASCIOPINTO,

Defendant-Appellant.

ORDER

Marian Whatley filed suit in federal court against her

former employer, Super Low Food Center, its owners.

and her former supervisor for sexual harassment in viola-

App. 2

tion of Title VII and for intentional infliction of emotional

distress. Before the trial, the defendants offered Whatley

a settlement of $5,000 pursuant to Federal Rule of Civil

Procedure 68. Whatley refused the offer. Subsequently,

a jury returned a verdict in favor of the defendants on

the intentional infliction of emotional distress claim and

the court entered judgment in favor of the defendants on

the Title VII claim. The defendants then moved for costs,

including attorney's fees, pursuant to Rule 68 and 42 U.S.C.

§ 2000e-i(k). The district court denied the motion. Only

defendant Masciopinto appeals, claiming that the district

court erred in not allowing that recovery.

I.

A. Costs Pursuant to Rule 68

Federal Rule of Civil Procedure 68 states: “If the judg:

ment finally obtained by the offeree is not more favorable

than the offer, the offeree must pay the costs incurred

after the making of the offer.” The Supreme Court has

analyzed the plain language of Rule 68 and concluded that

the rule applies only to the case in which a plaintiff obtains

a judgment that is less favorable than the defendant's set.

tlement offer. Delta Air Lines, Inc. v. August, 450 U.S.

346, 352 (1981). In Delta the defendants prevailed and

moved for costs pursuant to Rule 68. The plaintiff refused

a settlement offer that the Seventh Circuit found had not

been made in good faith. The Supreme Court stated that

because Rule 68 does not apply when the judgment is

entered in favor of the defendant, it was not necessary

“to read a reasonableness requirement into the rule.” Jd.

at 355.

Rule 68 alters the presumption of Federal Rule of Civil

Procedure 54(d), id. at 351, which provides that “lelxcept

App. 3

when express provision therefor is made either in a stat-

ute of the United States or in these rules, costs shall be

allowed as of course to the prevailing party unless the

court otherwise directs; . . The Delta Court reasoned

that the purpose behind Rule 68 is to encourage settle-

ments, and because a prevailing party presumably can re-

cover costs under Rule 54(d), Rule 68 places an added

burden on a plaintiff to whom a settlement offer has been

made. Id. at 352. The Court emphasized that where a de-

fendant prevails, the trial judge still retains his Rule 54(d)

discretion. Id. at 354. Masciopinto did not move for costs

under Rule 54(d), perhaps because 42 U.S.C. § 2000e-5(k)

precluded such recovery. Id. at 355-356 n.15.

We are bound by Delta, and under that authority a de-

fendant is not entitled to recover his costs. Therefore, the

denial of costs to Masciopinto was correct.

B. Attorney's Fees Pursuant to 42 U.S.C. S 20000-5(k)

At the oral argument, we speculated that defendant may

have waived his claim to attorney's fees under 42 U.S.C.

§ 2000e-K(k) because of “a jurisdictionally defective [1]

Charge of Discrimination and [2] Notice of Right to Sue.”

However, his brief did state this as an issue and it and

related matters were discussed in some detail in the argu-

ment section of his brief (Br. i and 12). In addition, the

subject was addressed in plaintiff's brief (at pp. 4-7), there-

by waiving any possible waiver argument. Shelton v.

Director, OWCP, 899 F.2d 690, 692 (7th Cir. 1990). The

reply brief considered this matter as well (at pp. 4-7).

Section 2000e-Kk) allows a prevailing party in a Title

VII case to recover attorney's fees, 42 U.S.C. § 2000e-54k),

when a court finds a plaintiffs claim “frivolous, unreason-

able, or groundless.” Christianburg Garment Co. v. Equal

App. 4

Employment Opportunity Commission, 434 U.S. 412, 422

(1978). In deciding the attorney's fees issue under N AAk.

the district court found that Whatley’s claim was not friv-

olous. R. Item 124 at 3.

Masciopinto argues that he is entitled to attorney's fees

under § 2000e-K(k), not because Whatley’s claim itself was

frivolous, but because it was frivolous to have added him

as a defendant in view of so-called “jurisdictional” defects.

His reasoning is that not only was he forced to defend

a suit that he won even after making a good faith offer

of settlement, he incurred legal expenses that he should

never have had to incur because he was wrongly joined in

ments can be grounds for Rule 11 sanctions, Dubisky v.

Owens, S49 F.2d 1034 (7th Cir. 1988), such a complaint

should also be considered frivolous for purposes of award-

ing a prevailing party attorney's fees.

