Amicus Curiae Brief — Scott v. Metropolitan Health Health Corp Corp (No. 07-630)

MOTION FILED

DEC 13 2007

No. 07-630

IN THE

SUPREME COURT OF THE UNITED STATES

MARY SCOTT,

Petitioner,

V.

METROPOLITAN HEALTH CORPORATION,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Sixth Circuit

MOTION AND AMICI CURIAE BRIEF OF

NATIONAL EMPLOYMENT LAWYERS

ASSOCIATION AND

NATIONAL WHISTLEBLOWER CENTER

IN SUPPORT OF PETITIONER

Richard R. Renner Stefano G. Moscato

Counsel of record Program Director

Tate & Renner National Employment

505 N. Wooster Ave. Lawyers Association

P.O. Box 8 44 Montgomery St. Ste. 2080

Dover, Ohio 44622 San Francisco, CA 94104

(330) 364-9900 (415) 296-7629

(330) 364-9901 FAX (415) 677-9445 FAX

rrenner@igc.org email: smoscato@nelahq.org

QUESTION PRESENTED

1. Whether it is a violation of the Due Process

Clause and an abuse of discretion for a court,

pursuant to its “inherent powers,” to issue sanctions

against a party without holding a hearing as to any

aspect of the litigation, where the

sanctions—amounting to over $1,600,000—rely on

findings that the party has acted with subjective bad

faith and that she, not her attorneys, was “the

driving force” behind any litigation misconduct.

2. In connection with meritorious proceedings

under the False Claims Act, which resulted in

payment of over $6,250,000 by the qui tam relator's

employer, did the Sixth Circuit err in affirming

$1,600,000 in attorneys’ fees against the relator

based on alleged litigation misconduct that affected

neither the disposition nor the duration of her

whistleblower retaliation action, which should have

survived summary judgment based on established

principles of employment law?

TABLE OF CONTENTS

QUESTIONS PRESENTED i

TABLE OF CONTENTS ii

TABLE OF CITED AUTHORITIES vi

MOTION FOR LEAVE TO FILE AMICI

CURIAE BRIEF ]

STATEMENT OF INTEREST l

SUMMARY OF ARGUMENT 3

ARGUMENT 4

A. Due Process requires a hearing

before imposition of sanctions

based on bad faith or other

alleged misconduct. 4

5 Evidentiary hearings

are crucial to the Due

Process clauses.

2. Where a party's bona fides

are at issue, the importance

of a hearing is at its zenith.

3. The District Court erred in

making a finding about

Scott's intent without a

hearing.

7

1}

4 Summary judgment

standards are instructive

on the circumstances when

judgment is appropriate

without an evidentiary

hearing. 1]

5. Mary Scott was entitled to

an evidentiary hearing to

determine the proper

amount of any sanction. 13

6. Whistleblowers, civil

rights plaintiffs and their

attorneys are depending on

this Court to make federal

courts a safe place to raise

legitimate claims. 14

B. A civil action is not frivolous or

brought in bad faith when it

prevailed and resulted in payment

of over $6,250,000 by the

opposing party. 14

CONCLUSION 19

lil

TABLE OF AUTHORITIES

Cases

Amlong & Amlong, P.A. v. Denny's, Inc.,

2006 WL 4758983, *7-10 (11th Cir. 2007)10

Anderson v. Liberty Lobby,

477 U.S. 242, 254, 255, 300 (1986)

12

Avirgan v. Hull, 932 F.2d 1572 (11th Cir. 1991) 10

Balmer v. HCA, Inc., 423 F.3d 606

(6th Cir. 2005)

Binder v. Long Island Lighting Co.,

57 F.3d 193, 200 (2d Cir. 1995)

Blanchard v. Bergeron, 489 U.S. 87, 96 (1989)

Christiansburg Garment Co. v. EEOC,

434 U.S. 412, 421-22 (1978)

City of Riverside v. Rivera,

477 U.S. 561, 574 (1986)

Cont. Ore Co. v. Union Carbide & Carbon,

370 U.S. 690, 696, n. 6 (1962)

Cooter & Gell v. Hartmarx Corp.,

496 U.S. 384, 393 (1990)

Fuentes v. Shevin (1972), 407 U.S. 67, 81,

92 S.Ct. 1983, 32 L.Ed.2d 556

Goldberg v. Kelly, 397 U.S. 254, 268, 269

(1970)

