No

table of contents

TABLE OF CONTENTS ...……………………………………………………….. i

table of authorities…………….……………………………………..…iii

argument.................................................................................................... 3

I. THE DISTRICT COURT ABUSED ITS DISCRETION IN AWARDING ATTORNEY'S AND EXPERT WITNESS FEES BECAUSE THE cOMMISSION'S ACTION WAS NOT FRIVOLOUS, UNREASONABLE, OR WITHOUT FOUNDATION……………………………………………...................... 3

A. Attorney's fees were not warranted under Christiansburg ……………....3

1. There should be no question that the Commission’s suit was supported by adequate foundation when it was filed..………………..3

2. It was reasonable for the Commission to continue to maintain this lawsuit challenging the specific practice of Peoplemark’s reliance on a client-driven no-felony policy as a selection criterion in employment.….....………………………………………………….…7

3. The Commission’s inability to produce a timely statistical expert report does not justify attorney’s fees where the suit had foundation until the report became unavailable and the Commission acted reasonably in dismissing its lawsuit for that very reason…………....10

B. Expert witness fees were not warranted under Christiansburg………....14

II. EVEN IF FEES WERE WARRANTED AT SOME POINT DURING THIS LITIGATION, THE DISTRICT COURT ABUSED ITS DISCRETION IN AWARDING EXCESSIVE FEES............................................................................... 15

A. Fees were excessive to the extent the court determined the Commission's case lacked foundation as of October 1, 2009 ……………………………..15

B. Even if fees were warranted, the amount of expert fees awarded was excessive …………………………………………….…………………….16

1. The district court abused its discretion by awarding expert witness fees that accrued before the attorney's fees award, covering only the period after October 2009…………………………………………...16

2. Expert witness fees that are not adequately documented to allow the court to assess their reasonableness cannot be part of a reasonable attorney's fee award under Christiansburg ………………………….21

3. Expert witness fees that are excessive cannot be part of a reasonable attorney's fee under Christiansburg ……………………. 25

conclusion............................................................................................... 29

certificate of compliance

certificate of service

table of authorities

CASES

Bjornson v. Dave Smith Mot./Frontier Leasing & Sales, 578 F.Supp.2d 1269 (D. Idaho 2008) ........................................................................................................ 28

Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978) .................. passim

Cross v. U.S. Postal Serv., 639 F.2d 409 (8^th Cir. 1981) ................................. 9

Donnelly v. Rhode Island Bd. of Gov. for Higher Educ.,

...... 946 F. Supp. 147 (D. R.I. 1996) .............................................................. 17

EEOC v. Bruno’s Restaurant, 13 F.3d 285 (9^th Cir. 1993)………………………..10

EEOC v. Keco Indus., Inc., 748 F.2d 1097 (6^th Cir. 1984)………………………5,6

Fox v. Vice, 131 S. Ct. 2205 (2011)…………………………………….18,19,20,21

Green v. Missouri Pac. R.R. Co., 523 F.2d 1290 (8^th Cir. 1975)…………………..5

Hensley v. Eckerhart, 461 U.S. 424 (1983)…………………………………....21,25

H.J. Inc. v. Flygt Corp., 925 F.2d 257 (8^th Cir. 1991)………………………….....22

In re: Synthroid Mktg. Litig., 264 F.3d 712 (7^th Cir. 2001)…………………….. 23

L&W Supply Corp. v. Acuity, 475 F.3d 737 (6^th Cir. 2007)……………………..17

McCombs v. Meijer, Inc., 395 F.3d 346 (6^th Cir. 2005)………………………….22

Medcom Holding Co. v. Baxter Travenol Labs., Inc.,

200 F.3d 518 (7^th Cir. 1999) ………………………………………………23,24

Oldenburg Group, Inc. v. Frontier-Kemper Const.,

597 F.Supp.2d 842 (E.D. Wisc. 2009) ……………………………………….23

Paschal v. Flagstar Bank, 297 F.3d 431 (6^th Cir. 2002)………………………….17

Riddle v. Egensperger, 266 F.3d 542 (6^th Cir. 2001)……………………………..12

U.S. v. Neal, 93 F.3d 219 (6^th Cir.1996) …………………………………………..6

Wennek v. Polygram Group Dist., Inc., 304 F.3d 123 (1^st Cir. 2002)……………22

STATUTES & REGULATIONS

28 U.S.C. § 1920 .......................................................................................... 17

Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq.

