Petition for Writ of Certiorari — Scandinavian Health Spa, Inc. v. Franklin
Supreme Court brief1998
Ask Donna
What actually matters in this document.
Text
SUpreme Com, U.
FILED -
(971430 my 2 1998
No. SFFICE OF THE CiEpy
In The
Supreme Court of the United States
fy.
October Term, 1997
SCANDINAVIAN HEALTH SPA, INC.,
Petitioner,
VS.
ANDREA FRANKLIN,
Respondent.
On Petition for Writ of Certiorari to the
United States Court of Appeals for the Eleventh Circuit
PETITION FOR WRIT OF CERTIORARI
MARK E. ZELEK THOMAS H. BARNARD
MORGAN, LEWIS & BOCKIUS Counsel of Record
5300 Southeast Financial Center BARTON A. BIXENSTINE
200 South Biscayne Boulevard ULMER & BERNE LLP
Miami, Florida 33131-2339 Bond Court Building
(305) 579-0300 1300 East 9th Street, Suite 900
Cleveland, Ohio 44114-1583
(216) 621-8400
Attorneys for Petitioner
(800) 274-3321 * (800) 359-6859 LK late
A DIVISION OF COUNSEL PRESS ervices, inc.
i
QUESTIONS PRESENTED
Whether an attorney fees award of $169,000 by the District
Court is unreasonable under Title VII of the Civil Rights Act of
1964 when Respondent obtained relief on only one minor claim
in the amount of $12,229.65?
(1) Whether it is unreasonable to award attorney fees for
any services after rejection of a settlement offer,
tendered early in the litigation, that was substantially
greater than the final judgment, when the offer was
rejected because it did not satisfy the fees demanded
by the plaintiff’s counsel?
(2) Whether attorney fees should be substantially reduced
where the primary claims and demands were rejected
and success was limited to a discriminatory demotion
claim with a back pay award that was one-twelfth of
what the plaintiff demanded at the conclusion of trial,
$12,229.65 vs. $146,000?
ii
PARTIES TO THE PROCEEDING
Petitioner represented in this Brief is Scandinavian Health
Spa, Inc. who is the only defendant remaining in this action.
Proceedings against four other defendants, Bally Manufacturing
Corporation (Scandinavian’s parent) and three Scandinavian
employees, Michael Palumbo, Gene Palumbo, and Mark
Seaman, were dismissed by the District Court and not challenged
on appeal by Respondent. Scandinavian Health Spa, Inc. has
no nonwholly owned subsidiaries.
Plaintiff-Respondent Andrea Franklin is a former employee
of Petitioner.
iil
TABLE OF CONTENTS
Page
Nee ae aii aa i
eer Pre ee ae are ii
EE CN 5G ni Cao's ao KOC ER OE OTE Duh iil
Ee EERE UE RT LTUL ERT ORT ET eee iV
ee oes cl eeu a bins gcc v vce l
SII OE PUUMNOUIONN oc ince cccccdceeencves l
Statutes and Rules Involved .................c000: l
NS I PE oo er sepa Ake s bao seeks 2
Ps eee MERION cc ce ccc cc cccs 3
i I PO, Sen cc decisbsndwcde ound 4
Reasons for Granting the Writ .................... 6
I. The Court Of Appeals’ Unexplained Affirmance
Of Respondent’s Award Of Attorney Fees
Undermines Title VII By Subsidizing Plaintiff’s
Who Reject Settlement Offers To Pursue Long-
I sec rhc o Vu chy so vl eis < 1]
A. The Court of Appeals’ Decision Rewards
Respondent for the Failure of Her Primary
CT GRR Saeco or ee eT Le 1]
iv
Contents
1. Respondent’s Primary and Secondary
Claims Were Not Interrelated For
Purposes of An Attorneys’ Fees Award.
2. Even if Respondent’s Primary and
Secondary Claims Were Interrelated, the
Court of Appeals’ Decision Undermines
Title VIi by Rewarding Respondent’s
Counsel for Failure of Their Primary
waren ee ET Pe ena
B. By Rewarding Respondent’s Counsel for
Rejecting Settlement Offers for More Than
the Value of Their Only Viable (But
Secondary) Claim to Pursue a Long Shot,
the Court of Appeals’ Decision undermines
Farrer and Promotes Vexatious Litigation.
sdiiecnn eC ET er eee ee a
TABLE OF CITATIONS
Cases Cited:
Adams v. Wolff, 110 E.R.D. 291 (D. Nev. 1986) .....
Alexander vy. Gardne --Denver Co., 415 U.S. 36 (1974)
oat Ee Oe CDE RSM BMI i ed me wee as Sekt os f
Page
13
20
18
Contents
Page
Chesny v. Marek, 547 F. Supp. 542 (N.D. Ill. 1982) .. 18, 19
City of Riverside v. Rivera, 477 U.S. 561 (1986) ...7, 8, 9, 10
Corder v. Brown, 25 F.3d 833 (9th Cir. 1994) ....... 15
Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986),
cert. denied, 481 U.S. 1029 (1987) ............. 18
Culpepper v. Reynold Metals Co., 421 F.2d 888 (Sth Cir.
SN A ck Rees ba Pao iL hee a i as 9
Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981) . 18
Denny v. Hinton, 131 F.R.D. 659 (M.D. N.C. 1990), aff’d
mam. 937 €.20 GO2 (40; Cis. 1991) oo csc cicba, 18
Donaldson v. Tennessee Valley Authority, 759 F.2d 535
ee Gals BET A Giese hawk ca creen noo ke 8
Farrar v. Hobby, 506 U.S. 103 (1992) .......... ae Se. Ne ke
Hetzel v. County of Prince William, 89 F.3d 169 (4th Cir.),
cert. denied, __ U.S. __, 117 S. Ct. 584 (1996) ... 15
Lawrence v. Western Pipe Service, 146 F.R.D. 195 (N.D.
Ala. 1993), aff’d mem., 19 F.3d 1445 (11th Cir. 1994)
vi
Contents
Page
Marek vy, Chesny, 473 U.S. 1 [EMR ce ibvweeucre ua 8, 19
Maker v. Gagne, 448 U.S. 122 NES Saccet voce: 19
McKenzie v. Cooper, Levins & Pastko, Inc., 990 F.2d 1183
FEUER 5d cov va kaeey eee 6
Myree v. Local 41, IBEW. aff'd mem., 29 F.3d 620 (2d
Sah, TION). 's inv we dewurednonsteid Leen eae, 15
O'Brien v. City of Greers Ferry, 873 F.2d 1115 (8th Cir.
Danial REET OLE RT er cies eo ET 18
Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157
(Sth Cir. 1978), cert. denied, 439 U.S. 1115 (1979)
18 9Ss0 eC we ONT Teh ERS VR CeENE UV RRA PET OUE 8, 9
Popham v. City of Kennesaw, 820 F.2d 1570 (11th Cir.
dened) MEER rere Ne eg ETE 15
Sheppard v. Riverview Nursing Center, Inc., 88 F.3d 1332
(4th Cir.), cert. denied, _ U.S. aus 417 S. Ce. 483
ERIS) no esineesneteeat beutee TRO Re Ss 9, 16
Simpson v. Sheahan, 104 F.3d 998 (7th Cir. 1997)... 17
Waters v. Heublein, Inc., 485 F. Supp. 110 (N.D. Cal.
SPIO) 9 vkasVnn sway ciddevore ee ee 18
Statutes Cited:
satharanies ah Boag) RECEP Ee a PLES l
vil
Contents
Page
RN SEE: a Se SUAS RCo bee pu ee dbewinksee l
ee Pas a RE whkisla Wena ava bat ees bb ovanwal anne l
Se a Ee 56 ow ek Re ORR TR res eke eh ees l
Ses OS OO, Cabo tapdeuce’odbuaeceawe Pe
Rule Cited:
ee ae MEE CU ods 6 bb eeu thd comes ok ee aee ce 8, 18
Other Authorities Cited:
Comment, Grossly Excessive Attorney's Fee Requests
under the Civil Rights Attorney’s Fee Awards Act:
Should the Entire Fee Request be Denied?, 24 U.
MEARS Se NG BO TEUNEE Shes avec skbexenacers 6
Dobbs, Awarding Attorney Fees Against Adversaries:
Introducing the Problem, 1986 DUKE L. J. 435 (1986)
PT Pe ET ne eet rie tree a eam 6
Note & Comment, For a Few Dollars Less: Equity Rides
Again in the Denial of Section 1988 Attorney's Fees
to a Prevailing Plaintiff in Farrar v. Hobby, 5
TEMPLE POL. & CIV. RTS. L. REV. 219 (1996)
PEMD ES COTES Ad MEASURE KS DK aLdee week 6
Report of the Federal Courts Study Committee 104 (April
BN Pe tok ii bs 5 ee Roa wad be eae on Sk eee 6
l
OPINIONS BELOW
The opinion of the United States Court of Appeals for the
Eleventh Circuit is produced at pps. la-3a of the Appendix.
The decision of the United States District Court for the Southern
District of Florida regarding Petitioner’s liability is reproduced
at pp. 17a-57a of the Appendix (and is cited hereafter as
“Liability Decision”). The decision of the United States District
Court for the Southern District of Florida regarding
Respondent’s Application for Attorney Fees is reproduced at
pp. 4a-6a of the Appendix (and is cited hereinafter as “Attorney
Fee Decision”). The report and recommendation of the
Magistrate regarding Respondent’s Application for Attorney
Fees is reproduced at pps. 7a-16a of the Appendix (and is cited
hereafter as “Magistrate’s Report”).
STATEMENT OF JURISDICTION
The judgment of the Eleventh Circuit was entered on
October 6, 1997, and rehearing was denied on December 1,
1997. The Court has jurisdiction under 28 U.S.C. § 1254(1).
Jurisdiction of the Eleventh Circuit was proper pursuant to 28
U.S.C. § 1291, and jurisdiction of the District Court was proper
pursuant to 28 U.S.C. §§ 1331, 1343.
STATUTES AND RULES INVOLVED
This case involves Section 706(k) of Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e-5(k), which provides
that:
In any action or proceeding under this subchapter
the court, in its discretion, may allow the prevailing
party, other than the Commission or the United
States, a reasonable attorney's fees (including expert
2
fees) as part of the costs, and the Commission and
the United States shall be liable for costs the same
as a private person.
STATEMENT OF THE CASE
The fundamental question is whether $169,000.000 are
“reasonable” attorneys’ fees, pursuant to the attorney fee
provision of Title VII of the Civil Rigits Act of 1964, 42 U.S.C.
§ 2000e-5(k), to Respondent Andrea Franklin (“Respondent”)
who: (1) failed to obtain any equitable or injunctive relief; and
(2) received a mere $12,229.65 damage award after (3) rejecting
a settlement offer that was greater than the judgment to generate
more than two-thirds of their legal fees pursuing their primary
claim, which they lost and as to which they did not appeal.
Following judgment for Respondent in her lawsuit against
Petitioner Scandinavian Health Spa, Inc. (“Scandinavian”),
Respondent was awarded $168,978.50 in attorneys’ fees
Petitioner appealed the award of attorneys’ fees, along with the
merits of the case.
The Court of Appeals affirmed, without explanation, the
District Court’s award of attorneys’ fees and costs. Again,
Respondent moved for an award of $33,750 for attorneys’ fees
incurred on appeal. The Cour of Appeals held that Respondent
is entitled to attorneys’ fees for the appeal, and it has remanded
to the District Court to determine the appropriate amount.
Scandinavian now appeals the award of attorneys’ fees at both
the trial and appellate level on the grounds that the award
undermines the attorneys’ fees provisions of Title VII in a
commonly repeated scenario — where a plaintiff raises
potentially meritorious claims of small value (here, Respondent’s
sexual harassment and discriminatory demotion claims) along
with long-shot claims for much larger damages (here,
Respondent’s constructive discharge claim).
;
A. Procedural Background.
On January 22, 1992, Respondent sued Bally
Manufacturing Corp. (“Bally”), Scandinavian, and three
Scandinavian employees, alleging sexual harassment,
discriminatory demotion, constructive discharge, and intentional
infliction of emotional distress. Respondent dropped her
emotional distress claim well before trial, and her back pay
demand at the conclusion of trial was $146,000. (Plaintiff’s
Back Pay Proposal).' More than 90% of this amount arose from
her unsuccessfui constructive discharge claim.
The District Court found Scandinavian liable for sexual
harassment’ and for discriminately demoting Respondent from
one division manager position to another. The District Court,
however: (1) rejected Respondent’s constructive discharge claim;
(2) granted no equitable or injunctive relief; (3) dismissed Bally
because it was not Respondent’s “employer”; and (4) limited
Respondent’s damages to only $12,229.65, plus interest.
Liability Decision, App. at 37-42, 52-56.
In moving for $182,212.49 in attorney fees and costs,
Respondent’s counsel asserted that the request was limited to
reasonable expenses in pursuing Respondent’s successful claims.
1. Respondent demanded $114,377.57 through the end of 1994,
plus $769.23 per week (annualized to $40,000) during 1995.
Respondent’s back pay demand for 1995, when the District Court
issued its Liability Decision on October 16, 1995, was $31,666.64.
2. Although the District Court found there was a sexually
hostile work environment at the Kendall II Health Club, it did not
grant any equitable or injunctive relief because: (1) Respondent had
not been subjected to sexual harassment after she was demoted; and
(2) she voluntarily had left her employment. Liability Decision, App.
at 37-42.
4
They stated that they had excluded expenditures devoted to
Respondent’s tort claim, claims against individual defendants,
the claim that Bally was Respondent’s employer, or to the crux
of Respondent’s case — her constructive discharge claim.
(Plaintiff’s Motion for an Award of Attorney’s Fees and
Reimbursement of Costs and Litigation Expenses at 4). These
exclusions totaled only 100 hours, or ten percent of the fees
incurred.
Respondent’s counsel did not file a cross-appeal of the
denial of Respondent's primary claim, her constructive discharge
claim. Instead, without seeking to increase the relief afforded
Respondent, Respondent’s counsel expended $33,750
defending Respondent’s $12,229.65 judgment.
Respondent’s counsel are demanding over $243,000 in
attorneys’ fees, costs, and interest to recover and defend a
$12,229.65 damage award with no equitable relief, along with
$28,112.66 in post-judgment interest.
B. The Avoidable Legal Fees.
Defendants sought to resolve the case before expending
time, fees and costs to go to trial. On November 11, 1993,
Defendants offered Respondent $17,500 to settle the lawsuit,
over $5,000 more than Respondent ultimately recovered.
To that point, Respondent’s counsel had conducted almost
all of their discovery — more than enough to make an intelligent
assessment of the merits of odds against recovery on her primary
claim for constructive discharge. They had: prepared
interrogatories and requests for the production of documents;
3. This amount was not specified either to include or exclude
attorneys’ fees.