Masciopinto filed a motion to dismiss Whatley s complaint

as to him on three supposedly jurisdictional grounds. The

first was that he was not named in the Charge of Dis-

crimination.’ His argument is that a civil action may be

brought only against the respondent named in the charge.

Eggleston v. Chicago Journeymen Plumbers, Ete., 657 F 2d

890, 905 (7th Cir. 1981). The only respondent named in

Whatley’s charge was Super Low Foods, the employer.

This leads to his second ground, that he was not the plain-

tiffs employer. His argument was that he had no power

to hire or set salaries and he was not in charge of the

App. 5

overall operation of the store. His third ground was that

Whatley’s pendent state claims of intentional infliction of

emotional distress has no independent basis of federal

jurisdiction.

The district court addressed each of these grounds in

its opinion denying the motion (R. Item 41): 1) Masciopinto

was named in the charge as Whatley’s “Department Man-

ager” and had adequate notice of the charge during two

interviews conducted by the EEOC, Schnellbaecher v.

Baskin Clothing Co., 887 F.2d 124, 126-27 (7th Cir. 1989)

(exception to the general rule that a party must be named

in the charge exists where the “unnamed party had ade-

quate notice of the charge under circumstances where the

party has been given the opportunity to participate in con-

ciliation proceedings aimed at voluntary compliance“; 2)

Deposition testimony by both Masciopinto and his co-

defendants established that he was Whatley’s supervisor;

and 3) Pendent jurisdiction existed under the guidelines

of United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966).

Order, November 6, 1989. Masciopinto then asked for re-

consideration and a jurisdictional hearing. The district

court gave Whatley an opportunity to respond with affi-

davits before denying Masciopinto’s motion to reconsider.

The court found the affidavits sufficient to prove that

Masciopinto had notice of the EEOC charge.

Masciopinto contends that the district court wrongly

denied him a hearing on jurisdiction. He interprets our

holding in Crawford v. United States as requiring an evi-

dentiary hearing when a defendant requests one. 796 F.2d

924, 928 (7th Cir. 1986). His reliance on Crawford is mis-

placed. Crawford speaks of “documents that might obviate

the need for oral testimony,” id., and states that (often

the only evidence necessary to resolve a jurisdictional is-

sue is documentary.” Id. at 928-929. Masciopinto adds that

App. 6

he was denied an opportunity to file a counter-affidavit

because the district court ruled on his motion to dismiss

on the day after the plaintiff's affidavit was filed and served

by mail. However, there has been no showing that the

result would have otherwise been different.

II.

Masciopinto is asking this Court to reject the Supreme

Court's clear pronouncement in Delta that Rule 68 sim

ply does not apply when defendants prevail. We are bound

by the Supreme Court's interpretation of Rule 68 and

therefore the district court’s denial of Masciopinto’s costs

under Rule 68 was appropriate. Because the district judge

did not erroneously deny the motion to dismiss and did

not abuse her discretion in finding that this Title VII suit

against Masciopinto was not frivolous, the denial of attor-

ney’s fees under 42 U.S.C. § 2000e-K(k) was also proper.

App. 7

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

JUDGMENT—WITH ORAL ARGUMENT

Date: December 7, 1990

BEFORE:

Honorable William J. Bauer, Chief Judge

Honorable Walter J. Cummings, Circuit Judge

Honorable Frank H. Easterbrook, Circuit Judge

No. 90-2406

MARIAN J. WHATLEY,

Plaintiff-Appellee,

V.

PAUL MASCIOPINTO,

Deſendant-Appellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division

No. 89 C 2976, Judge Suzanne Conlon

This cause was heard on the record from the above

mentioned district court, and was argued by counsel.

On consideration whereof, IT IS ORDERED AND AD.

JUDGED by this Court that the District Court's judg-

ment denying costs under Rule 68 and 42 U.S.C. sec.

2000e-Kk) in this case appealed from be, and the same

is hereby, AFFIRMED, with costs, in accordance with

the order of this Court entered this date.

App. 8

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Case Number: 89 C 2976 Date: March 30, 1990

Name of Assigned Judge: SUZANNE B. CONLON

Case Title: Marian J. Whatley v.

Super Low Food Center, Inc., et al.

DOCKET ENTRY:

(1) & Judgment is entered as follows:

(2) [Other docket entry:]

Judgment is entered for defendants r Low Food

Center, Inc., Paul Masciopinto, Chris and

Nick Kametas and t plaintiff Marian J.

Whatley on Count I. Enter attached Findings of

Fact and Conclusions of Law.

Suzanne B. Conlon

App. 9

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MARIAN J. WHATLEY, )

)

Plaintiff, ) 89 C 2976

)

v. ) Hon.