..... 42 U.S.C. § 2000e-2(k)(1)(A)(i) ............................................................... 10

..... 42 U.S.C. § 2000e-5(k) ...................................................................... passim

EEOC Enforcement Guidance on Consideration of Arrests and Conviction

Records in Employment Decisions Under Title VII http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm. ..……………………14

RULES

Fed. R. Civ. P. 15(b)………………………………………………………….......7,9

No. 11-2582

IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Plaintiff/Appellant,

PEOPLEMARK, INC.,

Defendant/Appellee.

On Appeal from the United States District Court

for the Western District of Michigan

No. 08-00907

REPLY BRIEF OF THE EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION AS APPELLANT

_______________________________________________________

In its opening brief, the Commission argued that the district court abused its discretion in awarding attorney’s fees and expert witness fees against the Commission under Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978), because at no time was this case frivolous, unreasonable, or without foundation. Specifically, the Commission argued that its initial challenge to what it reasonably believed—based on Peoplemark’s representations—was a blanket no-felony policy was legally sound and factually supported. Further, the Commission argued that it reasonably continued to litigate its disparate impact challenge to the policy revealed by Peoplemark witnesses during discovery—a client-driven no-felony policy. The Commission also argued that fees could not be justified under Christiansburg because the Commission acted reasonably in dismissing its suit once it became clear in January 2010, when the court refused to grant an extension of the deadline for its expert report, that it would be unable to rely on its expert statistical witness. The Commission also argued that even if fees were warranted at some point in this litigation, the amount of fees awarded was excessive and must be reduced under the proper legal standard.

In response, Peoplemark argues that the district court’s judgment should be affirmed but does not directly challenge many of the Commission’s central arguments and makes a number of misrepresentations of the record. Peoplemark asserts that: the suit lacked merit from its inception because the Commission should have known it did not have a blanket policy (br. at 35)—despite its own statements to the contrary; the district court did not err by holding the Commission to allegations in its complaint (br. at 38)—despite the liberal policies governing amendment of complaints; the court did not err by relying on the Commission’s failure to file an expert report as a basis for its fee award (br. at 41); and the court did not err in awarding the full amount of expert witness fees sought (br. at 47)—despite the fact that expert fees are governed by the Christiansburg standard and it makes no legal or logical sense to award the full fees charged by Peoplemark’s expert when attorney’s fees have been awarded for only a portion of the litigation.

ARGUMENT

I. The District Court Abused its Discretion in Awarding Attorney’s and Expert Witness Fees BECAUSE THE Commission’S ACTION WAS NOT FRIVOLOUS, UNREASONABLE, OR WITHOUT FOUNDATION.

A. Attorney’s fees were not warranted under Christiansburg.

1. There should be no question that the Commission’s suit was supported by adequate foundation when it was filed.

The district court recognized that this case was not frivolous when it was filed. RE #147 at 3. However, Peoplemark argues that it lacked merit from the beginning, asserting that “the EEOC was aware Peoplemark did not employ the blanket no-felon policy alleged in the Complaint.” Peoplemark br. at 35. This factual assertion is both untrue and irrelevant. In making this argument (repeatedly throughout it brief), Peoplemark attempts to minimize record evidence of the fact that Peoplemark itself provided the Commission’s factual basis for challenging a blanket policy against hiring ex-felons. Specifically, during the investigation Peoplemark admitted the existence of the very policy the Commission challenged in its complaint. EEOC br. at 4-5 (Peoplemark representative Judd Osten stated repeatedly during the Commission’s investigation that Peoplemark had, and continued to have, a company-wide policy or practice of denying referral for employment to individuals with felony conviction records). Thus, it was Peoplemark’s own representations to the Commission that led the Commission to plead a blanket no-felony policy.