Pairs a eS tor Maas oer od
5
reviewed Defendants’ discovery responses; defended
Respondent’s deposition; and taken the depositions of the
primary witnesses — Mark Seaman, Ron Wilcox, Stuart Dansby
and Rhonda Smith. Yet, Respondent’s counsel had only
expended $47,705 in legal fees — one-quarter of the amount
of fees requested and awarded.‘
Respondent’s attorneys refused the offer. Before the District
Court, Respondent’s counsel offered in explanation that if they
had accepted the settlement offer, Respondent “would have
effectively received nothing” as the settlement offer did not
account for the amount of fees expended in the case. (Plaintiff’s
Reply Memorandum to Defendant’s Memorandum in
Opposition to Plaintiff’s Motion for an Award of Attorney’s
Fees and Costs at 4).°
If Respondent’s counsel had accepted the settlement offer,
Respondent would have received more relief that the judgment,
and the unreasonable fees expended could have been avoided.
Instead, Respondent’s counsel refused to accept the settlement
offer, and changed this lawsuit into a lawsuit over attorneys’
fees.
Again, during the January 19, 1994 mediation conference,
Respondent’s counsel refused an offer for an amount greater
4. Robert E. Weisberg had expended $13,287.50 in fees (53.15
hours x $250 per hour), Martha Chapman $6,300 (42 x $150) and Scott
Jontiff $28,117.50 (187.45 x $ 150). Respondent’s counsel were
exaggerating their fees even at that early stage. In a letter sent on
November 10, 1993, they estimated their fees at that point to be
approximately $60,000. Respondent’s counsel were asked to verify in
writing the time they had expended to that point; they never did.
5. Respondent’s counsel indicated that her back pay as of
November 1993 was only $64,000, compared to the evidence
Respondent submitted after trial that her back pay should be $146,000.
6
than the final judgment. Defendants offered $24,000. Yet
Respondent’s counsel, more concerned with recouping its fees,
rejected the offer. As of the mediation conference, Respondent’s
counsel had nearly completed discovery, yet they had not
expended one-third of the attorneys’ fees requested and awarded.
Between November 11, 1993 and January 19, 1994,
Respondent’s counsel had: reviewed discovery responses and
requests; conducted witness investigations; taken and defended
the depositions of ten (10) secondary witnesses. The fees
expended to that point were $63,772.50.°
Had Respondent’s counsel worked to obtain the best result
for their client, nearly two-thirds of the fees received could have
been eliminated. Other than taking the depositions of two minor
witnesses, the remaining fees were expended on trial preparation.
REASONS FOR GRANTING THE WRIT
This case exemplifies a growing trend in which civil rights
litigation is converted into “lawsuits over attorney fees” in which
the only “winners” are the attorneys, while plaintiffs, defendants,
and the court all are losers.” Other courts have recognized and
6. Weisberg had incurred fees of $18,725 (74.90 x $250 per hour);
Chapman, $7,350 (49 x $150 per hour), and Jontiff $40,297.50 (268.65
x $150 per hour).
7. See McKenzie vy. Cooper, Levins & Pastko, Inc., 990 F.2d 1183,
1184 (11th Cir. 1993) (“Increasingly, Title VII litigation is fees litigation,
not civil rights litigation.”); see also Report of the Federal Courts Study
Committee 104 (April 2, 1990); Dobbs, Awarding Attorney Fees Against
Adversaries: Introducing the Problem, 1986 DUKE L. J. 435 (1985);
Note & Comment, For a Few Dollars Less: Equity Rides Again in the
Denial of Section 1988 Attorney's Fees to a Prevailing Plaintiff in Farrar
v. Hobby, 5S TEMPLE POL. & CIV. RTS. L. REV. 219 (1996); Comment,
Grossly Excessive Attorney's Fee Requests under the Civil Rights
Attorney's Fee Awards Act: Should the Entire Fee Request be Denied?,
24 U. BALT. L. REV. 149 (1994).
7
attempted to address this problem. The Eleventh Circuit’s
response, however, sanctions such a departure by the District
Court as to call for an exercise of this Court’s supervisory power.
The factual scenario here — where the plaintiff uses financially
‘small claims to subsidize failed litigation of long-shot claims
for higher stakes — is often repeated, and cries out for this
Court’s attention.
To start, this Court recognized more than a decade ago that
statutory fee awards reflect a balancing of interests. “Congress
intended that statutory fee awards be adequate to attract
competent counsel, but not produce windfalls to attorneys.”
City of Riverside v. Rivera, 477 U.S. 561, 579 (1986) (citation,
quotes, and editing omitted.) See also Farrar v. Hobby, 506
U.S. 103, 115-116 (1992); Hensley v. Eckerhart, 461 U.S. 424,
434-36 (1983).
The lower courts’ complete refusal to reduce the fee award
in the face of Respondent’s success on only a secondary claim,
her failure to obtain the equitable relief she demanded, and her
receipt of only a small portion of the monetary damages she
demanded under the pretense that her unsuccessful long-shot
claims were intertwined with her lone successful claim violates
both the letter and spirit of this Court’s ruling in Hensiey. Left
untouched, this result represents an open invitation to plaintiffs’
attorneys to “piggy-back” weak claims with high stakes onto a
minor claim with some reasonable merit, prevail on that one
claim, and then argue that a full fee award is justified because
the claims are interwoven. Defense attorneys, by contrast, are
faced with a Hobson’s choice: either accept settlement demands
that are far out of proportion to the substantive merits, or
continue to litigate with the prospect of losing a minor claim
and paying an exorbitant attorney fee award. Defendants should
not be forced to make such a choice, and plaintiffs should not
be permitted to “hold all of the cards.”
. |
|
‘4
+
2
8
Vacating the attorney fee award under the circumstances
present in this case is a critical “next step” in alleviating the
abuses that pervade attorney fee controversies in civil rights
cases. This Court already has held that the extent of a plaintiff's
success is a crucial factor in determining the proper amount of
a fee award, and even a prevailing plaintiff may be denied fees
if “special circumstances would render the award unjust.”
Hensley, 461 U.S. at 429, 434-36 (citations omitted). This Court
also has directed that the amount of damages recovered is
relevant to the amount of attorney fees awarded, and that
when the recovery of damages is the purpose of a
civil rights litigation, a district court, in fixing fees,
is obligated to give primary consideration to the
amount of damages awarded as compared to the
amount sought.
City of Riverside, 477 U.S. at 574; Id. at 586 (Powell, J.
concurring). This Court then pronounced that the most critical
factor in determining a fee award’s reasonableness is the degree
of success obtained, and that plaintiffs who recover only nominal
damages and fail to obtain any equitable relief usually are not
entitled to a fee award. Farrar, 506 U.S. at 112-16. Finally,
this Court has relieved a civil rights defendant of attorney fees
incurred after a Rule 68 offer of judgment where the judgment
recovered by the plaintiff is less than the offer. Marek v. Chesny,
473 U.S. 1 (1985).
Second, courts, including this Court, long have recognized
that voluntary settlement is the preferential means for resolving
Title VII cases and eliminating employment discrimination. See,
e.g., Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1974):
Donaldson v. Tennessee Valley Authority, 759 F.2d 535, 538
(6th Cir. 1985); Pettway v. American Cast Iron Pipe Co., 576
F.2d 1157, 1214 (Sth Cir. 1978), cert. denied, 439 U.S. 1115
R.A an a
Da AR MCs had eae eS Welk a ati hes! 2A I eee
9
(1979); Culpepper v. Reynold Metals Co., 421 F.2d 888, 891
(Sth Cir. 1970). Such efforts by employers should be rewarded.
The lower courts’ decisions in this case, however, force
parties in the opposite direction. Two reasonable settlement offers
were rejected, and the only explanation given to date for the
rejection is that Respondent’s counsel believed that they would
not be paid enough. Consequently, significant judicial resources
were wasted as the lawsuit now has lasted more than four years
longer than it should have just so Respondent’s counsel can be
rewarded for the failure of their primary claim, the constructive
discharge claim. “[R]efusing a reasonable offer of settlement
promotes few public interests when the plaintiff ultimately
receives a less favorable recovery after trial.” Sheppard v.
Riverview Nursing Center, Inc., 88 F.3d 1332, 1337 (4th Cir.),
cert. denied, __ U.S. __, 117 S. Ct. 483 (1996).
Vacating this fee award, however, will encourage early
settlements of civil rights cases. Faced with the risk of a
downside effect if they act only in their own interests, plaintiffs’
counsel will be compelled to weigh a reasonable settlement offer
that benefits their client against the possibility that they will be
penalized if they get greedy pursuing long-shot claims. Such a
choice should and will increase the likelihood that reasonable
offers will be accepted.
Upholding this fee award, which now totals nearly one-
quarter of a million dollars, clearly would turn every attorney
fee statute “into a relief Act for lawyers.” City of Riverside, 477
U.S. at 558 (Rehnquist, J., dissenting). From the moment
Respondent’s counsel rejected the November 1993 settlement
offer because its fees were allegedly not adequately addressed,
this case became a lawsuit over attorney fees. In fact, the failure
of Respondent’s counsel even to appeal the adverse ruling on
her discharge claim converted the appellate proceeding into little
10
more than a defense of the fee award. Such a result “wil)
unfortunately on!v add fuel to the fires of public indignation
over the cost of litigation.” Jd. (Burger, C.J., dissenting). Indeed,
“it would be difficult to find a better example of legal nonsense
than the fixing of attorney fees by a judge at” $169,000 (not to
mention the additional $74,000 in costs, appellate fees and post-
judgment interest) for a recovery of $12,229.65 in damages.
Id. at 587 (Burger, C.J., dissenting).
The result reached by the lower courts stands the attorney
fees statutes on their head. By rejecting two reasonable
settlement offers because it would not be paid enough and then
obtaining a resuit for their client that was less than what was
offered, Respondent’s counsel is “rewarded” with a fee award
that has nearly quadrupled since the first settlement offer was
made. By contrast, for its efforts in tendering two reasonable
settlement offers and achieving a result that is better than what
it had offered, Scandinavian is “rewarded” with a double
punishment. It has to Pay its own attorneys with no hope of
reimbursement because it is not a prevailing party, and it has to
pay Respondent’s attorney fees despite failing on their primary
claim.
It is a sad irony that the only “winners” in this protracted
proceeding are the attorneys. Respondent was not successful;
she received a final judgment that was thousands of dollars less
than what Scandinavian was ready to pay more than four years
ago. Scandinavian was not successful. By presenting a defense
that resulted in a final judgment that was less than what it had
offered, Scandinavian is forced to pay a fee award as if it had
suffered an unqualified loss. Most importantly, the District
Court’s limited resources were wasted by a legal proceeding
that could have ceased long before it did.
It stands to reason that: (1) a fee award should be reduced
dramatically where the plaintiff prevails on only a secondary
1]
claim fails to obtain any equitable relief, and receives a monetary
judgment that is a fraction of what is demanded, to reflect this
nearly complete lack of success; and/or (2) a defendant should
not be liable for attorney fees incurred after a good faith
settlement offer, made early in the litigation, is rejected where
the plaintiff’s eventual judgment is less than the offer due to
the complete failure of a plaintiff’s major claim.
I.
THE COURT OF APPEALS’ UNEXPLAINED
AFFIRMANCE OF RESPONDENT’S AWARD OF
ATTORNEY FEES UNDERMINES TITLE VII BY
SUBSIDIZING PLAINTIFFS WHO REJECT
SETTLEMENT OFFERS TO PURSUE LONG-SHOT
CLAIMS.
A. The Court of Appeals’ Decision Rewards Respondent
for the Failure of Her Primary Claim.
“(T]he extent of a plaintiff’s success is a crucial factor in
determining the proper amount of an award of attorney’s
fees... .” Hensley, 461 U.S. at 440. Only when a court rejects
“alternative legal grounds for a desired outcome” may a fee
reduction be avoided. /d. at 435.
Although the District Court acknowledged this obligation,
it paid only “lip service” to it by failing to reduce by one cent
Respondent’s requested fee award.* Such a refusal in light of
8. The District Court’s was unwilling to reduce Respondent's
requested fee award due to limited success because Respondent
already had made such a reduction, but its view is refuted by the
facts. The elimination of time for one attorney who attended, but
did nothing during the trial (which accounted for one-third of the
(Cont'd)
12
Respondent’s dramatically limited success is an unreasonable
application of Title VII.
1. Respondent's Primary and Secondary Claims Were Not
Interrelated For Purposes of An Attorneys’ Fees Award.
As Hensley teaches:
Where the plaintiff has failed to prevail on a claim
that is distinct in all respects from his successful
claims, the hours spent on the unsuccessful claim
should be excluded in considering the amount of a
reasonable fee.
Hensley, 461 U.S. at 440. “[W]Jork done on an unsuccessful
claim cannot be deemed to have been expended in pursuit of
the ultimate result achieved.” /d. at 435 (quote omitted).
The District Court’s conclusion that Respondent’s demotion
and constructive discharge claims were interrelated ignores
several critical facts found by the District Court. To start, the
District Court held that Respondent did not experience any
sexual harassment or other discriminatory treatment after her
demotion. Liability Decision, App. at 37. Moreover,
Respondent then voluntarily transferred to another work site
that was not supervised by any of the persons who harassed or
discriminated against her. Jd. Nor was she harassed or
discriminated against by anyone else at the new site. Jd. at 37-
38. It was from that work site that she terminated her employment
(Cont'd)
total voluntary reduction) obviously was for duplication of effort.
Overall, Respondent's voluntary reduction for limited success was
less than ten percent. The District Court's inaction, therefore, resulted
in no meaningful reduction for limited success despite Hensley’'s
directive to the contrary.
:
{
y
4
4
é
4
q
13
with Scandinavian, despite being urged to stay, to work for a
competitor at a higher rate of pay. Jd. at 38. The working
conditions at her last two work sites, therefore, were separate
and distinct from those at the work site from which she was
involuntarily transferred.
Because Respondent’s demotion and constructive discharge
claims are not “alternative legal grounds for a desired outcome,”
do not “involve a common core of facts,” and are not “based on
related legal theories,” id. at 435, her failure to prevail on her
constructive discharge claim mandated a substantial reduction
in her requested fee award. A good Starting point are the
examples indicated above of specific activities that were related
exclusively or primarily to her discharge claim. The District
Court should have excluded those services from a fee award.
Such a reduction should not have stopped there. Respondent’s
counsel should bear the consequences if it is difficult to identify
other such services because they “should maintain billing
records in a manner that will enable a reviewing court to identify
distinct claims.” /d. at 437. Failing that, the District Court should
have taken the initiative and reduced the fee award.
2. Even if Respondent's Primary and Secondary Claims
Were Interrelated, the Court of Appeals’ Decision
Undermines Title VII by Rewarding Respondent's
Counsel for Failure of Their Primary Claim.
Even
[w]here a lawsuit consists of related claims .. . where
the plaintiff achieved only limited success, the district
court should award only that amount of fees that is
reasonable in relation to the results obtained.
Hensley, 461 U.S. at 439. “[T]he district court should focus on
the significance of the overall relief obtained by the plaintiff in
14
relation to the hours reasonably expended on the litigation.”
Id. at 435.
Ifa... plaintiff has achieved only partial or limited
success, the product of hours reasonably expended
on the litigation as a whole times a reasonable hourly
rate may be an excessive amount.
Id. at 436. In such instances, “[t]he district court may attempt
to identify specific hours that should be eliminated, or it may
simply reduce the award to account for the limited success.” /d.
at 436-37.