Goss v. Lopez (1975), 419 U.S. 565,

95 S.Ct. 729, 42 L.Ed.2d 725

Harrison v. Metro. Gov't of Nashville &

Davidson County, Tenn., 80 F.3d 1107

(6th Cir. 1996)

Haynie v. Ross Gear Div. of TRW, Inc.,

799 F.2d 237, 242 (6th Cir. 1986),

vacated as moot, 482 U.S. 901 (1987)

iV

16

15

8

19

8

12

17

15

Jenkins v. McKeithen, 395 U.S. 411, 428-29

(1969)

Kiefel v. Las Vegas Hacienda, Inc.,

404 F.2d 1163, 1167 (7th Cir. 1968)

Logan v. Denny's, Inc.,

259 F.3d 558, (6th Cir. 2001)

Lytle v. Household Mfg., Inc.

494 U.S. 545, 554-555 (1990)

Malautea v. Suzuki Motor Co., Ltd.,

987 F.2d 1536, 1544 (11th Cir. 1993)

Mathews v. Eldridge, 424 U.S. 319, 333 (1976)

McGhee v. Sanilac County,

934 F.2d 89, 92 (6th Cir. 1991)

Miller-E] v. Dretke, 545 U.S. 231,

125 S.Ct. 2317, 2329 (2005)

Moore v. KUKA Welding Sys.,

171 F.3d 1073 (6th Cir. 1999)

Morrissey v. Brewer, 408 U.S. 471, 488-89

(1972)

Passantino v. Johnson & Johnson Consumer

Products, Inc., 212 F.3d 493,

507 (9th Cir. 2000)

Price Waterhouse v. Hopkins, 490 U.S. 228

(1989)

Reynolds v. Roberts, 207 F.3d 1288, 1302

(11th Cir. 2000)

Reeves v. Sanderson Plumbing Products,

120 S.Ct. 2097, 2110 (2000)

Riddle v. Egensperger, 266 F.3d 542,

548 (6th Cir. 2001)

Roadway Express, Inc. v. Piper,

447 U.S. 752, 767 (1980)

Schwartz v. Millon Air, Inc.,

341 F.3d 1220, 1225 (11th Cir. 2003) 10

Sheridan v. DuPont, 100 F.3d 1061,

1069 (3d Cir. 1996) 15

Tarter v. Raybuck, 742 F.2d 977,

987-88 (6th Cir. 1984) 16

Whitlock v. Johnson, 153 F.3d 380,

386-88 (7th Cir. 1998) 7

Statutes

28 U.S.C.§ 1927 8

31 U.S.C. § 3730(h) 15

Constitution

Fifth Amendment 5

Rules

Fed. R. Civ. P. 11 17

Fed. R. Civ. P. 26(g)(3) 13

Fed. R. Civ. P. 56(g) 13

U.S. Supreme Court Rule 37.2(b) |

Other Authorities

126 CONG.REC. 23625-26 (1980) 9

And the Chill Goes On—Federal Civil Rights

Plaintiffs Beware: Rule 11 Vis-a-vis

28 U.S.C. § 1927 And The Court's

Inherent Power, 37 Loy. L.A. L.

Rev. 645 (Winter 2004) 17

Antitrust Procedural Improvement Act of 1979:

Hearings on S.390 before the Subcomm.

On Antitrust & Monopoly of the Senate

Comm. on the Judiciary, 96th Cong., Ist

Sess. at 8, 27 (1979) 9g

vi

Antitrust Procedural Improvements and

Jurisdictional Amendments: Hearings

on H.R. 4047 before the Subcomm. on

Monopolies and Commercial Law of the

House Comm. on the Judiciary 96th Cong.,

Ist Sess. at 23, 60, 152 (1979) 4

George Cochran, The Reality of “A Last Victim”

and Abuse of the Sanctioning Power,

37 LOY.L.REV. 691, 713-24 (2004) 10

MOTION FOR LEAVE TO FILE AMICI

CURIAE BRIEF

Pursuant to U.S. Supreme Court Rule 37.2(b),

the National Employment Lawyers

Association (NELA) and the National

Whistleblower Center (NWC) move this Court for

leave to file this amici curiae brief.'