Peoplemark asserts that during the investigation the Commission had in its possession company documents that would have established that some applicants who disclosed prior felony convictions were hired, and it asserts that, had the Commission reviewed the job assignment records, it would have found that Peoplemark assigned felons for employment. Peoplemark br. at 35-36. Of course, if that were true, Peoplemark could have similarly reviewed those documents rather than stating that it had a blanket no-felony policy during the Commission’s investigation and conciliation before suit was filed. However, there is no evidence that Peoplemark itself knew that some of its managers hired some ex-felons before that information came to light in discovery. In fact, Peoplemark did not specifically deny the existence of a no-felony policy until well into this litigation. EEOC br. at 10-13.

Peoplemark and its amici also assert that the Commission had no statistical evidence to support its complaint’s allegation that Peoplemark’s blanket no-felony policy had a disparate impact on black applicants. Peoplemark br. at 39, 41; amici br. at 7. However, in filing this suit, the Commission relied on statistical evidence developed during the investigation including, among other things, DOJ Bureau of Justice Statistics Bulletins showing that the conviction rate for blacks is 3-4 times greater than the representation of blacks in the adult population or the civilian labor force nationally, and Census workforce data in the geographic areas where Peoplemark operates. EEOC br. at 5. Evidence of Peoplemark’s own admissions that it maintained a blanket practice of denying employment to former felons, and statistical evidence that such a practice adversely affects blacks, gave the Commission a reasonable basis for instituting this lawsuit challenging the disparate impact of that practice. See EEOC br. at 29-30, citing Green v. Missouri Pac. R.R. Co., 523 F.2d 1290 (8^th Cir. 1975).

Therefore, it is odd that Peoplemark devoted so much of its brief to criticizing the Commission’s investigation and basis for filing suit. As the Commission explained in its opening brief (at 35-36 & n.14), the district court did not justify its fee award on the basis that the Commission failed to meet conditions precedent to suit in this case. The magistrate explicitly declined to rely on the adequacy of the Commission’s investigation as a basis for fees. RE #137 at 8 (emphasizing that case was dismissed based on a joint motion filed by the parties and not for lack of a proper investigation). And the district court adopted the magistrate’s ruling. RE #147 at 1.

The district court’s refusal to rule on the adequacy of the pre-suit investigation was mandated by this Court’s ruling in EEOC v. Keco Indus., Inc., 748 F.2d 1097 (6^th Cir. 1984). In Keco, this Court explained that “inquiry [into the sufficiency of a pre-suit investigation] would deflect the efforts of both the court and the parties from the main purpose of this litigation: to determine whether [the defendant] has actually violated Title VII.... [Determining the sufficiency of an investigation] would effectively make every Title VII suit a two-step action: First the parties would litigate the question of whether EEOC had a reasonable basis for its initial finding, and only then would the parties proceed to litigate the merits of the action.” Id. at 1100. Likewise, the district court adopted the magistrate’s ruling declining to award fees as of the date this lawsuit was filed (September 29, 2008) and, instead, awarded fees as of October 1, 2009, the date it identified as when the Commission should have realized Peoplemark did not have a blanket exclusionary policy. RE #147 at 3; RE #137 at 11.