Characterizing claims as interrelated, therefore, does not
shield against a fee reduction when the plaintiff’s success on
those claims is limited. A trial court’s discretion on how to reduce
the award (specific hours vs. across the board), however, “must
be exercised in light of the considerations . . . identified” in
Hensley. Id. at 437. It cannot abandon those responsibilities
simply because the successful and unsuccessful claims are
related.
But that is precisely what the District Court did.
Respondent’s success unquestionably was limited. She claims
she was discharged; she lost. She wanted her old job back; she
did not get it. She wanted $146,000 in back pay and $40,000
per year in front pay; she received less than $13,000. She wanted
recovery against five defendants; she recovered only from one.
Yet the District Court awarded her fees as if she had prevailed
in full on all of her claims.
Instead, the District Court should have acted the same as
courts have done in countless other instances and reduced
substantially the requested fee award. See, e.g., Carroll v.
Blinken, 105 F.3d 79 (2d Cir. 1997) (fee award reduced by
%
A
a
4
bo
*
a
‘2
*
‘
a
4
3
i
RY
4
15
95% because plaintiffs prevailed on minor issue and failed on
more significant claim); Hetzel v. County of Prince William, 89
F.3d 169 (4th Cir.) (plaintiff “entitled to only a fraction of her
attorney’s fees” due to failure on most consequential claims),
cert. denied, __ U.S. __, 117 S. Ct. 584 (1996); Corder v.
Brown, 25 F.3d 833, 836 (9th Cir. 1994) (district court award
of full fees vacated when plaintiffs received $24,000 damage
award after demanding $2-million because plaintiffs obtained
“only a small fraction of what they originally sought”); Popham
v. City of Kennesaw, 820 F.2d 1570, 1578-82 (11th Cir. 1987)
(fee award reduced by two-thirds when plaintiff received
damages of $30,000 after demanding $2-million); Myree v. Local
41, IBEW, 847 F. Supp. 1059 (W.D. N.Y.) (plaintiff received
$25,000 damage award after seeking more than $200,000 in
back pay; court reduced by 75% all time attributable to issue of
damages), aff'd mem., 29 F.3d 620 (2d Cir. 1994); Lawrence
v. Western Pipe Service, 146 F.R.D. 195 (N.D. Ala. 1993) (fee
award reduced by 90% when plaintiff received $350 judgment
instead of more than $30,000 demanded), aff’d mem., 19 F.3d
1445 (11th Cir. 1994). Its failure to do so in defiance of this
Court’s directives constitutes an abuse of discretion and is clearly
not “reasonable” within the meaning of § 706(k) of Title VII.
Respondent’s counsel has already acted as if such a
reduction were warranted. They made a reduction, albeit
inadequate, for time spent on the post-trial Findings of Fact
and Conclusions of Law even though work performed on
unsuccessful claims was interrelated with the successful ones.
By the same logic Respondent’s should have extended those
reductions to the vast amount of time devoted to discovery,
trial preparation, the drafting of pre-trial Findings of Fact and
Conclusions of Law, the trial, and closing arguments.
16
B. By Rewarding Respondent’s Counsel for Rejecting
Settlement Offers for More Than the Value of Their Only
Viable (But Secondary) Claim to Pursue a Long Shot, the
Court of Appeals’ Decision Undermines Farrar and
Promotes Vexatious Litigation.
When a plaintiff rejects a settlement offer that exceeds the
value of her only viable (but small value) claim to pursue a
long-shot claim that fails, it offends Title VII and this Court’s
precedent for plaintiff’s counsel to be rewarded when the result
is a judgment that is less than the offer. Under Farrar, supra,
the plaintiff does not qualify as a “prevailing party” for all
purposes relevant to attorneys’ fees awards under Title VII. The
final judgment did not “modify the defendant’s behavior,” as is
required for a prevailing plaintiff, see Farrar, 506 U.S. at 111-
12, because Scandinavian already was willing to pay Respondent
a sum that was greater than the judgment.
It offends the principles espoused by this Court in Farrar
that Respondent’s counsel was rewarded fees for any services
performed after the offer was rejected. “Farrar was designed to
prevent a situation in which a client receives a pyrrhic victory
and the lawyers take a pot of gold.” Sheppard, 88 F.3d at 1339.
Even though Respondent was a prevailing party on her
secondary claims, Farrar teaches that “the ‘technical’ nature of
a... judgment. . . does not bear on the propriety of fees
awarded. ...” Jd. at 114. A court “may lawfully award fees or
no fees without reciting the twelve factors bearing on
reasonableness, or multiplying the number of hours expended
by a reasonable hourly rate.” Jd. at 115 (citations and quotes
omitted). A complete denial is appropriate where
the relevant indicia of success — the extent of relief,
the significance of the legal issue on which the
;
=
}
;
a
;
§
&
17
plaintiff prevailed, and the public purpose served
— all point to a single conclusion: ... only a de
minimis victory.
Id. at 122 (O’Connor, J., concurring). To be specific: (1) “A
substantial difference between the judgment received and the
recovery sought suggests that the victory is in fact purely
technical”; (2) “If recovering one dollar from the least culpable
defendant and nothing from the rest legitimately can be labeled
a victory . . . surely it is a hollow one”; and (3) “Success might
be considered material if it also accomplished some public goal
other than occupying the time and energy of counsel, court,
and client.” Jd. at 121-22 (O’Connor, J., concurring).
Once Respondent rejected the November 1993 settlement
offer, she was no different than the plaintiff in Farrar. She
“asked for a bundle and got [less than] a pittance.” Jd. at 120
(O’Connor, J., concurring). Her discharge claim failed because
her departure was voluntary; consequently, her demand for
equitable relief (i.e., reinstatement) was denied. She demanded
tens of thousand of dollars more than what Scandinavian had
offered, and she received thousands less, and from only one of
the five defendants she sued. Indeed, given that the $17,500
settlement offer more than covered the demotion claim, the
remainder of the case fairly can be characterized as a failure to
prevail on the discharge claim that would have netted a larger
judgment. Finally, any public purpose served by the judgment
because the award was less than the settlement offer, was of less
consequence than had Respondent accepted the settlement offer.
See Simpson v. Sheahan, 104 F.3d 998, 1002 (7th Cir. 1997).
Thus, Respondent should be treated the same as the plaintiff in
Farrar from November 1993 onward.
Nor should this just result by affected simply because
Scandinavian’s settlement offer was not couched as a Rule 68
18
offer of judgment, as Respondent undoubtedly will maintain.
This requirement, articulated in Chesny, should be revisited for
several reasons.
Rule 68 does not require an offer of judgment to reduce a
plaintiff’s attorney fees. Rule 68 actually requires a plaintiff to
pay the defendant’s costs, a far more harsh penalty. The language
does not provide for the milder penalty of a reduction of the
plaintiff’s fees. Given the harshness of the articulated result to
the plaintiff, the defendant should correspondingly be required
to offer to take an adverse judgment before obtaining that
sanction.
A civil rights defendant, however, does not receive such
benefits when an offer of judgment is made. Lower courts
repeatedly have denied fees to civil rights defendants if the
plaintiff’s judgment is less than the offer,’ and this Court has
held that the Rule 68 sanctions are not applicable if the
defendant prevails. Delta Air Lines, Inc. v. August, 450 U.S.
346 (1981). A civil rights defendant, however, still must suffer
a judgement against it to reduce the plaintiff’s fees, a judgment
that could be used against it in other proceedings. A civil rights
defendant should not have to choose between offering to take a
judgment just to limit the plaintiff’s fees or pay those fees in
full even when the eventual judgment is less than the offer.
In addition, the focus upon Rule 68 in Marek was misplaced.
The defendant had raised two contentions before the lower
9. O’Brien v. City of Greers Ferry, 873 F.2d 1115, 1120 (8th
Cir. 1989); Crossman v. Marcoccio, 806 F.2d 329, 333-34 (ist Cir.
1986), cert. denied, 481 U.S. 1029 (1987); Denny v. Hinton, 131
F.R.D. 659, 665 (M.D. N.C. 1990), aff'd mem., 937 F.2d 602 (4th Cir.
1991); Adams v. Wolff, 110 E.R.D. 291, 293-94 (D. Nev. 1986): Chesny
v. Marek, 547 F. Supp. 542, 547-48 (N.D. Ill. 1982); Waters vy.
Heublein, Inc., 485 F. Supp. 110, 117 (N.D. Cal. 197% .
rl
3
2
+5 io a
‘ached: ohana haa acti haa,
tee Eye) St
ba", ita Ee, ee Or * ~ ra ae .
Le EN eae Paneer RRP ES eae RT ee ET
19
courts: the reduction of the plaintiff’s fees and a recovery of its
own fees. The lower courts denied both claims, but the defendant
did not appeal the denial of its own fees. The significance and
necessity of an offer of judgment should have ceased once the
defendant relinquished its own fee demand.
Finally, whether the defendant makes a settlement offer or
an offer of judgment is a difference without a distinction. The
goal cited in Chesny to encourage settlements is just as applicable
when, as here, a settlement offer, rather than an offer of judgment
is made.
Respondent’s counsel easily could have remedied its
concern that Scandinavian’s settlement offer did not cover its
attorney fees. They either could have proposed that the fee issue
be left open for the District Court to decide whether Respondent
was the prevailing party. See Maher v. Gagne, 448 U.S. 122,
129-30 (1980). They declined, and their silence has been
rewarded.
This Court’s prior rulings provide the basis, and the present
case provides the opportunity, to address the abuses in civil
rights litigation where lawsuits are generated by a fight over
attorney fees. Respondent should be denied recovery of attorney
fees after she rejected Scandinavian’s November 1993 or January
1994 settlement offers.
20
CONCLUSION
The Petition for Writ of Certiorari should be granted.
Respectfully submitted,
THOMAS H. BARNARD
Counsel of Record
BARTON A. BIXENSTINE
ULMER & BERNE LLP
Bond Court Building
1300 E. 9th Street
Suite 900
Cleveland, Ohio 44114-1583
(216) 621-8400
MARK E. ZELEK
MORGAN, LEWIS & BOCKIUS
5300 Southeast Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2339
(305) 579-0300
Attorneys for Petitioner
APPENDIX
la
APPENDIX A — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE ELEVENTH
CIRCUIT FILED OCTOBER 6, 1997
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 95-5228
D.C. Docket No. 92-1702-CIV-MARCUS
ANDREA FRANKLIN,
Plaintiff-Appellee,
versus
BALLY MANUFACTURING CORPORATION, a Delaware
Corporation, SCANDINAVIAN HEALTH SPA, INC., an Ohio
Corporation,
Defendants-Appellants,
MARK SEAMAN, MICHAEL PALUMBO, EUGENE
PALUMBO, ETC.,
Defendants.
No. 96-5367
D.C. Docket No. 92-1702-CIV-SM
ANDREA FRANKLIN,
Plaintiff-Appellee,
2a
Appendix A
versus
BALLY MANUFACTURING CORPORATION, a Delaware
Corporation, SCANDINAVIAN HEALTH SPA, INC., an Ohio
Corporation,
Defendants-Appellants.
Appeal from the United States District Court for the
Southern District of Florida
(October 6, 1997)
Before CARNES, Circuit Judge, KRAVITCH and REAVLEY’,
Senior Circuit Judges.
PER CURIAM:
None of appellant’s contentions warrant discussion, except
one. Pointing to paragraphs nos. 21-22 of the district court's
findings of fact and conclusions of law, appellant contends that
the district court erred in considering as evidence of a hostile
sexual environment statements and conduct about which
appellee had no knowledge. Faragher v. City of Boca Raton,
76 F.3d 1155, 1162. (11th Cir. 1996), aff’d, 111 F.3d 1530
(1977) (en banc) (without relevant discussion), held that “an
employee’s conditions of employment cannot be altered by
conduct of which she is unaware,” and “cannot contribute to
her subjective view of the work environment as hostile.” We
did hold, however, that such evidence “may be relevant to the
extent that it corroborates her allegations.” 76 F.3d at 1162 n.5.
* Honorable Thomas M. Reavley, Senior U.S. Circuit Judge for
the Fifth Circuit, sitting by designation.
Rake
nn tat ae ER Ds he 5 au S
One ne ee Bee
3a
Appendix A
Of course, the district court did not have the benefit of
Faragher when it decided this case. However, even assuming
that the district court considered evidence of conduct and
statements of which appellee was unaware as substantive
evidence instead of merely as corroboration of appellee’s own
testimony, any such error was harmless in view of all the other
evidence. As we held in Faragher, 76 F.3d at 1162, “[w]e have
no doubt that the district court would have found that [the
plaintiff's] work environment was abusive, both objectively and
subjectively, based solely on conduct of which [she] was aware.”
AFFIRMED.
4a
APPENDIX B — ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF FLORIDA FILED OCTOBER 9, 1996
UNITED STATE DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 92-1702-CIV-MARCUS
Magistrate Judge Bandstra
ANDREA FRANKLIN,
Plaintiff
v.
BALLY MANUFACTURING CORP., et al.,
Defendants.
ORDER
THIS CAUSE comes before the Court upon Plaintiff’s
Motion for an Award of Attorney’s Fees and Reimbursement of
Costs and Litigation Expenses, initially filed September 26,
1995. Plaintiff also filed supporting memorandum, affidavits
and appendices, the Defendants filed a detailed Memorandum
in Opposition on October 25, 1995, and Plaintiff replied.
This Court referred the Motion to Magistrate Judge
Bandstra, who filed a Report and Recommendation in support
of Plaintiff’s Motion on February 21, 1996, specifically
recommending: (1) that Plaintiff’s request for attorney’s fees be
granted in the amount of $168,978.50; (2) that Plaintiff’s request
for reimbursement of costs and expenses be granted in the
OS ee a ee ee ee
phot Rk hie
Sa
Appendix B
amount of $11,373.99; and (3) that Plaintiff be awarded post-
judgment interest, at the prevailing rate, from August 30, 1995,
on any attorney’s fees and costs ultimately awarded in the case.
Thereafter, Defendants filed written objections to the Report
and Recommendation and the Plaintiff responded. Having
presided over the trial and having considered all of the relevant
pleadings, documents, and affidavits, de novo, and being
otherwise fully advised in the premises, this Court concludes
that the Magistrate Judge’s Report and Recommendation should
be adopted and the Plaintiff's Motion GRANTED.
The central contention raised by Defendants is that the
“lodestar” figure should be adjusted downward because Plaintiff
succeeded only on certain claims and was awarded only a
portion of her requested damages. As the Magistrate Judge noted,
and, indeed, as this Court observed in the course of the bench
trial, operative facts relevant to several of the claims were plainly
intertwined and overlapping. Defendants’ suggestion that the
Court should attempt to dissect the interlocking pieces of
evidence is unavailing here. We are satisfied that the fee calculus
has excluded the excessive, redundant and otherwise
unnecessary. Plaintiff’s claims were based on a central core of
facts. She successfully litigated whether a sexually hostile work
environment existed and she successfully proved that she was
discriminately demoted. Under the particular facts and
circumstances of this case, we are convinced that this “lodestar”
fee is both fair and reasonable. The labor of Plaintiff’s counsel
ultimately resulted in successfully proving much of the core
facts of the case, secured a personal damage award, and
vindicated a clear congressional policy against discriminatory
work practices. Accordingly, it is
6a
Appendix B
ORDERED AND ADJUDGED that
1) Plaintiff’s request for attorney’s fees is GRANTED in
the amount of $168,978.50;
2) Plaintiff's request for reimbursement of costs and
expenses is GRANTED in the amount of $11,373.99: and
3) Plaintiff is awarded post-judgment interest, at the
prevailing rate, from August 30, 1995, on attorney’s fees and
costs awarded in the case.