Petitioner Mary Scott, through counsel, gave

consent to file this brief.2, Respondent Metropolitan

Health Corporation, after timely notice to its counsel

of the intention of amici curiae to file this brief,

indicated that it would not consent. The movants'

interests are stated herein.

STATEMENT OF INTEREST

The National Employment Lawyers

Association (NELA) is the largest professional

membership organization in the country comprised

of lawyers who represent workers in labor,

employment and civil rights disputes. NELA

advances employee rights and serves lawyers who

No counsel for any party to this action

authored this brief in whole or in part. Furthermore,

the amici and their undersigned counsel bore the full

cost of preparation and submission of this brief, and

no other person or entity made any monetary

contribution to the preparation or submission of this

brief.

; Letters of Mr. Frederick M. Gittes dated

November 28, 2007, consenting to the filing of this

brief are submitted to the Clerk of this Court with

this brief.

advocate for equality and justice in the American

workplace. NELA and its 67 state and local affiliates

have a membership of over 3,000 attorneys who are

committed to working on behalf of those who have

been illegally treated in the workplace. NELA strives

to protect the rights of its members’ clients, and

regularly supports precedent-setting litigation

affecting the rights of individuals in the workplace.

As an organization focused on protecting the

interests of employees who are treated illegally,

NELA has an abiding interest in ensuring that

sanctions against such workers and their lawyers are

not routinely issued, but rather are reserved only for

egregious cases. The aim of NELA’s amicus

participation has been to cast light not only on the

legal issues presented in a given case, but also on the

practical effect and impact the decision in that case

may have on access to the Courts for people who

have been unlawfully treated and for their advocates

in litigation.

NELA has an interest in this case to secure

open courts for claims of unlawful discrimination.

The purpose of sanctions is to deter genuine abuses.

When sanctions are used against plaintiffs who have

raised a serious claim against an employer guilty of

defrauding the government, then the sanctions

hinder the public policy of encouraging legal actions

to recover funds for the government. When the

sanctions are extremely large, and issued without

clear evidence of abuse, the deterrent affect applies

not only to those who abuse process, but also to those

with legitimate claims.

The National Whistleblower Center

(NWC) is a not-for-profit corporation of the District of

Columbia that provides education and referral

services on behalf of whistleblowers. Since 1988, the

Center has provided protection and assistance to

thousands of whistleblowers across the United States.

The Center has focused on exposing government and

corporate misconduct and promoting the highest

standards of ethics. It has assisted whistleblowers in

exposing dangers at nuclear power stations,

mishandling of evidence at the 9/11 crime scenes,

and deficiencies in the FBI's counterterrorism

program. It successfully advocated for the

prohibition of "hush money” settlements in the

Department of Labor's nuclear and environmental

whistleblower program, withdrawal of "gag orders"

restricting the flow of information to Congress,

accreditation of the FBI crime lab, and protections

for whistleblowers through the No-Fear Act, the

Sarbanes-Oxley Corporate Whistleblower Protection

Act, and the Civil Rights Tax Relief Act.

The NWC speaks here out of concern about

the deterrent effect of the enormous sanction entered

against Mary Scott. The precedent here will deter

the work of the Center in encouraging whistleblowers

to come forward with information about frauds

against the government.

SUMMARY OF ARGUMENT

The Due Process clauses guarantee all persons

an opportunity to be heard before courts deprive

them of life, liberty or property. The courts below

deprived Mary Scott of $1,600,000 without ever

conducting an evidentiary hearing on the grounds

for the sanction or the amount of this sanction.

Indeed, the district court judge never even met her.

This case exemplifies the value and

significance of a hearing, in that if a hearing had

been held, Scott could readily have demonstrated

that she acted in good faith during discovery, and

that her case was not frivolous.

The amici urge granting the writ of certiorari

to protect the right of whistleblowers to keep their

lawful awards free of arbitrary sanctions imposed

without Due Process.

ARGUMENT

A. Due Process requires a

hearing before imposition of

sanctions based on bad faith

or other alleged misconduct.