Moreover, Peoplemark is not seriously challenging the reasonableness of the Commission’s suit at its inception because it is not seeking attorney’s fees for work done earlier than October 2009. Peoplemark br. at 60 (seeking affirmance on appeal). In short, Peoplemark does not challenge the district court’s ruling in any way or seek any additional relief in its brief on appeal, nor could it, because it did not file a cross-appeal. U.S. v. Neal, 93 F.3d 219, 224 (6^th Cir.1996) (“[A] party may not seek more extensive relief on appeal than it received in district court without filing a cross-appeal.”). And its arguments as to the adequacy of the investigation and foundation for the suit as filed do not support the basis for the district court’s fee award and, thus, may be disregarded by this Court. For this same reason, the arguments made by amici – regarding the adequacy of the Commission’s investigation and foundation for this lawsuit – should be disregarded.

Peoplemark’s focus on when the Commission should have realized that Peoplemark did not have a blanket policy is a distraction from the Commission’s central contention on appeal—that it reasonably maintained this suit challenging Peoplemark’s client-driven no-felony policy after learning that the policy did not operate as a blanket exclusion. Peoplemark has conceded the force of much of the Commission’s argument, as explained in the next section, but attempts to blunt the effect of these concessions through its diversionary attack on pre-suit conduct that is irrelevant to the issue on appeal.

By waiving any response, Peoplemark concedes that a disparate impact claim can be maintained absent a blanket policy and that the Commission could have amended its complaint under Fed. R. Civ. P. 15(b) at or after trial (if its expert had been allowed additional time to complete her report). Nevertheless, Peoplemark argues that it was proper for the district court to hold the Commission to the allegations in its complaint challenging a blanket no-felony policy, because, it argues, the Commission never identified and challenged any other specific practice, a crucial element of a disparate impact claim. Peoplemark br. at 38-39. This is untrue.

Although discovery revealed that Peoplemark referred some ex-felons for employment, evidence showed that Peoplemark did rely on felony convictions, based largely on client preferences, as a selection criterion. EEOC br. at 10-11 (deposition testimony of managers).[1] This evidence provided a reasonable basis for the Commission to maintain this suit challenging Peoplemark’s use of felony convictions as a selection criterion in employment. As the Commission explained, in light of this evidence, it continued to pursue this lawsuit to determine whether Peoplemark’s specific practice – reliance on a client-driven no-felony policy – had a disparate impact on blacks. EEOC br. at 31.

The district court properly stated that a disparate impact claim can exist absent a blanket policy (RE #147 at 3), and Peoplemark concedes this point, as it presents no argument to rebut the Commission’s position that it could proceed against a non-blanket policy. EEOC br. at 30-34. The court viewed the Commission’s claim dismissively because it failed to acknowledge that the Commission changed its pursuit of this case in light of evidence obtained in discovery. EEOC br. at 30-31. Peoplemark does the same. Peoplemark br. at 39-41 (arguing only that the Commission failed to identify a specific practice).[2] If the Commission had been granted an extension to allow its expert to complete her report, it could have established the disparate impact of Peoplemark’s client-driven no-felony policy, and then could have amended its complaint under Fed. R. Civ. P 15(b) at or after trial to conform to this modified factual proof. EEOC br. at 31-32. Peoplemark apparently concedes the point because it presents no argument or authority to the contrary, observing only the obvious—that the EEOC did not in fact amend its complaint. Peoplemark br. at 40.

Peoplemark also argues that the Commission failed to offer any statistically significant evidence that black applicants were rejected for employment at a disparate rate. Peoplemark br. at 39-40, 43, 46-47. While this is true, it is because the district court’s January 30, 2010, ruling (RE #108) effectively excluded the Commission’s statistical expert witness report (EEOC br. at 15-16, 33-34), not because the Commission changed its pursuit of its case after evidence obtained in discovery revealed that some felons were hired. If the court had allowed the Commission’s requested extension, Madden would have produced a timely expert report, and if her report demonstrated a disparate impact, the Commission would have prevailed, absent Peoplemark’s proof of the defense to an impact claim. 42 U.S.C. § 2000e-2(k)(1)(A)(i). Thus, the “fatal flaw” in the Commission’s case was not that there was no blanket policy, but that the Commission was unable to produce a timely expert statistical report to prove the impact of the policy Peoplemark did employ. The Commission was forced to dismiss its case because of an anticipated inability to submit its proof, not because its case lacked foundation legally or factually. Cf. EEOC v. Bruno’s Restaurant, 13 F.3d 285, 290 (9^th Cir. 1993) (even though district court explicitly found that EEOC failed to present credible evidence of discriminatory conduct, the court abused its discretion in awarding fees to prevailing defendant, because “[t]o justify an award of attorney’s fees, . . . the district court would have had to find . . . that the EEOC should have anticipated at the outset that none of its evidence of discriminatory conduct was credible.”).