) Suzanne B. Conlon

SUPER LOW FOOD CENTER, INC., )

PAUL MASCIOPINTO, JAMES )

KAMETAS, CHRIS KAMETAS, )

NICK KAMETAS and AL KAMETAS, )

)

Defendants. )

FINDINGS OF FACT

AND CONCLUSIONS OF LAW

Plaintiff Marian J. Whatley brings this action against her

former employer, Super Low Food Center, Inc. (“Super

Low“), Super Low’s owners, Dimitrios Kametas, Chris

Kametas, Nick Kametas and Eleftherios Kametas, and her

former supervisor, Paul Masciopinto (collectively “‘defen-

dants“). Whatley asserts that defendants violated Title VII

by engaging in or permitting sexual harassment (Count

I), that defendants terminated her employment in retalia-

tion for filing a worker’s compensation claim (Count II),

that defendant Masciopinto slandered her (Count II), and

that defendants intentionally inflicted emotional distress

(Count IV).

A jury trial was conducted on Counts II through IV.

The court considered the same evidence with respect to

Count I. At the conclusion of Whatley's case, the court

directed a verdict for all defendants as to Counts II and

App. 10

III. and for defendants Dimitrios Kametas and Eleftherios

Kametas on all counts. The jury returned a verdict for all

remaining defendants and against Whatley on Count IV.

The court enters the following findings of fact and con-

clusions of law as to Count I, pursuant to Fed. R. Civ. P.

5 An).

FINDINGS OF FACT

1. Whatley was employed by Super Low as a meat

wrapper from 1984 to July 1, 1988, except for a three-

week period in the summer of 1984, when she quit to

work at another store.

2. Whatley was initially hired and later was rehired by

3. Masciopinto became manager of Super Low's meat

department and Whatley's supervisor in 1985.

4. The remaining defendants were owners and officers

of Super Low. Chris Kametas managed the overall oper-

ation of the store, while Nick Kametas was responsible

for purchasing, sales and pricing.

5. During her employment, Whatley was the only

female employed in the meat department. When her em-

ployment ended on July 1, 1988, Whatley’s responsibilities

were assumed by male employees.

6. According to Whatley's testimony and that of two

other former meat department employees, Eugene Ander-

son and David Caraballo, Masciopinto frequently used pro-

fane and vulgar language. Masciopinto denied he used of.

fensive language, as did Gus Klios and Neville Cartwright.

Klios and Cartwright are still employed by Super Low.

one or two occasions. Masciopinto and current Super Low

employees denied these accusations.

10. The court finds that the credible evidence estab-

lished that on several occasions Masciopinto made sexually

suggestive gestures and comments to Whatley. However,

the court also finds that Whatley failed to establish that

this misconduct occurred on a frequent, regular or per-

vasive basis.

11. Whatley testified that she complained about Mascio-

pinto’s misconduct to both Chris Kametas and Nick Kame-

tas, but that they failed to take any corrective measures.

The Kametas’ denied that Whatley complained to them.

The court finds the conflicting evidence on this issue in-

conclusive.

12. On July 1, 1988, Masciopinto yelled at Whatley for

not placing enough ground meat out for customers. What-

ley claims that Masciopinto ordered her “to get the fuck

App. 12

out of here.“ Masciopinto, however, testified that Whatley

responded to his criticism about insufficient ground meat

by stating, “stick this job up your ass.”

13. It is undisputed that after this confrontation over

the ground meat, Whatley walked out of Super Low and

never returned to work. Whatley later told Lois Heatner,

a Super Low employee, that she quit“ her job.

14. Masciopinto did not have the authority to hire or

fire employees. The evidence established that Whatley

was aware of this fact. Whatley testified that in early

1988, Al (Eleftherios) Kametas told her she could return

to work after Masciopinto told her she could not.

15. Whatley made no attempt to discuss her employ-

ment status with Dimitrios Kametas, who initially hired

her and later rehired her, or the other owners of Super

Low, after her confrontation with Masciopinto on July 1,

1988.

CONCLUSIONS OF LAW

1. This court has jurisdiction over this matter pursuant

to 42 U.S.C. § 2000e-5(fK3).

2. To prevail on Count I, Whatley is required to estab-

lish by a preponderance of the evidence that she experi-

enced verbal or physical conduct that was so severe or

pervasive that it altered the conditions of her employment

and created an abusive working environment. Meritor Sav-

ings Bank v. Vinson, 477 U.S. 57, 67 (1986); Brooms v.

Regal Tube Co., 881 F.2d 412, 418 (7th Cir. 1989); Scott

v. Sears, Roebuck & Co., 798 F.2d 210, 213 (7th Cir. 1986).