The Fifth Amendment to the U.S.

Constitution, states in part as follows:

No person shall . . . be deprived of life,

liberty, or property, without due process

oflaw....

By entering a monetary judgment against

Scott, the trial court is depriving her of property.

The district court's judgment overtakes Scott's share

of the qui tam settlement and deprives her of her

statutory right to a share of that award. Particularly

where the underlying facts are either wrong or

disputed, and certainly the appropriate amount of

any sanction was disputed, those disputes needed an

evidentiary hearing for resolution. The trial court,

therefore, must afford her due process before entry of

such judgment.

5, Evidentiary hearings are

crucial to the Due Process

clauses.

The "basic thrust" of the due process clauses is

a requirement for notice and an opportunity to be

heard. Goss v. Lopez (1975), 419 U.S. 565, 95 S.Ct.

729, 42 L.Ed.2d 725; Fuentes v. Shevin (1972), 407

U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556; see also

Mathews v. Eldridge, 424 U.S. 319, 333 (1976)

("[T]he fundamental requirement of due process is

the opportunity to be heard at a meaningful time

and in a meaningful manner.") (internal quotation

omitted). These procedural safeguards reflect “the

high value, embedded in our constitutional and

political history, that we place on a person's right to

enjoy what is his, free of governmental interference."

Fuentes, 407 U.S. at 81.

Traditional notions of due process favor a

person's right to present live testimony about

contested issues of fact. This principle found full

flower in Goldberg v. Kelly, 397 U.S. 254 (1970),

where the Court considered the due process rights of

persons facing termination of welfare benefits in a

pre-deprivation hearing. The Court held that

challenges submitted solely on a written record did

not conform to minimal due process. Id. at 268.

Justice Brennan wrote for the Court that:

The city's procedures presently do not permit

recipients to appear personally with or without

counsel before the official who finally

5

determines continued eligibility. Thus a

recipient is not permitted to present evidence

to that official orally, or to confront or

cross-examine adverse witnesses. These

omissions are fatal to the constitutional

adequacy of the procedures. Id. at 268.

The due process failure of a document-only

review was rooted in its inherent unsuitability for

rendering credibility determinations:

It is not enough that a welfare recipient may

present his position to the decision maker in

writing or second hand through his

caseworker. . . . written submissions do not

afford the flexibility of oral presentations; they

do not permit the recipient to mold his

argument to the issues the decision maker

appears to regard as important. Particularly

where credibility and veracity are at issue, as

they must be in many termination

proceedings, written submissions are a wholly

unsatisfactory basis for decision. Id. at 269.

The Court closed by reaffirming the historical

view of due process that "[i]n almost every setting

where important decisions turn on questions of fact,

due process requires an opportunity to confront and

cross-examine adverse witnesses.” Id. at 269. On the

due process priority of live witnesses, Goldberg is

hardly an aberration. This Court has at other times

stressed the importance of allowing parties to present

and cross-examine live witnesses.”

: See, e.g.. Morrissey v. Brewer, 408 U.S. 471,

488-89 (1972) (requiring parole procedures to have at

This basic thrust applies to the imposition of

sanctions as they “certainly should not be assessed

lightly or without fair notice and an opportunity for a

hearing on the record.” Roadway Express, Inc. v.

Piper, 447 U.S. 752, 767 (1980).

2. Where a party's bona fides

are at issue, the importance

of a hearing is at its zenith.

Entry of sanctions without a hearing adds to

the trepidation prospective plaintiffs must feel when

they decide whether to come forward with their

claims of employer misconduct. Entry into the

judicial system will no longer be a place for

resolution of disputes based on evidence and fair

play, but rather a gamble about which judge will be

assigned, and what reaction that judge may have to

a minimum, inter alia, a right to be heard in person,

to present witnesses and to cross-examine adverse

witnesses); Jenkins v. McKeithen, 395 U.S. 411,

428-29 (1969) (finding that Louisiana commission

that conducted criminal inquiries and recommended

prosecutions violated due process of persons

investigated by failing to give them a right of

cross-examination and by limiting them to

submitting "pertinent" written statements of

favorable witnesses). Accord, Whitlock v. Johnson,

153 F.3d 380, 386-88 (7th Cir. 1998) (holding that, in

prison disciplinary hearings, warden's procedure of

interviewing prisoner's witnesses and then

summarizing testimony in an unsworn report

violated due process when presentation of live

testimony was otherwise feasible).

your claim. Due Process is the foundation of public

trust in our judiciary. Without it, our government

cannot accomplish the public purpose of any

remedial law.