Peoplemark argues that the district court did not abuse its discretion by enforcing the December 31, 2009, expert report deadline imposed by the magistrate. Peoplemark br. at 41-42. See RE #101 (magistrate’s December 21, 2009, order granting EEOC an extension from September 30 to December 31, 2009, and rejecting EEOC’s request for a February 11, 2010, deadline). However, the Commission does not argue that the district court abused its discretion by denying the Commission’s request for an extension until February 2010 to produce Madden’s crucial expert report. Peoplemark itself acknowledges that this issue is not before this Court. Peoplemark br. at 42. The Commission’s point on appeal is twofold. Under Christiansburg, fees are inappropriate before January 29, 2010, because the Commission reasonably believed its suit had foundation until the court’s order on that date made reliance on Madden’s testimony impossible. See infra at 14-16, & EEOC br. at 32-41, 43-44. And fees are inappropriate after the court’s January 29, 2010, order because the Commission acted reasonably by agreeing to dismiss its suit with prejudice, in a joint motion with Peoplemark. EEOC br. at 34, 41.

Peoplemark criticizes the Commission for failing to meet the district court’s expert witness report deadline because of delays in contracting its experts. Br. at 42, 46. However, as the Commission explained in it opening brief, even if the Commission had been able to hire Dr. Madden earlier, she would have been unable to complete her report by the district court’s deadline due the unanticipated volume of records produced in discovery and delays in Peoplemark’s document and data production. EEOC br. at 8, 14-15 & n.8, 37-38 & n.15. The district court abused its discretion when it failed to take into account, as it should have, the effect of Peoplemark’s own delays on the Commission’s expert’s ability to produce a timely report. See Riddle v. Egensperger, 266 F.3d 542, 557 (6^th Cir. 2001) (concurring opinion) (emphasizing that the conduct of the prevailing party must be considered in assessing fees under Christiansburg; “It is not only Riddle’s actions leading to the filing of this lawsuit that are at issue; rather, it is also Defendant’s actions that are at issue and whether Plaintiff could have reasonably believed that these actions provided a foundation for relief.”).

Finally, Peoplemark accuses the Commission of attempting to turn Dr. Pager from a sociological expert into a statistical one. Peoplemark br. at 43-46. This is a total mischaracterization of the Commission’s argument and Dr. Pager’s role in this case. Pager, a sociologist, provided background evidence that blacks are convicted of felonies at a disproportionately high rate compared to their representation in the U.S. population. EEOC br. at 13, citing RE #126-13 (Pager report) at 4-5; see also RE #126-13 at 6-8. Pager also found similar racial disparities in the geographical locations of Peoplemark’s facilities. EEOC br. at 13, citing RE #126-13 (Pager report) at 8-9.[3] Peoplemark quarrels (br. at 43) with the Commission’s statement in its opening brief (at 32) – that “there is compelling evidence that employment practices that disqualify applicants because of felony convictions have a disparate impact on black applicants” – but the quoted language is nothing more than a statement of fact about the world we live in today in the United States; because blacks have a greater share of felony convictions than the general population, the use of felony convictions as a criterion for any decision would disproportionately disadvantage blacks. See RE #126-13 (Pager report) at 4-22 (and studies cited) & 22-23 (concluding that “African Americans are substantially overrepresented among those with felony convictions” and “individuals with criminal records face significant barriers in access to entry level employment, particularly when African American”); see also EEOC Enforcement Guidance on Consideration of Arrests and Conviction Records in Employment Decisions http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm.

