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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2007

## Text

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

16

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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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1679%3A4. Public record. Not legal advice.