DONE AND ORDERED at Miami, Florida, this 9th day
of October, 1996.
s/ Stanley Marcus
STANLEY MARCUS
UNITED STATES DISTRICT JUDGE
SOUTHERN DISTRICT OF FLORIDA
cc: Magistrate Judge Bandstra
Mark Zelek, Esq.
Thomas H. Barnard, Esq.
Scott J. Jontif, Esq.
Robert E. Weisberg, Esq.
Ta
APPENDIX C — REPORT AND RECOMMENDATION
. OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF FLORIDA
DATED FEBRUARY 21, 1996
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 92-1702-CIV-MARCUS
ANDREA FRANKLIN,
Plaintiff,
VS.
BALLY MANUFACTURING CORPORATION, et al.,
Defendants.
REPORT AND RECOMMENDATION
THIS CAUSE is before the Court on Plaintiff’s Motion for
an Award of Attorney’s Fees and Reimbursement of Costs and
Litigation Expenses filed on September 26, 1995. On January
18, 1996, this motion was referred to the undersigned by the
Honorable Stanley Marcus for a Report and Recommendation
pursuant to 28 U.S.C. § 636(b). Upon review of this motion,
defendants’ opposition thereto, the Court file and applicable
law, the undersigned recommends that plaintiff’s motion be
GRANTED as provided below.
es ne ee a ee
8a
Appendix C
INTRODUCTION
On July 22, 1992, plaintiff, Andrew Franklin, filed this
action against defendants, Bally Manufacturing Corporation and
Scandinavian Health Spas, Inc., alleging discrimination on the
basis of sex, sexual harrassment, and constructive discharge in
violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e et seg., and the Florida Human Rights Act, Fla. Stat.
§ § 760.10 et seq. Plaintiff also named certain individuals as
additional defendants in her complaint and asserted various state
law claims. The individual defendants and state law claims were
voluntarily dismissed by plaintiff early on in the litigation.
Following a period of discovery, the case proceeded to a
bench trial, between February 13, 1995 and February 17, 1995,
resulting in the issuance of Findings of Fact and Conclusions
of Law, dated August 30, 1995, in which the Court found
Scandinavian Health Spas liable for sexual harrassment and for
discriminatorily demoting plaintiff from one position to another.
The Court further found that Bally Manufacturing did not
constructively discharge plaintiff and, therefore, limited
plaintiff’s damages to $ 12,229.65.
On September 26, 1995, plaintiff filed the instant motion
for attorney’s fees, costs and litigation expenses. In this motion,
plaintiff seeks $170,838.50 in attorney’s fees, including those
incurred in conjunction with this motion, and $11,375.39 in
costs and expenses. In support thereof, plaintiff summits the
affidavits of her attorneys attesting to the accuracy of their
detailed billing records, the affidavit and billing records of a
paralegal who worked on the case, and a summary of costs and
litigation expenses incurred in the case.
-
a
a
a
é
.
3
;
:
;
9a
Appendix C
Defendants object to plaintiff’s motion arguing, in
summary, that the hours expended by plaintiff’s legal staff were
excessive, redundant and unreasonable. In addition, defendants
argue that the hourly rates charged by plaintiff’s attorneys are
excessive and unsupported. Defendants particularly complain
about plaintiff’s request for attorney’s fees in an amount in
excess of $180,000 when plaintiff recovered just over $12,000
in the case. Defendants also object to plaintiff’s attempt to recover
fees for attorney hours expended on unsuccessful claims
including plaintiff’s constructive discharge claim. Consequently,
iefendants request that this Court dismiss plaintiff's fee request
in toto or, in the alternative, award fees reduced to a reasonable
level.
ANALYSIS
A. Attorney's Fees
Pursuant to the Court’s Findings of Fact and Conclusions
of Law, plaintiff, as the prevailing party in this Title VII action,
is entitled to recover reasonable attorney’s fees pursuant to 42
U.S.C. § 2000e-5(b). In this circuit, the determination of a
reasonable attorney's fee begins by determining the “lodestar,”
a number calculated by multiplying hours reasonably expended
by counsel by a reasonable hourly rate. Norman v. Housing
Authority of City of Montgomery, 836 F.2d 1292, 1299 (11th
Cir. 1988) (citing Hensley v. Eckerhart, 421 U.S. 424, 433
(1983)). Generally, a district court has “great latitude in
formulating attorney’s fee awards” subject only to the necessity
of explaining its reasoning to allow for appellate review.
McKenzie v. Cooper, Levins & Pastko, Inc., 990 F.2d 1183,
1184 (11th Cir. 1993) (quoting Gilmere v. City of Atlanta, 931
F.2d 811, 814 (11th Cir. 1991)).
10a
Appendix C
Here, plaintiff calculates a suggested loadstar of
$170,838.50' by multiplying the hours expended by her four
attorneys working on the case by their hourly billing rates
ranging from $150.00 to $250.00. Plaintiff supports her loadstar
calculation with the detailed billing records of each attorney
which provide a brief description of the work performed by
each attorney and the time expended on the various tasks on
particular dates. Plaintiff also seeks paralegal expenses, in the
amount of $8,911.11 (included in her loadstar calculation),
which are also supported by the affidavit and billing records of
the paralegal working on the case.
Defendants raise several objections to the suggested loadstar
challenging both the reasonableness of the hours expended by
plaintiff’s legal staff and their hourly billing rates. Defendants
begin their challenge noting plaintiff’s “limited success” at trial
on only certain claims in her complaint and her recovery of
“only” $12,229.65 in damages. Defendants argue that plaintiff
cannot possibly justify as reasonable her request for attorney’s
fee in an amount over $180,000 when she succeeded on only
some of her claims and not on her claim for constructive
discharge. From this premise, defendants argue that the hours
plaintiff's legal staff claim to have expended on successful claims
1. Plaintiff's suggested loadstar includes $6,050.00 sought for
attorney's fees incurred in conjunction with litigating the attorney's
fees issue. Plaintiff notes the general rule recognized in this circuit
that time expended litigating attorney's fees is fully compensable.
See e.g. Martin v. University of South Alabama, 911 F.2d 604, 610
(11th Cir. 1990); Johnson v. University College of University of
Alabama in Birmingham, 706 F.2d 1205, 1207 (11th Cir. 1983).
Defendants make no specific objection to plaintiff’s request for
attorneys fees resulting from this particular motion except as
addressed above.
he, RON all OMAR OL EG SA a
j
4
lla
Appendix C
are excessive, redundant and unreasonable, citing numerous
examples of excessive fees from the billing records of plaintiff's
attorneys.
The first issue raised by defendants is whether the loadstar
figure should be adjusted downward because plaintiff succeeded
on only certain claims and was awarded only a portion of her
requested damages. This issue has been repeatedly addressed
by the Supreme Court and the Eleventh Circuit Court of Appeals
in recent years. In the landmark case of Hensley v. Eckerhart,
supra, the Supreme Court announced the following result
oriented standard:
We hold that the extent of a plaintiff's success is a
crucial factor in determining the proper amount of
an award of attorney’s fees under 42 U.S.C. § 1988.
Where the plaintiff has failed to prevail on a claim
that is distinct in all respects from his successful
claims, the hours spent on the unsuccessful claim
should be excluded in considering the amount of a
reasonable fee. Where a lawsuit consists of related
claims, a plaintiff who has won substantial relief
should not have his attorney’s fee reduced simply
because the district court did not adopt each
contention raised.
Hensley, 461 U.S. at 440.
Hensley teaches that a critical factor in determining
appropriate attorney’s fees is the degree of success obtained in
the case. William v. Roberts, 904 F.2d 634, 640 (11th Cir. 1990).
Thus, the district court, when reviewing an attorney’s fees
motion, should consider the relationship of the claims that
12a
Appendix C
resulted in the judgment with the claims that were rejected and
the contribution, if any, made to plaintiff’s success of the
investigation and prosecution of the entire case. /d. Importantly,
where operative facts relevant to the several claims are
overlapping and intertwined, the court need not attempt to dissect
the interlocking evidence and consider it in isolation as
supporting only one claim or the other. /d. Finally, the court
need not lower an attorney’s fee award simply because a
successful Title VII plaintiff did not receive the full amount of
damages sought in the case. Id. (citing City of Riverside v.
Rivera, 477 U.S. 561, 106 S. Ct. 2686 (1986) (as a rule,
attorney’s fees in civil rights cases should not be lowered to a
porportion of the damages awarded).
Reviewing plaintiff’s billing records and the court file, the
undersigned finds that plaintiff has made a reasonable and good
faith attempt to seek attorney’s fees for only those hours
expended by her attorneys on her successful claims of sexual
harrassment and discriminatory transfer/demotion while
attempting to exclude those hours directed solely to unsuccessful
claims. Defendants estimate that plaintiff excludes only about
100 attorney hours (of approximately 980 expended by
plaintiff’s legal staff), and plaintiff does not challenge this
estimate. While a 10% reduction of time may seem insignificant
to defendants, the undersigned does not find it “inconceivable”
that only 10% of plaintiff’s attorney time was expended solely
on unsuccessful claims. Stated otherwise, the undersigned finds
no reason to question plaintiff’s estimate that 90% of her
attorney’s time was spent developing facts that were overlapping
and interwined with both successful and unsuccessful claims.
Finding no reason to reduce the requested lodestar based
on plaintiff's “limited” success at trial, the undersigned next
13a
Appendix C
examines plaintiff’s billing records to determine whether any
hours expended by plaintiff’s legal staff were excessive,
redundant, or unreasonable. To a large extent, defendants argue
for such a finding based on the fact that plaintiff’s law firm had
four attorneys working on the case, sharing certain
responsibilities, and carrying pretrial discovery and trial
responsibilities at different times in the case. The undersigned
finds no inherent problem in plaintiff staffing her case in this
manner. As noted above, each attorney working on the case
submitted his or her own affidavit and billing records which
document the work responsibilities of each attorney and the
time spent on particular tasks. The undersigned does not find
that any of the tasks performed were unnecessary to the
preparation or trial of this case or that plaintiff’s attorneys merely
duplicated each other’s work resulting in excessive fees. Thus,
the undersigned rejects defendants’ contention that plaintiff’s
attorneys “milked” the case to increase their fees.
Defendants also note several “examples” of “inappropriate
charges” in support of their position. Reviewing those examples,
the undersigned finds no obvious instances of excessive billing
associated with the depositions, written discovery, or any other
work in the case. While the requested fee appears high, it does
not seem excessive due to the numerous depositions completed
prior to trial, the numerous issues which went to trial, and the
degree to which defendants defended the case. Plaintiffs, in
their reply memorandum agree to delete 12.4 hours of attorney
time as hours inadvertently included in the fee request. Apart
from those hours, the undersigned finds no reason to
recommend a further reduction of the requested lodestar due to
any excessive or unreasonable billing by plaintiff’s attorneys.
Finally, the undersigned finds that the hourly billing rates
charged by plaintiff’s attorneys are reasonable for attorneys of
l4a
Appendix C
their skill and experience in this type of litigation. Three of
plaintiff’s four attorneys billed at the hourly rate of $150.00.
Only Robert E. Weisbergk, Esquire, billed at $250.00 per hour.
Based on this Court’s experience and knowledge of attorney
rates typically charged for this type of litigation by attorneys of
similar experience and skill, the undersigned finds these rates
are reasonable for this particular case.
B. Costs and Expenses
Plaintiff also seeks to recover $11,373.99 in costs and
expenses incurred in the case. Reviewing plaintiff's summary
of such expenses, it appears that the largest expense, was for
court reporter costs for transcripts and attendance fees
($5,942.55) with the remainder of the expenses composed
mostly of photocopying, mailing, and other recoverable
expenses. Defendants raise no objection whatsoever to any of
the requested costs or expenses. Accordingly, the undersigned
recommends a reimbursement of costs and expenses in the
requested amount of $11,373.99.
C. Post-Judgment Interest
Finally, plaintiff seeks post-judgment interest on attorney's
fees and costs ultimately awarded in the case from August 30,
1995, the date of the Court’s issuance of it’s Findings of Fact
and Conclusions of Law. Plaintiff cites authority in support of
its request for interest on fees although not from this circuit.
- See e.g. Copper Liquor, Inc. v. Adolph Coors Co., 701 F.2d
542 (Sth Cir. 1988) (interest awarded on fees from date of
original judgment); Finkelstein v. Bergna, 804 F. Supp. 1235,
1240 (N.D. Cal. 1992). Once again, defendants raise no
objection to this aspect of plaintiff’s motion.
15a
Appendix C
Accordingly, the undersigned recommends that the Court
award post-judgment interest, at the prevailing rate, on any
attorney's fees and costs ultimately awarded by the Court from
August 30, 1995.
SUMMARY
For all of the foregoing reasons, the undersigned
recommends:
(a) that plaintiff's request for attorney’s fees be GRANTED
in the amount of $168,978.50;
(b) that plaintiff’s request for reimbursement of costs and
expenses be GRANTED in the amount of $11,373.99; and
(c) that plaintiff be awarded post-judgment interest, at the
prevailing rate, from August 30, 1995, on any attorney’s fees
and costs ultimately awarded in the case.
The parties may serve and file written objections to this
Report and Recommendation with the Honorable Stanley
Marcus, United States District Judge, within ten (10) days of
the receipt. See 28 U.S.C. § 636(b)(1)(C); United States v.
Warren, 687 F.2d 347 (11th Cir. 1982), cert. denied, 460 U.S.
1087 (1983); Hardin v. Wainwright, 678 F.2d 589 (Sth Cir.
Unit B 1982); see also Thomas v. Arn., 474 U.S. 140 (1985).
seta iii
l6a
Appendix C
RESPECTFULLY SUBMITTED at Miami, Florida this
21st day of February, 1996.
s/ Ted E. Bandstra
Ted E. Bandstra
United States Magistrate Judge
Copies furnished to:
Hon. Stanley Marcus
All counsel of record
17a
APPENDIX D — FINAL JUDGMENT OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF FLORIDA FILED OCTOBER 16, 1995
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 92-1702-CIV-MARCUS
ANDREA FRANKLIN,
Plaintiff,
vs.
BALLY MANUFACTURING CORPORATION, a Delaware
corporation, and SCANDINAVIAN HEALTH SPA, INC., an
Ohio corp.,
Defendant.