The Commission acknowledged in its opening brief (at 33-34) that Dr. Madden’s statistical evidence was necessary to tie Dr. Pager’s background evidence to the specific selection practice in use at Peoplemark’s facilities.[4] In other words, Dr. Madden would establish whether the client-driven use of felony convictions as a selection criterion had a statistically significant disparate impact on black applicants in Peoplemark’s workplace. EEOC br. at 14, 32-34. That is the very reason why, when the Commission learned it would be unable to rely on Dr. Madden as a statistical expert on January 29, 2010 (RE #108), the Commission made the completely reasonable litigation decision to dismiss this lawsuit with prejudice, jointly with Peoplemark. RE #117. The Commission should not be punished by the imposition of fees for doing so.

B. Expert witness fees were not warranted under Christiansburg.

Peoplemark does not dispute the Commission’s argument that if this Court finds attorney’s fees are unwarranted, then expert witness fees also are unwarranted. This result flows directly from the express language of section 706(k) of Title VII, which provides that “in any [Title VII] action … the court, in its discretion, may allow the prevailing party … a reasonable attorney’s fee (including expert fees).” 42 U.S.C. § 2000e-5(k). See EEOC br. at 41-43, and cases discussed therein. Thus, if this Court finds that the Commission’s case was not without foundation and the Commission acted reasonably in promptly dismissing this suit when it became clear at the end of January 2010 that it could not rely on its expert’s report, then Peoplemark is not entitled to shift any of its attorney’s fees or expert witness fees to the Commission under Christiansburg. Peoplemark does not dispute this argument.

II. EVEN IF FEES WERE WARRANTED AT SOME POINT DURING THIS LITIGATION, THE DISTRICT COURT ABUSED ITS DISCRETION IN AWARDING EXCESSIVE FEES.

A. Fees were excessive to the extent the court determined the Commission’s case lacked foundation as of October 1, 2009.

In its opening brief (at 43-44), the Commission argued that even if this Court concludes that fees became warranted at some point, the district court’s determination that the Commission’s suit lacked foundation as of October 1, 2009, rests on faulty legal and factual foundations. The court found the Commision’s failure to produce a statistical expert report from Dr. Madden provided support for a fee award, but the court did not deny the Commission’s motion for an extension of time to produce Madden’s report until January 29, 2010. RE #108. Evidence in support of the Commission’s claim was largely expected to come from this anticipated expert witness. EEOC br. at 7-8, 14-17, 32-34, 44. Because the Commission reasonably believed its suit had foundation until reliance on Madden’s testimony became impossible, it was entirely reasonable for the Commission to continue to prosecute this action at least until January 29, 2010, and under Christiansburg, no fees – attorney’s or expert witness – should have been awarded before that date. Christiansburg, 434 U.S. at 422 (“a plaintiff should not be assessed his opponent’s attorney’s fees unless a court finds that his claim was frivolous, unreasonable or groundless, or that the plaintiff continued to litigate after it clearly became so”). Peoplemark offers no response to this point and thus has waived any argument to the contrary.

B. Even if fees were warranted as of October 2009, the amount of expert fees awarded was excessive.

1. The district court abused its discretion by awarding expert witness fees that accrued before the attorney’s fees award, that covered only the period after October 2009.

The district court determined the Commission’s case lacked foundation as of October 1, 2009. Assuming for the sake of argument that this Court agrees the Commission’s case lacked a reasonable foundation after October 1, 2009, attorney’s fees cannot be awarded for work performed prior to that date. The district court properly limited the attorney’s fee request, but did not properly evaluate the appropriate temporal scope of the expert witness fees, which logically should be congruent with the attorney’s fees.