Subjective bad faith is the appropriate test for

an award of any punitive sanctions, particularly in

employment and civil rights cases. As this Court has

stated, “(u)nlike most private tort litigants, a civil

rights plaintiff seeks to vindicate important civil and

constitutional rights that cannot be valued solely in

monetary terms.” Blanchard v. Bergeron, 489 U.S.

87, 96 (1989) quoting City of Riverside v. Rivera, 477

U.S. 561, 574 (1986) (plurality opinion).

The standard for imposing sanctions should be

at its highest when such sanctions would deter

parties from bringing meritorious claims that

advance civil rights, uncover fraud, or serve other

important government interests. Sanctions under a

court's inherent authority are evaluated under the

same standards as those under 28 U.S.C. § 1927.

See Schlaifer Nance & Co. v. Estate of Warhol, 194

F.3d 323, 336 (2d Cir. 1999) (§ 1927 and inherent

authority turn on same subjective standard and

“only meaningful difference" is “that awards under §

1927 are made only against attorneys’); see also

Dreiling v. Peugeot Motors of Am., 768 F.2d 1159,

1164-65 (10th Cir. 1985) ("Section 1927 is a natural

outgrowth of the inherent authority of a court to

assess costs and attorney's fees .. . against a party

who has acted in bad faith, vexatiously, wantonly, or

for oppressive reasons" (quotation omitted)).

It is thus appropriate to consider how the court

in Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163

(7th Cir. 1968) interpreted 28 U.S.C. § 1927 liability

to hinge on whether the questioned conduct reflected

a “serious and studied disregard for the orderly

processes of justice." Kiefel, 404 F.2d at 1167

(emphasis added). In 1980, Kiefel was cited by

witnesses in Congressional hearings in which an

easing of the standard for sanctions awards was

under consideration. See Antitrust Procedural

Improvement Act of 1979: Hearings on S.390 before

the Subcomm., On Antitrust & Monopoly of the

Senate Comm. on the Judiciary, 96th Cong., 1st Sess.

at 8, 27 (1979); Antitrust Procedural Improvements

and Jurisdictional Amendments: Hearings on H.R.

4047 before the Subcomm. on Monopolies and

Commercial Law of the House Comm. on the

Judiciary 96th Cong., Ist Sess. at 23, 60, 152 (1979).

The effort to amend §1927 failed. In a speech on the

House floor, Congressman Mazzoli explained the

legislators’ conclusions:

The managers on the part of the House were

firm in their resolve to maintain the tough

standard of current law so that the legislation

in no way would dampen the legitimate zeal of

an attorney in representing a client.

See 126 CONG.REC. 23625-26 (1980).

The Congressional determination to preserve

a high bar for the imposition of sanctions is reflected

in appellate decisions. In Avirgan v. Hull, 932 F.2d

1572 (11th Cir. 1991) the Eleventh Circuit held that

§ 1927 allows district Courts to “assess attorney's fees

against litigants, counsel, and law firms who wilfully

abuse judicial process by conduct tantamount to bad

faith.” Id. at 1582 (emphasis added); see also

Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536,

1544 (1lith Cir. 1993)(§ 1927 sanctions are reserved

for counsel “who wilfully abuse the judicial process’).

Likewise, in Schwartz v. Millon Air, Inc., 341 F.3d

1220 (11th Cir. 2003), the Court acknowledged the

holding in Avirgan and concluded that, for purposes

of § 1927, “|a] determination of bad faith is warranted

where an attorney knowingly or recklessly

pursues a frivolous claim...” Id. at 1225.