FINAL JUDGMENT
THIS ACTION came for trial before the Court, Honorable
Stanley Marcus, District Judge, presiding and the issues having
been duly tried and the Court having entered its Findings of
Fact and Conclusions of Law, it is hereby
ORDERED AND ADJUDGED, that judgment is hereby
entered in favor of Defendant, BALLY MANUFACTURING
CORP., and against Plaintiff, ANDREA FRANKLIN, with
respect to her claims against BALLY MANUFACTURING
CORP. If is further
ORDERED AND ADJUDGED, that the Plaintiff,
ANDREA FRANKLIN, recover from Defendant,
18a
Appendix D
SCANDINAVIAN HEALTH SPA, INC., the sum of fourteen
thousand eight hundred forty six dollars and twenty one cents
($14,846.21) which includes damages in the amount of twelve
thousand two hundred twenty nine dollars and sixty five cents
($12,229.65) and prejudgment interest in the amount of two
thousand six hundred sixteen dollars and fifty six cents
($2,616.56). Plaintiff shall also recover post judgment interest
at the rate allowed by law. It is further,
ORDERED AND ADJUDGED that Plaintiff, ANDREA
FRANKLIN, as a prevailing party in a Title VII action, is also
entitled to recover reasonable attorneys’ fees pursuant to 42
U.S.C. §2000e-5(k), as well as her costs. The Court will enter a
separate Order on Plaintiff's attorneys’ fees and costs.
DONE AND ORDERED in Chambers in Miami, Dade
County, Florida this 16th day of October, 1995.
s/ Stanley Marcus
STANLEY MARCUS
UNITED STATES DISTRICT JUDGE
cc: Counsel of Record
F; ae
ce Rit Seer
EE. ee oot
19a
APPENDIX E — FINDINGS OF FACT AND
CONCLUSIONS OF LAW OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF FLORIDA FILED AUGUST 30, 1995
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 92-1702-CIV-MARCUS
ANDREA FRANKLIN,
Plaintiff,
V.
BALLY MANUFACTURING CORPORATION,
a Delaware corporation licensed to do business in Florida,
and SCANDINAVIAN HEALTH SPA, INC., an Ohio
Corporation licensed to do business in Florida,
Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS CAUSE was tried without a jury before the Court on
February 13-15, 1995, and closing arguments were heard on
May 16, 1995. In this action, Plaintiff Andrea Franklin sues
her former employer for violations of Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. § 2000¢e et seq.,
and Florida Statutes Chapter 760. Specifically, Count I of the
Plaintiff’s complaint alleges that she was discriminated against
when she was demoted and constructively discharged on the
basis of her gender, in violation of Title VII. In Count H, Plaintiff
claims that she was subjected to a sexually hostile and offensive
20a
Appendix E
work environment, also in violation of Title VII. Count III,
claiming intentional infliction of emotional distress, was
voluntarily dismissed by the Plaintiff on February 23, 1993.
Count IV alleges that the same discriminatory conduct against
the Plaintiff was in violation of Chapter 760 of the Florida
Statutes.
Jurisdiction is vested in this Court by 42 U.S.C. § 2000e
5(f) (3) and 28 U.S.C. §§ 1331 and 1367, and pursuant to Fed.
R. Civ. P. 52(a), the Court makes the following Findings of
Fact and Conclusions of Law.
I. FINDINGS OF FACT
1. The parties have stipulated that:
A. Plaintiff was an employee of Defendant
Scandinavian Health Spa, Inc. (“Scandinavian”).
B. Defendant Scandinavian owns and operates eleven
clubs in Dade, Broward and Palm Beach Counties, among others
in other states in the United States.
C. Defendant Scandinavian is a wholly-owned
subsidiary of Defendant Bally Manufacturing Corp. (“Bally”).
D. Defendants Scandinavian and Bally are employers
under Title VII who are engaged in interstate commerce and
each of them employs twenty or more employees.
2. The Plaintiff filed an administrative charge of
discrimination with the Equal Employment Opportunity
Commission (“EEOC”) (EEOC Charge No. 150-91-2900) on
ee Me
2la
Appendix E
or about August 8, 1991. The EEOC issued a Notice of Right
to Sue, which was received by the Plaintiff within ninety days
before July 22, 1992. The Plaintiff has met all conditions
precedent to the filing of this action.
3. The eleven health clubs operated by Scandinavian in
South Florida were known as: Davie, Courtrooms, Waterways,
Kendall I, Kendall II, North Miami, Pompano, Coral Gables,
Boca Raton, West Palm, and Palm Beach. The Kendall I,
Pompano, and North Miami locations were known as “non-
executive” clubs, while the remaining eight were classified as
“executive” clubs. The distinctions between executive and non-
executive clubs were the size of the facility and the amenities.
The executive clubs were larger and held amenities not offered
by the non-executive clubs, which included, for example, one
or more of the following: tennis courts, racquetball courts, a
larger swimming pool, more exercise classes, a tanning room,
and a running track.
4. Membership sales were the primary revenue source for
Scandinavian’s South Florida clubs. Employees sold
memberships in different packages and for different lengths of
time. At all relevant times, however, the majority of membership
options in the South Florida clubs permitted the member to use
any of Scandinavian’s clubs, whether executive or non-
executive. Salespeople in non-executive clubs could sell both
the same membership packages as sold in executive clubs, as
well as being able to offer less expensive memberships when
the sale was made at a non-executive club.
5. Before March 11, 1991, all eleven South Florida clubs
had the same sales and management structure. Each club had
two sales teams, known as divisions. The divisions were
22a
Appendix E
comprised of an equal number of Program Directors — the
entry level sales position at Scandinavian. The division might
also include one or two Staff Managers, also known as Future
Managers. The entire division was run by the Division Manager
(or “DM”), and the two Division Managers reported to a single
club General Manager (or “GM”).
6. Program Directors were responsible primarily for selling
club memberships, and their compensation was based on sales
commissions. Staff Managers, like Program Directors, were
primarily concerned with selling memberships, but they also
oversaw the sales efforts of a few Program Directors as well.
Division Managers were responsible for generating both their
own personal sales and for coordinating and maximizing the
sales efforts of the Program Directors and Staff Managers on
their teams. The DMs assisted with sales efforts, helped close
deals, and coached and pressured Program Directors to ensure
high levels of sales. Division Managers’ compensation was
primarily based on their own sales results, but they were also
able to earn “overrides” depending on how well their team
performed relative to the team’s sales quota.
7. The monthly sales quotas for the South Florida clubs
were set by Scandinavian according to the sales expectations
for the club. Non-executive clubs generally had smaller sales
quotas and smaller sales staffs than executive clubs. Each
salesperson had an individual sales quota, computed as some
portion of the club’s overall sales quota. Each Divisional
Manager also had a sales quota for his or her staff that equalled
half of the club’s overall sales quota.
8. Selling memberships at a non-executive club was more
difficult than at an executive club because the smaller size and
H
t
4A
4
3
3
23a
Appendix E
fewer amenities drew less traffic into the club, resulted in a
smaller member base, and made selling a membership more
difficult. A Divisional Manager at a non-executive club could
genera'ly be expected to earn less than a Divisional Manager at
an executive club because of the lower overall membership sales
rate at those facilities. This difference was offset to some degree,
however, because non-executive clubs had lower sales quotas,
making it easier to obtain override compensation. In a few
instances, an individual DM at a non-executive club did earn
more in a single month than an individual DM at an executive
club.
9. Prior to March of 1991, each club had a single General
Manager, the highest management position at any one facility.
The GM was responsible for the day-to-day operation of the
club, as well as its overall sales performance. The GM was not
rersonally responsible for selling memberships, and the GM’s
compensation was based entirely on salary and overrides.
10. As nearly every present and former Scandinavian
salesperson or manager to testify made clear, Scandinavian
employees worked in a potentially lucrative, but high pressure,
competitive sales environment. Employees were consistently
expected to sell large numbers of memberships and were always
in competition with one another for promotional opportunities
and even for maintenance of their own positions. Salespeople
and managers were commonly transferred from one position to
another, either within or among clubs. These transfers often
involved demotions and promotions between levels of
management and sales positions, as well as lateral transfers to
more or less desirable clubs. Nearly every former or present
Scandinavian employee having achieved a position beyond
Program Director who testified at trial had a work history replete
24a
Appendix E
with transfers, promotions, and demotions. Both male and
female employees experienced this shuffling of positions.
11. During 1990, the eleven South Florida Scandinavian
clubs were under the direction of Jeff Stockstill. In addition, in
December of 1989, Mark Seaman was promoted to a position
called Area Manager. In that capacity, Seaman supervised first
three, and later four clubs, and reported to Jeff Stockstill, who
supervised the remaining South Florida clubs directly. The clubs
under Seaman’s management were Kendall I, Kendall II, and
Coral Gables. The Davie club was later added as a fourth facility
under Seaman’s direction.
12. Andrea Franklin was introduced to the Scandinavian
clubs in late 1988 or early 1989, when she was an employee of
another club owned by Bally in St. Louis, Missouri. During a
vacation in South Florida, Franklin went to the Waterways club
to exercise. As a manager of another club owned by Bally, she
was permitted to use any of the Bally-owned facilities in the
country. Mark Seaman was the manager at the Waterways club
at that time. Seaman discussed the earnings potential at the South
Florida Scandinavian clubs with Franklin, and encouraged her
to come to work for him. Seaman explained, however, that
Franklin would have to start at the bottom and work her way
up. Seaman then gave the Plaintiff the name of one of the
Divisional Managers at Waterways, Joe Picone, and told Franklin
to contact Picone if she were interested in pursuing a position.
Franklin did contact Picone, made arrangements to move to
Florida, and began workin? atthe Waterways club in May of
1989 as a Program Director.
13. Shortly before the Plaintiff joined the sales team at
Waterways, Seaman also hired Dave Widstrand, who had
previously been a manager of other health clubs in the Chicago
25a
Appendix E
area, as a Future Manager/Staff Manager in the Waterways club.
In August of 1989, Franklin was promoted to the Staff Manager
position.
14. In September of 1989, Franklin was promoted to the
position of Divisional Manager at the Kendall II facility, under
then General Manager Ron Wilcox. Franklin took over this
position in October of 1989. The other Divisional Manager
position at Kendall II remained unoccupied until mid-December
of 1989.
15. Stuart Dansby replaced Wilcox as General Manager at
Kendall II in early December of 1989. Also in December of
1989, Seaman was promoted to the position of Area Manager,
with direct supervision of the Kendall I, Kendall II, and Coral
Gables clubs. At about the same time, Jeff Stockstill became
the Area Director for all eleven South Florida Scandinavian
clubs.
17. Seaman’s office during this time was located in the
Coral Gables club, and he spent the majority of his time at that
facility. His contact with the Kendall II club included calling
the club daily and visiting the club approximately once a week.
18. Also in December of 1989, Jim Willin was moved from
his position as General Manager at the Kendall I club to the
open Divisional Manager position at Kendall II, opposite
Franklin. Franklin worked the “A team” which covered Monday,
Wednesday, Friday, and alternating Sundays. Willin’s “B team”
worked Tuesday, Thursday, Saturday, and alternating Sundays.
19. A typical work day on Franklin’s Monday-Wednesday-
Friday and alternating Sunday schedule ran from 10 or 11 in
the morning until 10 or 11 at night. In addition, on Tuesday,
26a
Appendix E
Thursday, and Saturday, the “off days,” salespeople were
expected to report for “phone night.” On phone night, the
employee worked between two and four hours in the afternoon
or early evening, setting up appointments for the next work
day. Thus, in a typical month, Franklin and the other salespeople
could expect to have two days entirely off from work.
20. The Kendall II club was performing poorly at this time.
In September of 1989, for example, the club fulfilled only 65
percent of its $325,000.00 sales quota for the month. By January
of 1990, however, the club reached 115 percent of its then
$375,000.00 sales quota. The monthly sales performances of
Franklin and Willin and their respective staffs for January
through August of 1990 at Kendall II were as follows:'
—STAFF RESULTS— —PERSONAL RESULTS—
Month/DM Quota/Sales % Quota/Sales %
January $187,500 $50,000
Franklin $225,138 120 $55,990 112
Willin $205,658 110 $63,578 127
February $187,500 $50,000
Franklin $183,059 98 $64,324 129
Willin $143,319 76 $68,108 136
March $187,500 $50,000
Franklin $216,563 116 $63,438 127
Willin $196,432 105 $62,811 126
April $187,500 $50,000/
$42,000?
Franklin $194,011 103 $61,629 123
Willin $193,597 103 $47,303 113
1. Defs.” Exh. 3, Composite Staff Results for the South Florida
Clubs for 1990.
2. In April of 1990, Willin’s personal quota was $42,000, while
Franklin’s was $50,000.
27a
Appendix E
May $187,500 $60,000
Franklin $210,150 112 $61,703 103
Willin $213,762 114 $66,813 111
June $187,500 $60,000
Franklin $215,231 115 $59,705 100
Willin $214,442 114 $70,314 117
July $187,500 $50,000
Franklin $242,110 129 $56,689 113
Willin $234,558 125 $65,031 130
August $187,500 $50,000
Franklin $252,331 135 $58,211 116
Willin $260,733 139 $58,694 117
Thus, the two Divisional Managers at the Kendall II club
performed comparably for the period between January and
August of 1990.
A. Claim of Sexual Discrimination Based upon a Sexually
Hostile and Offensive Work Environment
21. Despite the Plaintiff's accomplishments in her tenure
with the Scandinavian clubs, Mark Seaman and Stuart Dansby
subjected the Plaintiff to a continuous pattern of harassment
based upon her gender. The oppressive working conditions and
acts of sexual discrimination and harassment she suffered while
working at Kendall II between January and October of 1990
included:
a. At periodic group meetings and in the club, Plaintiff
Franklin was referred to in a sexually derogatory and degrading
manner. Both Dansby and Seaman regularly referred to Franklin
as the “DM with tits.” This epithet was applied to Franklin both
when Dansby and Seaman addressed her directly and as a means
28a
Appendix E
of referring to her with others. Seaman and Dansby used the
phrase “DM with tits” during conversations in front of club
members, as well as the staff. Dansby admits having referred to
Franklin in this manner. In addition, a number of former
Scandinavian employees testified as to these derogatory
comments. Gina Reyes testified that she heard both Dansby
and Seaman call Franklin “DM with tits;” Ana Remond testified
to having overheard Dansby on the telephone with Seaman on
two separate occasions in which he referred to Franklin as a
“DM with tits;” Cindy Watson testified to having heard Seaman
use the term “DM with tits” in reference to the Plaintiff; and
Ron Wilcox testified that Seaman used the phrase “DM with
tits” on “a couple of occasions.” (Wilcox Depos. at 53). Wilcox
recalled in particular that at a meeting regarding Franklin's
demotion to North Miami, Seaman stated that he was “sick and
tired of DMs with tits.” Plainly, the repeated use of this
derogatory phrase undermined Plaintiff's authority with both
her staff and club members and humiliated her.
22. Mark Seaman and Stuart Dansby subjected the Plaintiff
to a series of derogatory remarks and an oppressive work
environment. Cindy Watson’ testified credibly that Dansby stated
at a meeting at the Kendall II club that “you could fly a small
jet engine into Andrea Franklin’s crotch and not hit the sides.”