Courts have not addressed whether expert witness fees that accrued before attorney’s fees became appropriate can be awarded under a fee shifting statute. This Court, relying on Supreme Court precedent, has distinguished the award of attorney’s fees under Title VII (and § 1988) from other statutes that recognize expert witness fees as separate costs. L&W Supply Corp. v. Acuity, 475 F.3d 737, 739-41 (6^th Cir. 2007) (under clear Supreme Court precedent, absent express statutory authority expert fees are not recoverable as costs); Paschal v. Flagstar Bank, 297 F.3d 431, 437 (6^th Cir. 2002) (§ 1988) (expert witness fees are part of attorney’s fees).[5] Because the express statutory language of Title VII makes plain that expert witness fees are included in “a reasonable attorney’s fee” (42 U.S.C. § 2000e-5(k)), courts have held that the same legal standard for determining whether Title VII attorney’s fees are warranted governs Title VII awards of expert witness fees. See, e.g., Donnelly v. Rhode Island Bd. of Gov. for Higher Educ., 946 F. Supp. 147, 150 (D. R.I. 1996) (“awards for both attorney’s fees and expert witness fees are governed by the same standard”). And because expert witness fees are considered part of the attorney’s fees under Title VII (and § 1988), they too can only be awarded to a prevailing defendant to the extent that the plaintiff’s case was frivolous, unreasonable, or without foundation.

Peoplemark relies on Fox v. Vice, 131 S. Ct. 2205 (2011), in support of its argument that the district court’s award of all expert witness fees, regardless of the date they were incurred, was proper in this case. Peoplemark br. at 47. Read properly, the Supreme Court’s decision support’s the Commission’s argument that attorney’s and expert witness fees incurred before its case lost its foundation should not be shifted to the Commission. In Fox, the plaintiff asserted both state and federal claims against the defendant, and the federal claims were ultimately dismissed and the case was remanded to state court. Plaintiff conceded that the federal claims were frivolous, and the district court awarded defendant attorney’s fees for all work performed in the case. Despite the fact that plaintiff’s state law claims had not been found frivolous, the district court did not require defendant to separate out the work his attorneys had done on those claims. 131 S. Ct. at 2211-12. A divided Fifth Circuit affirmed. Id. at 2212. The question before the Supreme Court was to what extent a court may grant reasonable fees to a defendant under § 1988 when a plaintiff asserts both frivolous and non-frivolous claims. Id. at 2212-13. The Court held that in such a case, “a defendant may recover the reasonable attorney’s fees he expended solely because of the frivolous claims.” Id. at 2218 (emphasis added).

The Court offered guidance on allocation of fees when a lawsuit presents a mix of frivolous and non-frivolous claims. Id. at 2214-18. Because the congressional purpose of § 1988 “is to relieve defendants of the burdens associated with fending off frivolous litigation” (id. at 2215), a defendant may “recover reasonable attorney’s fees incurred because of, but only because of, a frivolous claim.” Id. (“But if the defendant would have incurred those fees anyway, to defend against non-frivolous claims, then a court has no basis for transferring the expense to the plaintiff.”) (emphasis in original). The Court rejected a more expansive fee-shifting standard because it “would furnish windfalls to some defendants who would be relieved of normal litigation costs merely because the plaintiff’s suit also included frivolous claims.” Id. at 2215. The dispositive question, the Court concluded, is “whether the costs would have been incurred in the absence of the frivolous allegation.” Id. at 2216. The Court remanded the case because the lower courts applied an improper standard by awarding defendant attorney’s fees for work his attorneys would have done even if plaintiff had not brought his frivolous claims. Id. at 2217-18.