She has not done so.

3. Masciopinto’s use of crude and profane language was

directed at all employees, Whatley and her male co-

App. 13

workers alike. Whatley admits using offensive language

herself.

4. Masciopinto’s use of obscene gestures and comments

regarding marrow bones and sausages on one or two oc-

casions, and his comment about Whatley’s pubic hair once

eight months before she left Super Low, were not shown

by a preponderance of credible evidence to have been so

severe or pervasive that Whatley’s conditions of employ-

ment were altered.

5. Whatley failed to prove by a preponderance of the

evidence that she was discharged or fired by any of the

defendants.

6. Whatley’s decision to leave Super Low on July 1,

1988 was based on a clash with her supervisor over a

work-related matter and was not the result of any sex-

ually abusive conduct.

7. In order to establish that she was constructively

discharged from Super Low, Whatley must show that the

defendants made her working conditions so intolerable

that she was forced into an involuntary resignation. Bart-

man u. Allis-Chalmers Corp, 799 F.2d 311, 314 (7th Cir.

1986), quoting Vaughn v. Pool Offshore Co., 683 F.2d 922,

926 (5th Cir. 1982). The test is whether a reasonable em-

ployee would have felt compelled to resign under the cir-

cumstances. Brooms, 881 F.2d at 423. Whatley was ob-

ligated to seek legal redress while remaining in her job

unless she was confronted with an “aggravated situation

beyond ordinary discrimination.” /d., quoting Bailey v.

Binyon, 583 F.Supp. 923, 929 (N. D. III. 1984).

S. While Whatley has established that Masciopinto was

a heavy-handed, unpleasant manager who dealt poorly

with others, his conduct was not shown by the prepon-

derance of credible evidence to be so abusive that he

App. 14

forced Whatley’s resignation. Miller v. State of Illinois,

681 F. Supp. 538, 544 (N. D. Ill. 1988).

Accordingly, judgment is entered for defendants Super

Low Food Center, Inc., Paul Masciopinto, Chris Kametas,

and Nick Kametas and against plaintiff Marian J. Whatley

on Count I.

ENTER:

/s/ Suzanne B. Conlon

United States District Judge

Dated: March 30, 1990

App. 15

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JUDGMENT IN A CIVIL CASE

MARIAN J. WHATLEY

v. Case Number: 88 C 2976

SUPER LOW FOOD CENTER INC. et al

x Jury Verdict. This action came before the Court for

a trial by jury. The issues have been tried and the

jury has its verdict.

Decision by Court. This action came to trial or hear-

ing before the Court. The issues have been tried or

heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED enter judgment

on the jury e 1990 in favor

of defendan Se on aS ot

—

— > Whatley

nter j in favor of defendants Kametas and

Kametas — plaintiff Whatley on counts II and

ter judgment in favor of defendants Low Food

— ne. et al and against the plaintiff Whatley on

ount

No further proceedings are anticipated.

Date 30 March 1990

H. STUART CUNNINGHAM

Clerk

By Deputy Clerk

a

App. 16

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Case Number: 89 C 2976 Date: May 23, 1990

Name of Assigned Judge: SUZANNE B. CONLON

Case Title: MARIAN J. WHATLEY v.

SUPER LOW FOOD CENTER, INC., et al.

MOTION:

Defendants’ Motion for Costs

DOCKET ENTRY:

(1) © Judgment is entered as follows:

(2) & [Other docket entry:]

Defendants’ motion for costs, including attorneys’

fees, pursuant to Fed. R. Civ. P. 68 and 42 U.S.C.

§ 2000e-K(k) is denied. ENTER MEMORANDUM

OPINION AND ORDER.

Suzanne B. Conlon

(12) & (For further detail see

Order on the reverse of

order attached to the original minute order

form.)

App. 17

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MARIAN J. WHATLEY, )

)

Plaintiff, ) 89 C 2976

)

v. ) Judge

) Suzanne B. Conlon

SUPER LOW FOOD CENTER, INC., )

et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Marian Whatley sued her former employer, Super Low

Food Center, its owners and her former supervisor for

sexual harassment in violation of Title VII and for inten-

tional infliction of emotional distress. Defendants gave

Whatley an offer of judgment of $50,000 to settle the case

pursuant to Fed. R. Civ. P. 68. Whatley refused defen-

dants’ offer of judgment. The case proceeded to trial and

the jury returned a verdict in favor of defendants on the

emotional distress claim. The court entered judgment in

favor of defendants on Whatley's Title VII claim. Defen-

dants now move for costs, including attorneys’ fees, pur-

suant to Fed. R. Civ. P. 68 and 42 U.S.C. § 2000e-5(k).