That a subjective bad faith standard should be

required is evident from the statutory language

itself; from interpretations by Congress during

efforts in 1980 to obtain certain ameliorating

amendments to §1927. See George Cochran, The

Reality of “A Last Victim” and Abuse of the

Sanctioning Power, 37 LOY.L.REV. 691, 713-24

(2004) (status of current case law and legislative

history). But see, Amlong & Amlong, P.A. v. Denny's,

Inc., 2006 WL 4758983, *7-10 (11th Cir. 2007)

(stating that “[p]lainly, an attorney threatened with

sanctions under [28 U.S.C.] § 1927 is entitled toa

hearing,” citing Reynolds v. Roberts, 207 F.3d 1288,

1302 (11th Cir. 2000), despite holding that subjective

bad faith is not prerequisite to sanctions under §

1927).

To delve past the objective facts and make an

inference about Scott's intention to withhold

evidence requires a hearing. It was an abuse of

discretion for the district court to make this finding

without offering her the opportunity to testify in

10

person.

3. The District Court erred in

making a finding about

Scott’s intent without a

hearing.

The Sixth Circuit side-stepped the due process

issue when it stated:

Scott obviously knew whether, as alleged in

her affidavit, she developed her version of the

minutes based on her honest recollection of

what happened, rather than fabricating a

version of events that she knew never occurred

or inserting material to reflect what allegedly

was Said at a prior meeting.

NELA and NWC are concerned by the

precedent for imposing sanctions without an

evidentiary hearing when the court finds that the

plaintiffs mental state was "obvious." The district

court entered judgment without a hearing.

4. Summary judgment

standards are instructive on

the circumstances when

judgment is appropriate

without an evidentiary

hearing.

Summary judgment is a permissible means of

entering judgment without a hearing. The law on

summary judgment is instructive on the

circumstances when a trial court can rule on claims

without a hearing. This Court has stressed on

numerous occasions that in considering motions for

summary judgment, a court "must draw all

reasonable inferences in favor of the nonmoving

party, and it may not make credibility

determinations or weigh the evidence." Reeves v.

Sanderson Plumbing Products, 120 S.Ct. 2097, 2110

(2000), citing Lytle v. Household Mfg., Inc. 494 U.S.

545, 554-555 (1990), Anderson v. Liberty Lobby, 477

U.S. 242, 254 (1986), Cont. Ore Co. v. Union Carbide

& Carbon, 370 U.S. 690, 696, n. 6 (1962).

"Credibility determinations, the weighing of

evidence, and the drawing of legitimate inferences

from the facts are jury functions, not those of a

judge." Id., quoting Liberty Lobby, 477 U.S. at 255.

The Court "must disregard all evidence favorable to

the moving party that the jury is not required to

believe." Id. at 2110. The “court should give

credence to the evidence favoring the nonmovant as

well as that ‘evidence supporting the moving party

that is uncontradicted and unimpeached, at least to

the extent that that evidence comes from

disinterested witnesses." Id., quoting Liberty Lobby

at 300, emphasis added. See also, Logan v. Denny's,

Inc., 259 F.3d 558, (6th Cir. 2001) (district court

wrongly adopted defendant's version of the facts and

ignored plaintiff's evidence showing there to be a

factual dispute).

Since the district court's sanction is based on a

finding about Scott's bad faith, and since Scott's

opposition demonstrated a genuine dispute about

this material fact, the court needed to hold a separate

hearing to resolve this dispute.

5. Mary Scott was entitled to

an evidentiary hearing to

determine the proper

amount of any sanction.

When sanctions are appropriate, they serve

the purpose of showing the offending party what are

the true costs of their misconduct. Rule 26(g) (3) of

the Federal Rules of Civil Procedure limit sanctions

to "the reasonable expenses incurred because of the

violation . . .."* Sanctions that are higher that the

victim's actual costs flowing from the improper

conduct are punitive.

The district court's failure to conduct a

hearing on the correct amount of sanctions in this

case raises distressing questions about the district

court's purpose. Any purpose other than

compensating the hospital for its actual costs

incurred as a result of Scott's alleged misconduct

would be improper. As the public record stands in

this case, legitimate whistleblowers with strong

evidence of fraud against the government face a

legitimate fear that coming forward with their

evidence could unleash a torrent of close scrutiny

and a severe punishment imposed without due

process.

: Rule 56(g) contains the same limitation on

sanctions imposed for presenting an affidavit in bad

faith.