Watson also testified that Seaman had referred to Watson as a
“dumb fucking cunt,” that she must be a “great lay” to have
attained her position with Scandinavian, and that the only reason
she made as much money as she did was because she was “good
on her back.” In addition, Watson further recalled Seaman
making certain generally derogatory comments about women
3. Watson was the General Manager of the Coral Gables club,
where Seaman had his office during 1990 and spent the majority of
his time.
29a
Appendix E
employees on a regular basis in 1990, including: that women
don’t have the “warrior mentality” that it takes to succeed, that
a woman's place was at home, that women were not strong
enough for promotion, and that women employees asked for
too much time off.
Ron Wilcox testified that Seaman regularly expressed a
dislike for women and that he often conveyed the idea that “on
a management level, that women were not good enough to be
general managers... .” Wilcox Depos. at 57. Wilcox also
recalled Seaman “alluding to the fact that he preferred to have
men as general managers, that they were more reliable, that
they were more dependable, that he didn’t have to worry about
them, whether they’re going to have their periods or not,
whether they’re going to be sick, whether they'd make it into
work that day or not, whether they'd have complaints.” /d. at
58-59.
Gina Reyes, a staff manager on Andrea Franklin’s team at
Kendall II, added that Dansby often made sexually derogatory
comments about the women members of his staff at team
meetings. In particular, Reyes recalled Dansby telling her to go
out into the club with her “lead boxes” and get some leads,
referring to her large breasts. These comments were made in
Franklin’s presence.
Ana Remond testified that while she was a Divisional
Manager at the Coral Gables club, Mark Seaman made numerous
derogatory comments about women generally. Seaman stated
that women don’t make good managers because they don’t have
the “warrior mentality,” and that women should stay at home
and cook. Remond also recalled having heard Seaman call
Cindy Watson a “fucking dumb bitch” and telling Remond not
to listen to Watson.
30a
Appendix E
Finally, Plaintiff Franklin testified credibly that Seaman
was often present when Dansby would call her the “DM with
tits” but that he never reprimanded Dansby. Instead, Seaman
laughed. Franklin complained to Dansby about both his own
behavior and that of Seaman, but Dansby did nothing to correct
the problem.
23. Seaman and Dansby treated Franklin differently from
her male counterpart, Jim Willin, despite their nearly identical
records of sales, both personally and for their staffs. Dansby
and Seaman often screamed and yelled at Franklin, while Willin
was spared this kind of treatment. In addition, Franklin received
written warnings for conduct that Willin was never reprimanded
for. Finally, after Willin had been out of the club for nearly a
month for personal reasons, Franklin was not permitted to take
even a one-week vacation. The increasing pressure that was
heaped upon Franklin by Dansby, and at Seaman's direction,
culminated in her demotion in October of 1990.
B. Claim of Sexual Discrimination in Demotion from
Kendall II to North Miami Club
24. In September of 1990, Willin was absent for the
majority of the month, first on bereavement leave, and later for
medical reasons. While Willin was out of the club, the Plaintiff
was required to cover Willin’s responsibilities. Franklin worked
every day in September without a single day off. Despite Willin’s
absence, and with Franklin’s considerable efforts, the Kendall
II club achieved 101 percent of its $400,000.00 quota in
September of 1990. Defs.’ Exh. 4 at 002682. The A-team sold
111 percent of its $200,000.00 quota, and the B-team 95 percent
of its $200,000.00 quota. The Plaintiff herself reached sales of
116 percent of her personal quota in September, while Willin
sold only 38 percent of his quota.
“i an aioe a
3la
Appendix E
25. Stuart Dansby testified that it was Mark Seaman’s
decision that Franklin would have to make up for Willin’s
absence during the September period. Dansby specifically
acknowledged that requiring her to take over Willin’s staff in
addition to her own was a lot to ask. However, Dansby did not
relate these concerns to Seaman and instead continued to apply
the pressure to Franklin at Seaman’s direction.
26. The Plaintiff received six employee warning reports
while she was a Divisional Manager at Kendall II. First, on
June 20, 1990, Plaintiff was warned for not meeting
requirements of $5000 of personal gross sales in a working
day, having fifteen appointments scheduled for a working day,
staying until the last sale is made and the last salesperson goes
off duty, and staying until 8:30 p.m. on phone night. Next, on
September 20, 1990, the Plaintiff was given three written
warnings charging, respectively, that Plaintiff: (1) wrote a
“phony turn back the hands of time contract;” (2) forged Stuart
Dansby’s signature on a contract; and (3) called in $4,000.00
of “non-existent gross.” On October 17, 1990, Plaintiff was
given two warnings, both for coming to work without fifteen
appointments. The Plaintiff did not disagree in writing with
any of these write-ups, despite there being a space on the form
for the employee to respond to the charge. However, we credit
Franklin’s testimony that Dansby instructed her not to disagree
if she wanted to keep her job. Jim Willin also testified that on
one occasion when he was warned for an incident in 1989 which
he did not believe was his fault, he was instructed not to disagree.
27. Other similarly situated employees generally were not
given written warnings for the kinds of problems identified in
the warnings given to the Plaintiff. Gina Reyes, a member of
the A team, testified that she often worked out in the Kendall II
32a
Appendix E
club on her phone nights after completing her work. Therefore,
she was often present at the end of the B team’s sales day. Reyes
stated that Jim Willin did not always stay until the last salesperson
on his team left for the night, but that his Staff Manager would
sometimes stay and call in the daily numbers instead. Although
Willin testified that he never left before the last salesperson, we
find Reyes’s testimony on this point credible, as she has no
apparent bias and clearly recalled the circumstances surrounding
these nights.
Dave Widstrand, formerly a Divisional Manager, General
Manager, and Area Manager for Scandinavian, testified that
salespeople were permitted to sell “turn back the hands of time”
contracts* even when the promotion was not being run and
even if no existing member came in with the new member.’
4. The “turn back the hands of time” contract was a promotion
in which a prospective member could join at the rate at which an
existing club member had joined, even if the club member had joined
many years ago at a rate no longer available for memberships. The
promotion was a way of getting existing members to bring in their
friends as members of the club.
5. Defendants objected to Widstrand’s testimony with respect
to this subject on the grounds of relevancy, foundation, and hearsay.
Widstrand’s testimony is relevant to the issue of whether it was
acceptable practice for Scandinavian employees to use the turn back
the hands of time promotion at times when the promotion was not
officially being run. If this practice were allowed, then the fact that
Plaintiff was written up for doing so would be an indication that the
warning was undeserved. With respect to the claim of hearsay,
Widstrand testified as to matters within his own knowledge. To the
extent that Widstrand testified as to what Jeff Stockstill told
managers about the acceptability of this practice, the testimony is
not hearsay because it was not offered for the truth of its contents,
but for the fact that it was stated. If Stockstill told managers that
(Cont'd)
33a
Appendix E
Widstrand further stated that he himself sold such contracts and
was never disciplined for doing so. Widstrand also testified that
calling in “non-existent gross”* was commonplace among
Divisional Managers, including himself, but that he never
received any written warnings for doing so.
The Divisional Managers at Kendall II during this time
could not have been expected to sell $5000 per day in
memberships. Each DM would generally sell on fifteen days of
each month. At sales of $5000 per day, a DM would be expected
to sell $75,000.00 in memberships in a month. Neither Willin
nor Franklin ever achieved this level of sales in any month at
Kendall II. Thus, the “requirement” that Franklin reach $5000
in sales each work day could not have been applied generally
to the Divisional Managers at Kendall II in 1990.
28. Mark Seaman instructed Stuart Dansby to give Franklin
written warnings during September and October of 1990.
Dansby Depos. at 330.
(Cont'd)
they could use the hands of time promotion in this way, then
managers would think that this practice was allowed, even if it were
not in truth permitted. Defendants have not specified their foundation
requirement with enough specificity for this Court to determine what
portion of the six pages of testimony to which the objection was
raised lacks foundation. We see no such infirmity in Widstrand’s
testimony on this point.
6. At the end of the work-day, the Divisional Managers were
required to call in their teams’ sales for the day. Calling in non-
existent gross would mean that the Divisional Manager had called
in a number for the day that was greater than the amount of sales
actually made that day.
34a
Appendix E
29. Despite these warnings, Dansby testified that he was
satisfied with the Plaintiff’s performance during that time. He
stated that she had done all that could be expected of her with
the burden of both staffs on her shoulders in September.
30. After this difficult month, Franklin requested a vacation
in October. This request was granted, in writing, by both
Seaman and Dansby. Pltff.’s Exh. 29 at 000017. The vacation
was scheduled for October 13th through 21st.
31. In the first ten days of October, Franklin’s personal
sales totalled $8321.47. With a sales quota of $50,000.00 for
October, Plaintiff's sales were less than what would be expected
for the first third of the month (i.e. less than one-third of her
quota) if Plaintiff were to meet her quota for the month.
However, in several other months during 1990, Franklin’s early
sales figures were less than one-third of quota, and she obtained
her personal quota in each of those months.’
32. Approximately two days before Franklin’s vacation
was to begin, Seaman and Dansby insisted that she cancel the
vacation and increase her sales production over the next ten
days or she would be demoted. Dansby testified that cancelling
7. The following table shows four months in which Plaintiff's
initial sales were low but in which she eventually reached her quota:
Month 10-day sales Times Three Quota % Quota
Reached
March $14,377.48 $43,132.44 $50,000.00 127
April $16,116.00 $48,348.00 $50,000.00 123
May $13,573.00 $40,719.00 $60,000.00 103
June $17,051.25 $51,153.75 $60,000.00 100
Data from Pitff.’s Exh. 4, Sales Detail Audits.
35a
Appendix E
Franklin's vacation was Seaman’s idea. Dansby disagreed with
this move because he felt Franklin had done a good job in
September and would not have cancelled her vacation.
Nonetheless, he went along with Seaman’s decision. Franklin
was then given an ultimatum — to get her numbers up in the
next ten days or she would be demoted. However, no specific
number was set for Plaintiff to achieve during that time, and it
was unclear what was then expected of her.
33. Despite having already purchased plane tickets and
made other reservations for her vacation, Plaintiff cancelled her
trip and remained at work. The sales detail audit report for
Plaintiff's October sales shows that from October 11th throv zh
October 19th, Franklin’s sales totalled $13,581.97. Before tne
end of this ten-day trial period, however, Franklin was told that
she was being demoted. Plaintiff was then given the choice of
being a Program Director — the entry-level sales position — at
Kendall II, or becoming a Divisional Manager at the North
Miami club, a non-executive facility. Seaman had no
supervisory role over the North Miami club at that time. Franklin
chose the North Miami club alternative.
34. Although Defendants suggested that Franklin herself
requested the move to North Miami, we find that no such request
was ever made until Plaintiff was given the above-mentioned
choice. In particular, we credit the testimony of Stuart Dansby
regarding the Plaintiff's demotion. Dansby first testified that
Seaman initiated the issue of demoting Franklin when he insisted
that she be told to either get her numbers up or be demoted.
Dansby Depos. at 203. Dansby further stated directly that
Franklin did not request the transfer. Jd. at 156-57. Ultimately,
Dansby testified that Seaman decided to demote Franklin, and
he went along with the decision despite his own reservations.
36a
Appendix E
In fact, Dansby said that he felt the decision was made too
quickly and that Franklin’s performance was not deserving of a
demotion. /d. at 271, 297. In addition, the Plaintiff herself
testified credibly that she did not choose to transfer to North
Miami, but only asked for that position after being given the
demotion alternatives.
35. The Plaintiff's transfer from Kendall II to North Miami
at the Divisional Manager's position was a demotion, not a
lateral transfer. Selling memberships at a non-executive club
was more difficult than at an executive club because the smaller
size and fewer amenities drew less traffic into the club, resulted
in a smaller member base, and made selling a membership more
difficult. A Divisional Manager at a non-executive club was
generally expected to earn less than a Divisional Manager at an
executive club because of the lower overall membership sales
rate at those facilities. This difference was offset to some degree,
however, because non-executive clubs had lower sales quotas,
making it easier to obtain override compensation. Nonetheless,
the earnings potential of a Divisional Manager at a non-executive
club was widely viewed as less than that for a Divisional
Manager at an executive club. Every present and former
Scandinavian employee to testify at trial or in deposition, with
the singular exception of Mark Seaman, agreed that a transfer
from a Divisional Manager position at an executive club to a
Divisional Manager position at a non-executive club was a
demotion. With respect to the Plaintiff in particular, Stuart
Dansby testified repeatedly about her “demotion” to North
Miami. In addition, where Plaintiff was given the choice
between taking an entry-level position at the Kendall II club or
the DM position at North Miami, the transfer can only be seen
as a demotion for the Plaintiff. Indeed, if the transfer were not a
demotion, then offering Plaintiff the choice of a demotion to
37a
Appendix E
the Program Director position as an alternative would have made
no sense whatsoever.
B. Claim of Constructive Discharge
36. Franklin remained at the North Miami club for three
months. During that time, there is no evidence that Franklin
experienced any sexual harassment or other discriminatory
treatment. In fact, the Plaintiff offered no evidence that she even
encountered Seaman or Dansby in any way during this time.
However, she testified that she was unhappy at North Miami
because the membership was primarily black, while she was
white, and that there was a lot of racial tension in the club.
Franklin also stated that she was afraid to be the last one at the
club in North Miami and have to physically check the facilities
and lock the doors alone. As a result of this fear and the racial
tension at North Miami, Franklin requested a transfer out of the
North Miami club in January of 1991. Area Manager Jeff
Stockstill informed the Plaintiff that no Divisional Manager
positions were available at that time, and Franklin requested a
transfer to a Program Director position at the Waterways club.
At that time, Mark Seaman had no supervisory role with respect
to the Waterways club.
37. Rhonda Smith was the General Manager of the
Waterways club in early 1991. Franklin was placed on the “A”
team, under Divisional Manager Joe Picone. Likewise, there is
no evidence that the Plaintiff suffered any discriminatory
treatment while at the Waterways club or encountered even a
single instance of sexual harassment there.
38. In February of 1991, Scandinavian announced a drastic
reorganization of the South Florida market in response to the
38a
Appendix E
overall poor fiscal performance of the South Florida area during
1990. The reorganization wholly restructured the management
scheme of the South Florida clubs, eliminating the General
Manager/two Divisional Manager staffing of each facility. The
Program Directors at all eleven South Florida clubs would now
come under the supervision of two co-managers, with equal
responsibility for the administration of each club. These co-
managers, in turn, reported to one of four area supervisors. The
reorganization also drastically reduced the sales commission
system in the South Florida clubs. Salespeople and managers ai
all South Florida facilities suffered approximately a 60 percent
reduction in pay.
39. The Scandinavian reorganization took effect in March
of 1991. The change in compensation and management structure
prompted a mass exodus of both male and female employees
from the South Florida Scandinavian clubs. Both Ron Wilcox
and Rhonda Smith urged Franklin to stay with Scandinavian.
However, Franklin quit her job with Scandinavian to join Spa
Lady, a direct competitor of Scandinavian, effective March 1,
1991.
40. Also in February of 1991, Mark Seaman became the
Area Manager for the entire South Florida region. There is no
evidence that Seaman and Franklin came into contact during
the approximately two weeks in which he was Area Manager
and Franklin was still at the Waterways club. Although Franklin
testified that she left the employ of Scandinavian as a result of
her past problems with Seaman and his new management role,
we find that Franklin was one of a number of employees who
found their earnings potential within the Scandinavian system
drastically reduced and chose to leave the company for that
reason.