An offer [of judgment] not accepted shall be deemed

withdrawn and evidence thereof is not admissible except

inap ing to determine costs. If the j nt finally

obtained by the offeree is not more favorable than the

offer, the offeree must pay the costs incurred after the

making of the offer.

App. 18

Fed. R. Civ. P. 68. Whatley would be obligated to pay

defendants’ costs incurred after their unaccepted offer of

judgment only if judgment were entered for her in an

amount less than the offer. Rule 68 does not apply here

because judgment was entered in favor of defendants.

Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981). De-

fendants argue that Delta Air Lines is not controlling

after Marek v. Chesney, 473 U.S. 1 (1985). Marek involved

a case where the plaintiff had prevailed, but in an amount

that was less than the offer of judgment. The Supreme

Court found that attorneys’ fees are recoverable as costs

under Rule 68 if the statute upon which plaintiff sued

defines costs to include attorneys’ fees. Marek, 473 U.S.

at 10. Nonetheless, several post-Marek decisions have af-

firmed the continuing validity of Delta Air Lines. Hop-

per v. Euclid Manor Nursing Home, Inc., 867 F.2d 291,

293 (6th Cir. 1989); Trohoske v. McDonough Power Equip.

Co., 118 F.R.D. 425, 426 (W.D. Pa. 1988); Lewis v. Safe-

way Stores, Inc., 671 F. Supp. 361, 363 (D. Md. 1987).

Defendants admit that Marek did not directly overrule

Delta Air Lines. Defendants contend, however, that Marek

suggests the Supreme Court would no longer rule as it

did in Delta Air Lines. Defendants provide little support

for their argument. In Delta Air Lines, the Supreme

Court gave two reasons why Rule 68 does not apply when

judgment is entered for the defendant. First, the rule's

plain meaning limits its application to cases where “the

judgment finally obtained by the offeree is not more fa-

vorable than the offer. The court read “obtained by the

offeree” to be synonymous with a judgment for the plain-

tiff. Delta Air Lines, 450 U.S. at 351. In addition, the

Court found the plain meaning of the rule consistent with

the purpose of encouraging settlement in a manner that

is fair to both plaintiffs and defendants. Id. at 352-4.

Marek upholds the rationale of Delta Air Lines by affirm-

ing a plain meaning interpretation of the rule that encour-

App. 19

ages settlement in a neutral and fair manner. Marek, 473

U.S at 9-10. Moreover, Marek cites Delta Air Lines as

binding authority. Id. at 5. The Supreme Court has not

overruled or seriously questioned the rationale of Delta

Air Lines. Defendants, as the prevailing parties, are not

entitled to costs under Fed. R. Civ. P. 68.

42 U.S.C. § 2000e-5(k)

In any action or proceeding under this title the

court, in its discretion, may. allow the prevailing party

. a reasonable attorney’s fee as part of the costs

42 U.S.C. § 2000e-5(k). A prevailing defendant in a Title

VII action should not be awarded attorney's fees unless

the court finds the plaintiff's claim frivolous, unreasonable

or groundless. Christiansburg Garment Co. v. Equal Em-

ployment Opportunity Commission, 434 U.S. 412, 422

(1978). Defendants do not argue and this court does not

find that Whatley’s claim was frivolous, unreasonable or

groundless. The fact that Whatley ultimately lost her case

is not itself a sufficient justification for the assessment

of fees. Hughes v. Rowe, 449 U.S. 5, 14 (1980). Defendants’

offer of judgment and this court’s findings both indicate

that Whatley’s claim had merit. Whatley did not prevail

because she failed to establish a causal connection between

the sexual harassment she experienced and her decision

to resign. Conclusions of Law, March 30, 1990, JJ 4-8.

Defendants’ motion for costs, including attorneys’ fees,

pursuant to Fed. R. Civ. P. 68 and 42 U.S.C. S 2000e-5(k)

is denied.

ENTER:

N /s/ Suzanne B. Conlon

May 23, 1990 United States District Judge

App. 20

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Case Number: 89 C 2976 Date: June 18, 1990

Name of Assigned Judge: SUZANNE B. CONLON

Case Title: MARIAN J. WHATLEY v.

SUPER LOW FOOD CENTER, INC., et al.

R *&* „ *

DOCKET ENTRY:

(1) — Judgment is entered as follows:

(2) & [Other docket entry:]

The memorandum opinion and order issued May

23, 1990 is amended as follows: in line 5 of the first

paragraph, “$50,000” should read 85.000.“

/s/ Suzanne B. Conlon

R W K *