13

6. Whistleblowers, civil rights

plaintiffs and their attorneys

are depending on this Court

to make federal courts a safe

place to raise legitimate

claims.

The myriad of employee protections in

environmental, nuclear, transportation, corporate

accounting and national security laws demonstrate

the importance Congress has placed in the protection

of employees who speak out about wrongdoing.

We are depending on this Court to set and

enforce the minimum standards for the imposition of

sanctions: that parties have an evidentiary hearing

before they suffer a loss of their property on account

of a conclusion about their good faith.

B. A civil action is not frivolous

or brought in bad faith when

it prevailed and resulted in

payment of over $6,250,000 by

the opposing party.

The district court's decision to impose

sanctions against Mary Scott for the totality of

respondents’ legal fees and expenses for the entirety

of this action was founded on the court's claim that

filing this action was in bad faith. This finding

suffers from an obvious contradiction: Mary Scott

prevailed in the qui tam action. The United States

government intervened and obtained a settlement

with respondents in which they paid over $6 million.

This action was not frivolous, and was not brought in

bad faith.

Even her claim of retaliatory discharge,

standing alone, was not frivolous. The record

provides ample evidence that Scott's discharge and

other adverse treatment was motivated by her

protected activities. Price Waterhouse v. Hopkins,

490 U.S. 228 (1989) (discriminatory remarks may

prove discriminatory intent); Moore v. KUKA

Welding Sys., 171 F.3d 1073 (6th Cir. 1999)

(temporal proximity considered with other evidence

of retaliatory conduct would be sufficient to establish

a cauSal connection); Harrison v. Metro. Gov't of

Nashville & Davidson County, Tenn., 80 F.3d 1107

(6th Cir. 1996) (same).° See also Miller-El v. Dretke,

545 U.S. 231, 125 S.Ct. 2317, 2329 (2005). That the

Hospital resorted to a pretext to get rid of Scott is

itself evidence of unlawful motive. “Resort to a

pretextual explanation is, like flight from a scene of

the crime, evidence of consciousness of guilt, which is,

of course, evidence of illegal conduct.” Sheridan v.

DuPont, 100 F.3d 1061, 1069 (3d Cir. 1996), quoting

Binder v. Long Island Lighting Co., 57 F.3d 193, 200

(2d Cir. 1995).

The False Claims Act (FCA), at 31 U.S.C. §

3730(h), protects those employees who come forward

with information about frauds against the

government. When they do so, they are protected

’ The Ninth Circuit has held that timing alone

is sufficient to avoid summary judgment “even in the

face of alternative reasons proffered by the

defendant.” Passantino v. Johnson & Johnson

Consumer Products, Inc., 212 F.3d 493, 507 (9th Cir.

2000).

15

from adverse actions by their employer. The large

amount of the recovery against the hospital here

raises a legitimate concern that Scott's discharge was

motivated, at least in part, by her revelation of this

massive fraud. Furthermore, that Scott brought

such a meritorious claim should prevent a finding

that her action is frivolous. Amici urge adoption of

the Sixth Circuit's rule articulated in Balmer v. HCA,

Inc., 423 F.3d 606 (6th Cir. 2005), as follows:

We agree with the district court that Balmer's

failure to promote and sexual harassment

claims were completely without merit and

“frivolous, unreasonable, or without

foundation.” Nevertheless, we reverse the

district court's award of attorney's fees to HCI.

Based on the language of Haynie and Tarter,

we conclude that in this circuit attorneys’ fees

may not be awarded to defendants where the

plaintiff has asserted at least one

non-frivolous claim.

See also Haynie v. Ross Gear Div. of TRW, Inc., 799

F.2d 237, 242 (6th Cir. 1986), vacated as moot, 482

U.S. 901 (1987) (holding that “where one of the

plaintiffs claims is non-frivolous, the defendant's

attorney fees may not be shifted to the plaintiff even

though others of the plaintiffs claims are patently

without merit."); Tarter v. Raybuck, 742 F.2d 977,

987-88 (6th Cir. 1984) (holding that awarding

attorneys fees was an abuse of discretion even

though some of plaintiffs claims were meritless). The

Sixth Circuit's rule satisfies the objective of assuring

that actions filed in federal courts have some merit.