39a
Appendix E
II. CONCLUSIONS OF LAW
|. Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e, et seq., provides, in pertinent part:
(a) It shall be an unlawful employment practice for
an employer-—
(1) to fail or refuse to hire or to discharge any
individual, or otherwise to discriminate against any
individual with respect to his compensation, terms,
conditions, or privileges of employment, because
of such individual's race, color, religion, sex, or
national origin... .
42 U.S.C. § 2000e-2.
2. For sexual harassment to be actionable under Title VII,
however, the harassing actor must be an “employer,” as defined
by 42 U.S.C. § 2000e(b), i.e., an individual or firm that is
“engaged in an industry affecting commerce who has fifteen or
more employees for each working day in each of twenty or
more calendar weeks in the current or preceding calendar year,
and any agent of such a person. ...” Jd. Defendants here
concede that they are “employers” within the meaning of Title
VII. Joint Pre-trial Stipulation J V.10. Defendant Bally, however,
contends that it is not Plaintiff's employer. The Plaintiff,
conversely, argues that Defendants Scandinavian and Bally are
sufficiently integrated to be considered a single “employer”
within the meaning of Title VII.
3. A grouping of employers may be considered as one
“employer” if they are highly integrated with respect to
40a
Appendix E
ownership and operations. See Armbruster v. Quinn, 711 F.2d
1332 (6th Cir. 1983) (parent and subsidiary constituted single
“employer”); Baker v. Stuart Broadcasting Co., 560 F.2d 389
(8th Cir. 1977) (commonly owned and managed radio station
and management company constituted single “employer”).
Courts considering whether nominally separate entities should
be treated as an integrated enterprise for the purposes of Title
VII generally have employed the standards promulgated by the
National Labor Relations Board:
a. The degree of interrelation between the operations.
b. The degree to which the entities share common
management.
c. The centralized control of labor relations, and
d. The degree of common ownership or financial
control over the entities.
Armbruster, 711 F.2d at 1337; Stuart Broadcasting, 560 F.2d
at 392.
a. In the instant case, there is scant evidence of
interrelation of operations. The Plaintiff has attempted to show
interrelation of operations through proof that: (1) two
individuals, Michael and Eugene Palumbo, held positions both
with Scandinavian and another of Bally’s wholly-owned
subsidiaries, Health and Tennis Corporation of America
(“HTCA”); (2) HTCA held a series of sexual harassment
seminars which were attended by Scandinavian employees; (3)
Mark Seaman and two employees of HTCA answered
interrogatories for both Defendants in this case; (4) the Monthly
4la
Appendix E
Marketing Guide book issued by HTCA was used by numerous
Bally subsidiaries, including Scandinavian: (5) certain
advertisements run in The Miami Herald used the names “Bally’s
Scandinavian,” “Bally’s Health & Tennis Corporation of
America,” and noted at the bottom, “Bally’s Health & Tennis
Corporation. Over 300 Locations Across the Country;” and (6)
Ed Haggerty, Director of Internal Affairs for Bally, went to the
Waterways club in April of 1990 to investigate a potential
problem in the club. The vast majority of this evidence, however,
relates only to a potential interrelationship between
Scandinavian and HTCA or other Bally subsidiaries, not a
relationship between Bally and Scandinavian. The fact that
advertisements were run using the name “Bally’s Scandinavian”
and that one Bally employee came to the Waterways club on a
single occasion in April of 1990 provides little evidence of
interrelation of operations.
b. There is no evidence whatsoever of any sharing of
common management by Scandinavian and Bally.
c. There is similarly no evidence of a centralized control
of labor relations between Bally and Scandinavian.*
d. The final factor — degree of common ownership or
control over the entities — has been admitted by the Defendants.
Scandinavian is 100 percent owned by HTCA, which is in turn
100 percent owned by Bally’s Health and Tennis corporation,
which is 100 percent owned by Bally.
8. Plaintiff points to certain documents in the Plaintiff’s
personnel file which show the names of other Bally subsidiaries,
including HTCA, in addressing changes in the Plaintiff’s employment
status. Again, these records do not associate Bally with Scandinavian,
and Plaintiff has not attempted to include these other entities in this
lawsuit.
42a
Appendix E
4. The degree of interrelationship between Bally and
Scandinavian, however, is insufficient to support a finding that
Bally and Scandinavian constitute a single employer under Title
VII. Thus, Plaintiff was employed by Scandinavian and not
Bally, and Bally cannot be held liable as the Plaintiff’s
“employer” under Title VII.
5. The Florida Human Rights Act, Fla. Stat. § 760.10,
states, in relevant part:
(1) It is an unlawful employment practice for an
employer:
(a) To discharge or fail or refuse to hire any
individual, or otherwise to discriminate against any
individual with respect to compensation, terms,
conditions, or privileges of employment, because
of such individual’s race, color, religion, sex, national
origin, age, handicap, or marital status.
Fla. Stat. § 760.10. Federal caselaw under Title VII is applicable
to the construction and application of the Florida Human Rights
Act, which was patterned after Title VII. Florida Dept.
Community Affairs v. Bryant, 586 So. 2d 1205 (Flat Ist DCA
1991). The Plaintiff’s claim under the Florida Human Rights
Act is coextensive with her Title VII claim and need not be
addressed separately.
6. A plaintiff may establish a violation of Title VII by
proving that discrimination based on sex has created a hostile
or abusive work environment, even if no tangible job detriment
has occurred. Harris v. Forklift Sys., Inc., _. U.S. __, 114 S.
Ct. 367, 370 (1993); Meritor Savings Bank v. Vinson, 477 U.S.
57, 67 (1986).
43a
Appendix E
7. In order to prove a hostile environment sexual
harassment case, a plaintiff must demonstrate:
a. that she belongs to a protected group, i.e., that
she is a woman;
b. that she was subject to unwelcome sexual
harassment;
c, that the harassment complained of was based upon
sex, i.e., that the actor did not similarly harass male
employees; and
d. that the harassment involved affected a “term,
condition or privilege” of employment.
Henson v. City of Dundee, 682 F.2d 897, 903-04 (11th Cir.
1982). Unwelcomeness means that the employee did not solicit
or invite the alleged behavior. /d. at 903.
8. As to the first factor, there is no question that Plaintiff
belongs to a protected class. See, e.g., Moylan v. Maries County,
792 F.2d 746, 749 (8th Cir. 1986).
9. Franklin has also clearly established the second factor,
namely, that the harassment occurred because of her gender.
She proved this by, among other things, showing that “but for
the fact of her sex, she would not have been the object of
harassment.” Henson, 682 F.2d at 904. Plainly the epithet “DM
with tits,” would not have been applied to male employees and
is patently offensive to any reasonable female “who seeks to
deal with her fellow employees and clients with professional
dignity and without the barrier of sexual differentiation and
44a
Appendix E
abuse.” Bennett v. Corroon & Black Corp., 845 F.2d 104, 106
(Sth air. 1988), cert. denied, 489 U.S. 1020 (1989). Similarly,
the references to Gina Reyes’ breasts as “lead boxes” was
denigrating to women, as were Seaman’s repeated statements
about women’s abilities as managers. The repeated use of
derogatory epithets and comments about women employees were
sexually harassing conduct that occurred because Andrea
Franklin was a woman.
10. Third, we find that the sexual harassment of Andrea
Franklin was not welcomed by her. Franklin complained to
Stuart Dansby about his and Seaman’s comments, but Dansby’s
behavior did not change. In addition, the pervasiveness of
offensive references to and treatment of women at the workplace
by her immediate and indirect superior left her little choice but
to attempt to fit in if she wanted to keep her job. Bundy vy.
Jackson, 641 F.2d 934, 945-46 (D.C. Cir. 1981) (“If the
employer demands no response to his verbal or physical gestures
other than good-natured tolerance, the woman has no means of
communicating her rejection. She neither accepts nor rejects
the advances; she simply endures them. She might be able to
contrive proof of rejection by objecting to the employer’s
advances in some very visible and dramatic way, but she would
do so only at the risk of making her life on the job even more
miserable.”).’ The Plaintiff's failure to complain to Seaman’s
9. We note in this regard that the Defendants have attempted
to defeat the Plaintiff's claim of unwelcomeness by showing that
the Plaintiff does not harbor hard feelings towards Stuart Dansby.
We find that the Plaintiff, having asked Dansby to cease his
harassment, was under no obligation to alienate her direct boss by
publicly objecting to his running commentary. The fact that Franklin
may not have felt or expressed any ill will towards Dansby cannot
be taken as an indication that his offensive comments were welcomed
by her.
45a
Appendix E
superiors alone will not defeat a claim of unwelcomeness. In
no event were Dansby and Seaman's derogatory remarks and
treatment welcome.
11. To prove the fourth element, namely, that the sexual
harassment affected a “term, condition, or privilege” of
employment within the meaning of Title VII, the harassment
“must be sufficiently severe or pervasive ‘to alter the conditions
of [the victim’s] employment and create an abusive working
environment.’ ” Vinson, 477 U.S. at 67 (quoting Henson 682
F.2d at 904). The hostile work environment complained of need
not result in psychological injury to the plaintiff to be actionable
under Title VII. Harris, 114 S. Ct. at 370-71. “So long as the
environment would reasonably be perceived, and is perceived,
as hostile or abusive, there is no need for it also to be
psychologically injurious.” Jd. at 371 (citation omitted). Thus,
this element of the hostile environment claim is evaluated both
on a subjective and an objective basis. The factors to be
considered when evaluating this element of a hostile work
environment claim include: “the frequency of the discriminatory
conduct, the severity of the discriminatory conduct, whether
the conduct is threatening or humiliating, and whether the
conduct unreasonably interfered with the plaintiff’s performance
at work.” Edwards v. Wallace Community College, 49 F.3d 1517,
1521-22 11th Cir. 1995) (citing Harris, 114 S. Ct. at 372).
The pervasive sexual hostility at the Kendall II club was
such that a reasonable woman would perceive the environment
as sexually abusive, and Plaintiff did perceive the workplace as
hostile and abusive. Applying the factors set out by the Eleventh
Circuit, we first find that the discriminatory conduct in this
case was frequent. The epithet “DM with tits” was a frequent
means of reference to the Plaintiff to her face, in front of
46a
Appendix E
Franklin’s staff and in the presence of club members, between
Dansby and Seaman, and by Seaman when speaking to other
managers. In addition, Seaman’s use of highly offensive name-
calling and open denigration of the value of female employees
in numerous settings left the general impression among
Scandinavian employees that Seaman disliked women in the
workplace and women managers particularly. It is highly
offensive that a manager would use a derogatory term like “DM
with tits” repeatedly and in nearly the same manner as one might
use an employee’s name. While the conduct directed at Franklin
herself was not “severe” in the sense that there was no physical
contact or intimidation, its repetition was so pervasive that it
was commonplace. Seaman’s comments were repeated with such
regularity that his dislike for women was commonly known
among his co-workers and subordinates. The continuous use
of derogatory epithets to describe women and the pattern of
statements denigrating female employees’ abilities as workers
and managers, “create[d] a barrier to the progress of women in
the workplace because it convey[ed] the message that they do
not belong, that they are welcome in the workplace only if they
will subvert their identities to the sexual stereotypes prevalent
in that environment.” Robinson v. Jacksonville Shipyard, Inc.,
760 F. Supp. 1486, 1523 (M.D. Fla. 1991). Third, there is no
question that Seaman and Dansby’s comments humiliated
Franklin both in front of the staff she was expected to manage
and in front of club members. With respect to the final factor,
the gender hostility suffered by Franklin undermined her ability
to effectively manage her team by demeaning her in front of
them. A reasonable person in Franklin’s position would feel
denigrated, humiliated and devalued by her direct and indirect
supervisors, and the pervasive use of sexually derogatory
remarks would affect any woman’s ability to effectively manage
a staff and stay motivated to sell in the highly pressured sales
47a
Appendix E
environment at Scandinavian, and the Plaintiff herself was
negatively affected by the abusiveness of this treatment.
12. Corporate liability for sexual harassment by corporate
employees under a hostile work environment theory is based
on the doctrine of repondeat superior, and the plaintiff must
show that the corporate defendant “knew or should have known
of the harassment and failed to take prompt remedial action
against the supervisor.” Steele v. Offshore Shipbuilding, Inc.,
867 F.2d 1311, 1316 (distinguishing between quid pro quo
and hostile environment sexual harassment and applying
respondent superior standard to hostile environment case), reh’g
denied, 874 F.2d 821 11th Cir. 1989).
We find that Scandinavian either actually knew or should
have known of the sexually hostile treatment being heaped upon
Plaintiff and other females by Seaman in particular. First,
Seaman’s derogatory view of women employees was widespread
and well-known by Scandinavian employees, both male and
female. Seaman was a supervisor of numerous individuals at
this time, and his conduct would have been apparent to his
supervisors, who held relatively high-level positions with
Scandinavian. Scandinavian should have known that a sexually
hostile work environment was present in Seaman’s clubs. We
reach this conclusion based upon the testimony of Cindy
Watson, Ana Remond, Rhonda Smith, Gina Reyes, Ron Wilcox,
and Plaintiff herself that Seaman’s attitude towards female
employees was blatantly hostile and readily communicated to
others. In addition, Wilcox testified that Seaman made
derogatory comments about women managers and employees
at a meeting regarding Andrea Franklin’s demotion at which
Jeff Stockstill was present. Wilcox recalled Seaman making
“really off-color remarks... something really derogatory .. .
48a
Appendix E
alluding to her anatomy,” and that Seaman went on to state that
all women in the company were problems and that he wished
there were no female Divisional Managers. Wilcox Depos. at
50-52. Wilcox recalled Seaman having stated that he was “sick
and tired of DMs with tits.” Jd. at 52-53. Jeff Stockstill, as
Seaman’s manager, should have, at the very least, taken action
at that point in time. Stockstill himself testified that he should
have been more aware of the circumstances surrounding
Franklin’s demotion because of Rhonda Smith’s May 1990
allegations regarding sexual harassment. Stockstill Depos. at
27-28.'° Nonetheless, Stockstill took no action, and in fact then
10. Stockstill testified as follows:
Q. [D]o you know why Andrea Franklin was — or did
move from the Kendall II club to the North Miami club?
A. I should know that, but I do not. The reason I say I
should know it is because it was a very volatile time
and that was an interesting situation enough for me to
have remembered it, but, no, I do not.
Q. Why do you say it was a volatile time, what do you
mean by that?
A. Everyone was very sensitive towards lawsuits or
potential misdealings at that time.
Q. Who’s everyone?
A. I shouldn’t speak for everyone. I was.
Q. Why was that?
A. Because of the Rhonda Smith case. (Cont'd)
49a
Appendix E
permitted Franklin’s demotion from Kendall II to North Miami
at Seaman’s recommendation. Thus, Scandinavian is liable for
the sexual harassment in this case.
13. Plaintiff has also brought a claim of disparate treatment,
alteging intentional discrimination on the basis of gender in
violation of Title VII in this case, based upon her demotion
from Kendall II to North Miami. In disparate treatment cases, if
the plaintiff’s case is based solely on circumstantial evidence,
then the burdens of proof are allocated pursuant to McDonnell
Douglas Corp. v. Green, 411 U.S. 792 (1973). Bell v.
Birmingham Linen Service, 715 F.2d 1552, 1556 (11th Cir.
1983), cert. denied, 467 U.S. 1204 (1984). Where the plaintiff
has produced direct evidence of discrimination, however, then
the McDonnell Douglas framework does not apply. EEOC vy.
Beverage Canners. Inc., 897 F.2d 1067, 1071 (11th Cir. 1990).
14. Direct evidence of discrimination is evidence which,
if believed by the Court, would “prove the existence of
[discrimination] without inference or presumption.” Carter v.
City of Miami, 870 F.2d 578, 581-82 (11th Cir. 1989).
[Njot every comment concerning a person’s [sex]
presents direct evidence of discrimination. Young [v.
General Foods Corp.}, 840 F.2d [825,]
829. ...[C]ourts have found only the most blatant
remarks, whose intent could be nothing other than
to discriminate on the basis of [sex], to constitute
direct evidence of discrimination.
(Cont'd)
Stockstill Depos. at 27, line 17-28, line 6. Rhonda Smith
testified on cross-examination that she threatened to bring a lawsuit
in May of 1990, which included sexual harassment claims.
~~ #
50a
Appendix E
Id. at 582. Where the decision-maker in an adverse employment
action utters a discriminatory comment in the course of the
decision-making process, then direct evidence of discrimination
is present. Wilson v. City of Aliceville, 779 F.2d 631, 634 (11th
Cir. 1986) (citing Miles v. M.N.C. Corp., 750 F.2d 867, 873-
76 (1ith Cir. 1985) ). And if the plaintiff has proven that the
work environment was sexually hostile, and that the decision-
makers were responsible for the sexual hostility, then the
evidence of sexual hostility “constitutes direct evidence of
discriminatory intent in management decisions,” even if the
statements made are unrelated to the employment action at issue.
EEOC v. Beverage Canners, Inc., 897 F.2d 1067, 1071-72 &
n.9 (11th Cir. 1990) (race discrimination).
The Plaintiff has proven her case by direct evidence of
discrimination. Seaman was the decision-maker with respect to
the demotion of Andrea Franklin. He repeatedly made statements
that women were not good employees. Specifically in the context
of the decision to demote the Plaintiff, Seaman stated that he
__ wished there were no female Divisional Managers at
- Scandinavian, that he “was sick and tired of DMs with tits,”
and that all women Divisional Managers were a problem for
him. Seaman made these statements at a meeting with Jeff
Stockstill, Ron Wilcox, and Stuart Dansby that was held
specifically to address the demotion and transfer of Andrea
Franklin. Standing alone, these statements constitute direct
evidence that the decision to demote Franklin was substantially
motivated by gender bias. When combined with the sexually
hostile work environment at Scandinavian, the Plaintiff has
plainly shown direct evidence of discrimination. See Beverage
Canners, Inc., 897 F.2d at 1071 (“Th{e] overwhelming evidence
of racial hostility constitutes direct evidence of discriminatory
intent in management decisions.”).
Sla
Appendix E
15. In direct evidence cases, if the Court credits the
plaintiff’s direct evidence of discrimination, then the burden
shifts to the defendant to prove by a preponderance of the
evidence that “the same decision would have been reached even
without the discriminatory factor.” Jd. at 1071; Mt. Healthy
City School District vy. Doyle, 429 U.S. 274 (1977); Wall v.
Trust Co., 946 F.2d 805, 809 (11th Cir. 1991); Wilson v.
Aliceville, 779 F.2d 631, 634 (11th Cir. 1986).
The Defendants have not carried this burden of persuasion.
There is no question that the Plaintiff received a number of
disciplinary warnings around the time of her demotion.
However, these warnings for the most part were made regarding
matters for which other similarly situated male employees were
not warned. See Thompkins v. Morris Brown College, 752 F.2d
558, 564 n.16 (1 1th Cir. 1985) (unequal application of objective
non-discriminatory criteria constitutes pretext for
discrimination). Of these warnings, only the charge that Plaintiff
forged Stuart Dansby’s signature on a contract was of the nature
for which any other employee would be disciplined. These
warnings are also highly suspect in that Plaintiff was given
three such written admonitions on the same day at a time when
Seaman was putting great pressure on Stuart Dansby to push
Franklin to work harder even though she had been covering
both the A and B teams for twenty days at that time. In fact,
Dansby testified that Seaman himself told Dansby to issue
written warnings to Franklin. Dansby Depos. at 332. There
was also evidence that the Plaintiff’s sales were low for the first
ten days of October. Based on all the evidence, however, her
October sales were not so low that she could not have recovered
and reached her quota for the month.
These elements would be insufficient cause for demotion,
and we find that the Plaintiff would not have been demoted on
52a
Appendix E
these grounds had she not been a woman. Stuart Dansby
testified that he did not believe Franklin’s performance —
including both the warnings and the low production in October
— warranted a demotion. Dansby’s testimony on this point is
particularly valuable in that he was Franklin’s direct manager,
and he earned money based on how his employees performed.
If the Plaintiff or her staff were not selling memberships at an
acceptable rate, then Dansby’s own income would suffer. The
fact that Dansby did not consider Plaintiff’s performance below
expectations for that time is a strong indication that her demotion
was unwarranted. We find that the Plaintiff would not have
been demoted but for her gender.
16. “[A]n employer is strictly liable for sexual
discrimination by supervisors that causes tangible job detriment.”
Henson, 682 F.2d at 909 (citing Willingham v. Macon Telegraph
Publishing Co., 507 F.2d 1084, 1091 5th Cir. 1975) (en
banc) )."' Scandinavian is responsible for the Plaintiff’s
discriminatory demotion.
17. Plaintiff also asserts a claim for constructive discharge.
“A claim for constructive discharge requires the employee to
demonstrate that the work environment and conditions of
employment were so unbearable that a reasonable person in
that person’s position would be compelled to resign.” Virgo v.
Riviera Beach Assoc., Ltd., 30 F.3d 1350, 1363 (11th Cir.
1994); Steele, 867 F.2d at 1317; Huddleston v. Roger Dean
Chevrolet, 845 F.2d 900, 905 (11th Cir. 1988); Wardwell v.
School Board, 786 F.2d 1554 (11th Cir. 1986).
11. In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981)
(en banc), the Eleventh Circuit adopted as binding precedent all
decisions of the former Fifth Circuit handed down prior to October
1, 1981.
53a
Appendix E
We find that a reasonable person in the Plaintiff’s position
would not have felt compelled to resign and that, in fact, the
reason for the Plaintiff’s resignation was the change in corporate
structure at the Scandinavian clubs announced in February of
1991. While Mark Seaman was promoted to Area Manager at
nearly the same time, giving him a supervisory role over the
Plaintiff, the level of contact between the Plaintiff, then a
Program Director at the Waterways club, and the Area Manager,
would have been minimal at most. Seaman, with responsibility
for all eleven South Florida clubs, then managed through four
Area Directors, each of whom had responsibility for between
two and four facilities. Each club was then run by two Co-
Managers who reported to the Area Directors. The Plaintiff’s
position at that time was three levels removed from Mark
Seaman, and she had no regular contact with Stuart Dansby.
She was no longer subjected to any sexual harassment at that
time. Although the Plaintiff testified that she left Scandinavian
because she wanted a management position and that her
opportunities for advancement were hampered by Seaman’s new
supervisory role, she offered no evidence of even a single
incident of harassment after she left the Kendall II club. Indeed,
the Plaintiff offered no evidence of having even encountered
either Seaman or Dansby while working at either the North
Miami or the Waterways club. The speculation of some future
unspecified failure to promote for discriminatory reasons is not
in itself sufficient to make a reasonable person resign. See
Wardwell v. School Board, 786 F.2d 1554, 1557-58 (11th Cir.
1986) (reversing District Court’s finding of constructive
discharge because discriminatory refusal to promote, while
relevant to the issue of constructive discharge, is not alone
sufficient to constitute constructive discharge); Brusque v. Powell
Elec. Mfgr. Co., 617 F.2d 61, 65 (5th Cir. 1980) (“We have no
question that her resignation resulted directly from her
S4a
Appendix E
disappointment in not receiving the raise she had expected. We
cannot fault her for her disappointment. Nevertheless, we cannot
accept that under the circumstances presented here a reasonable
employee would have felt compelled to resign. Moreover, we
believe that discrimination manifesting itself in the form of
unequal pay cannot, alone, be sufficient to support a finding of
constructive discharge.”); see also Steele v. Offshore
Shipbuilding, Inc., 867 F.2d 1311, 1317-18 (11th Cir. 1989)
(affirming District Court’s finding of no constructive discharge
where only one incident of harassment reported in the two weeks
prior to time of plaintiff’s resignation). While the Plaintiff was
plainly disappointed that her opportunities for advancement
would be hampered by Seaman’s promotion, her conditions of
employment were far from intolerable at that time, and a
reasonable person would not have felt the need to resign for
this reason. Bourque, 617 F.2d at 65 (plaintiff’s disappointment
in not receiving promotion denied on discriminatory basis was
understandable but insufficient to make a reasonable person
resign); Wardwell, 786 F.2d at 1557 (plaintiff’s embarrassment
upon discriminatory refusal to promote was not intolerable such
that a reasonable person would be compelled to resign).
In addition, and significantly, several present and former
Scandinavian employees testified as to the drastic change in
pay structure that was announced in February and took effect
in March of 1991. Numerous employees, both male and female,
left the Scandinavian health clubs at that time because their
earnings potential had been reduced by approximately 60
percent. We are convinced and find specifically that the Plaintiff
left Scandinavian for Spa Lady because of this drastic reduction
in earning potential. See Huddleston v. Roger Dean Chevrolet,
845 F. 2d 900, 905-06 (11th Cir. 1988) (affirming District
Court’s holding that no constructive discharge occurred, despite
55a
Appendix E
finding of pattern of sexual harassment, where another plausible
explanation supported by record evidence was found to be the
cause of the plaintiff’s resignation). Thus, we can find no
constructive discharge in this case.
18. Plaintiff Andrea Franklin is entitled to backpay from
the date of her demotion from the Divisional Manager position
at the Kendall II facility (11/01/90)'? until the date of her
voluntary resignation (03/01/91). The Plaintiff is not entitled
to backpay for the period after she voluntarily left Scandinavian:
nor is she entitled to front-pay or reinstatement. See Bourque v.
Powell Electrical Mfgr. Co., 617 F.2d 61, 66 n.8 (Sth Cir. 1980);
Morrison v. Genuine Parts Co., 828 F.2d 708, 710 n.1 (11th
Cir. 1987), cert. denied, 484 U.S. 1065 (1988); Campbell v.
Kansas State Univ., 780 F. Supp. 755, 766 (D. Kan. 1991).
Plaintiff’s backpay shall be computed based on the salary of
Jim Willin,’* her male counterpart at Kendall II, for the period
in question, subtracting the amount she actually earned during
12. Although Franklin was informed of the decision to demote
her on October 18, 1990, the transfer was effective November l,
1990. Plaintiff’s backpay proposal reflects a request for backpay
beginning with the first full pay period in November of 1990.
13. Defendants oppose this calculation for the period beginning
in January of 1991, arguing that the Plaintiff did not earn as much
as Jim Willin while both he and Franklin were Divisional Managers
at Kendall II. Defendants instead propose that if backpay is awarded
for that period, that the Plaintiff be compensated on the basis of the
average earnings of the two Divisional Managers at Kendall II during
that time — Ruy Tamayo and Jim Willin. We find, however, that the
great disparity in earnings between Willin and Tamayo for this period
would result in underpaying the Plaintiff. Her earnings while at
Kendall II were very close to those of Jim Willin. Thus, we find that
Jim ... [text missing from original]
56a
Appendix E
this time. Plaintiff is entitled to an award of $12,229.65 in
backpay, plus pre-judgment and post-judgment interest at IRS
prime rates calculated in accordance with 28 U.S.C. § 1961.
EEOC v. Guardian Pools, Inc., 828 F.2d 1507 (11th Cir. 1987).
Therefore, based on the evidence and arguments presented,
it is hereby
ORDERED and ADJUDGED that judgment is hereby
entered in favor of Defendant Bally Manufacturing Corp., and
against Plaintiff Andrea Franklin, with respect to her claims
against Bally Manufacturing Corp. It is further
ORDERED and ADJUDGED that Plaintiff, Andrea
Franklin, shall recover from the Defendant Scandinavian Health
Spa, Inc., judgment for damages in the aggregate amount of
$12,229.65, plus prejudgment and post-judgment interest, for
violation of Title VII and Florida Statutes Chapter 760. Plaintiff,
as a prevailing party in a Title VII action, is also entitled to
recover reasonable attorney’s fees pursuant to 42 U.S.C.
14. The actual earnings of both the Plaintiff and Jim Willin are
taken from the Payroll History Register for 1990 and 1991. Four
fourteenths (4/14) of the earnings for pay period 03/10/91 are
included in the calculation as an estimation of the pay for both
Franklin and Willin for the last four days of February. Although the
monies received by Franklin in the period after March 1, 1991,
plainly were earned while she was working at Scandinavian, we find
that the inclusion of these later amounts in her salary for the period
in question would result in double-counting of her earnings.
Plaintiff’s earnings for November, for example, would include some
commissions earned in October but not credited until the November
time-frame. Thus, to also include these later-credited amounts for
Franklin, but not for Willin, would result in underpayment to the
Plaintiff.
57a
Appendix E
§ 2000e-5(k), as well as her costs. A proposed Order of Final
Judgment, as well as Plaintiff’s claim for attorneys’ fees and
costs, shall be submitted by Plaintiff within ten (10) days of
this Order.
DONE AND ORDERED in Miami, this 30th day of
August, 1995.
s/ Stanley Marcus
STANLEY MARCUS
UNITED STATES DISTRICT JUDGE
copies to:
counsel of record
58a
APPENDIX F — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
FILED DECEMBER 1, 1997
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
Nos. 95-5228; 96-5367
ANDREA FRANKLIN,
Plaintiff-Appellee,
versus
BALLY MANUFACTURING CORPORATION, a Delaware
Corporation; SCANDINAVIAN HEALTH SPA, INC.; an Ohio
Corporation,
Defendants-Appellants,
MARK SEAMAN; MICHAEL PALUMBO; EUGENE
PALUMBO, etc.,
Defendants.
On Appeal from the United States District Court for the
Southern District of Florida
BEFORE: CARNES, Circuit Judge, KRAVITCH and
REAVLEY*, Senior Circuit Judges.
* Honorable Thomas M. Reavley, Senior U.S. Circuit Judge for
the Fifth Circuit, sitting by designation.
59a
Appendix F
PER CURIAM:
The petition(s) for rehearing filed by the Appellant,
Scandinavian Health Spa, Inc. is DENIED.
ENTERED FOR THE COURT:
s/ E. Carnes
UNITED STATES CIRCUIT JUDGE
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.