The rule also provides some freedom for parties

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asserting novel claims or making good faith

arguments for the extension of the law or its

application to new factual situations.

The developed law under Rule 11° is

instructive. "(T]he central purpose of Rule 11 is to

deter baseless filings in district court,” Cooter & Gell

v. Hartmarx Corp., 496 U.S. 384, 393 (1990), and

courts must be wary of plaintiffs who may make

baseless allegations. But, "Rule [11] must be read in

light of concerns that it will spawn satellite litigation

and chill vigorous advocacy." Id. Rule 11 “is not

intended to chill an attorney's enthusiasm or

creativity in pursuing factual or legal theories."

McGhee v. Sanilac County, 934 F.2d 89, 92 (6th Cir.

1991) (quoting Fed. R. Civ. P. 11 advisory

committee's note).

, Recent scholarship has documented a trend in

civil rights cases in which defendants use § 1927 and

the court's inherent power to circumvent the reforms

in the 1993 amendments to Rule 11, particularly the

“safe-harbor” provision; the requirement of detailed

factual findings and legal conclusions; the limits on a

Court's power to award fees on its own motion; and

the preference for non-monetary sanctions. Hart,

And the Chill Goes On—Federal Civil Rights

Plaintiffs Beware: Rule 11 Vis-a-vis 28 U.S.C. § 1927

And The Court's Inherent Power, 37 Loy. L.A. L. Rev

645 (Winter 2004). This case presents a new branch

on this trend: the use of discovery sanctions to

circumvent the limitations of Rule 11. All branches

of this trend create dislocations that burden courts

and taxpayers and as here, plaintiffs in civil rights

and fraud cases

People in positions of power do not like

whistleblowers. Whistleblowers speak truth to power,

and power does not appreciate the challenge. The

courts below overlooked this possibility: even if the

employer found some justification to discharge Scott,

that does not mean that it was the real reason for the

discharge. When the facts and inferences allow more

than one conclusion, only the trier of fact can

determine the real reason. Outright admissions of

impermissible motivation are infrequent and

plaintiffs often must rely upon other evidence. Hunt

v. Cromartie (1999), 526 U.S. 541. The record here

includes evidence of animus, timing, and dissembling

that could have supported a jury decision in Scott's

favor. There is no dispute that she prevailed by

settlement in her qui tam action founded on

defendant's massive fraud against the government.

Therefore, her claim was not frivolous.

Respondents here subjected Mary Scott to a

grueling examination of every aspect of her

employment, her litigation and her life to find any

grounds to oppose her claims. The discovery issue

that led to the order against her was equivocal at

best. That the courts below entered and affirmed

sanctions against her on this issue without every

affording her a hearing to contest the factual

conclusions is a shocking departure from Due Process

standards. It is also now a strong deterrent for other

whistleblowers who must weigh the risk of such

sanctions -- even when they raise a meritorious claim

against those defrauding our government.

"|I]t is important that a district court resist the

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understandable temptation to engage in post hoc

reasoning by concluding that, because a plaintiff did

not ultimately prevail, his action must have been

unreasonable or without foundation." Christiansburg

Garment Co. v. EEOC, 434 U.S. 412, 421-22 (1978).

Therefore, "[t]o determine whether a claim is

frivolous, unreasonable or groundless, the court must

determine plaintiff's basis for filing the suit." Riddle

v. Egensperger, 266 F.3d 542, 548 (6th Cir. 2001).

That determination in this case is flawed where the

district court never conducted any hearing.

CONCLUSION

For the foregoing reasons, this Court should

grant Ms. Scott's Petition for Writ of Certiorari.

Respectfully submitted,

Richard R. Renner

Counsel of record

Tate & Renner

505 N. Wooster Avenue

P.O. Box 8

Dover, Ohio 44622

(330) 364-9900

Facsimile: (330) 364-9901

rrenner@igc.org

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Stefano G. Moscato

Program Director

National Employment

Lawyers Association

44 Montgomery St., Ste.

2080

San Francisco, CA 94104

(415) 296-7629

(415) 677-9445 FAX

smoscato@nelahq.org

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