The major distinction between Fox and this case is that, in Fox, the Court was parsing out how to deal with a case where there are both frivolous and non-frivolous claims, whereas in this case, the dispositive issue is when the claim became frivolous or lost its foundation, if at all.[6] However, applying the Supreme Court’s reasoning in Fox, the district court’s award of expert witness fees to Peoplemark prior to the date the Commission’s suit lost its foundation does not serve the purpose of Title VII’s fee shifting provision, which is to deter the bringing of frivolous suits. Prior to October 1, 2009 (or later if this Court agrees with the Commission), the Commission’s suit was neither frivolous nor unreasonable. Awarding expert fees for this earlier time period gives Peoplemark a windfall, covering expenses that were proper because they would have been incurred even if the case became without foundation on some later date.

Peoplemark cites (br. at 47) to one portion of the decision where the Court stated: “[t]he essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection . . . . And appellate courts must give substantial deference to [trial court] determinations [calculating and allocating an attorney’s time], in light of ‘the district court’s superior understanding of the litigation.’” Id. at 2216 (citation omitted). However, the Court’s “rough justice” comment simply referred to its caution that attorney’s fees “‘should not result in a second major litigation’” (id., quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)),[7] and it went on to emphasize that “the trial court must apply the correct legal standard, and the appeals court must make sure that has occurred.” Id. (“A trial court has wide discretion when, but only when, it calls the game by the right rules.”). In this case, the district court did not apply the correct standard when it awarded expert witness fees for work performed before attorney’s fees were warranted. The court erred because Peoplemark would have incurred those expert expenses in the ordinary course of litigation, even if the Commission’s suit later proved to be unsupported by the evidence (as happened here only because the Commission could not produce a timely expert report). Therefore, as the Supreme Court counseled in Fox, it is proper for this Court to step in to correct this error.

2. Dr. Cohen’s expert witness fees are not adequately documented to allow a court to assess their reasonableness and, therefore, they cannot be part of a reasonable attorney’s fee award under Christiansburg.

There is no dispute that Peoplemark, as the fee applicant, “bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). And, as the Commission demonstrated in its opening brief (at 46-49), fees cannot be awarded for billings that are so inadequately documented and vague that a court cannot assess them for their reasonableness. See, e.g., H.J. Inc. v. Flygt Corp., 925 F.2d 257, 260 (8^th Cir. 1991).

Peoplemark argues that Dr. Cohen’s fee invoices are sufficiently specific because they “present general descriptions of the charges and time spent.” Peoplemark br. at 52, citing McCombs v. Meijer, Inc., 395 F.3d 346, 361 (6^th Cir. 2005). The “general descriptions” of expert work that the McCombs Court found acceptable are not set out in that opinion. However, to constitute “descriptions” of any kind, the invoices in McCombs would have had to contain more information than the generic entries in Cohen’s billing invoices – “data management,” “meeting,” “research,” and “analysis.” EEOC br. at 48, citing RE #122-20 at 5-29. Cohen’s billing entries are too general and uninformative to provide a basis for assessing the reasonableness of the associated fees.

To the extent the district court made a general finding that the expert witness fees were reasonable because the expert’s work was important to Peoplemark’s defense (RE #147 at 6-7), it erred. The Commission does not challenge the relevance of Cohen’s work; it challenges the reasonableness of his fees. And Cohen’s billing invoices offered the district court nothing other than a conclusory basis for finding his fees reasonable. Wennek v. Polygram Group Dist., Inc., 304 F.3d 123, 134-35 (1^st Cir. 2002) (“conclusory statements [by lower court] concerning reasonableness are insufficient to withstand appellate review”).

Peoplemark also defends its expert fee award by arguing that Cohen’s fees “are commercially reasonable” because his invoices were submitted to and reviewed by counsel and paid by the company. Peoplemark br. at 52-53. Peoplemark relies on two contractual indemnification cases, Medcom Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518 (7^th Cir. 1999), and Oldenburg Group, Inc. v. Frontier-Kemper Const., 597 F.Supp.2d 842 (E.D. Wisc. 2009), and on one “common fund” class-action settlement case, In re: Synthroid Mktg. Litig., 264 F.3d 712 (7^th Cir. 2001)), for the proposition that fees that are actually paid by the client “in the ordinary course of business … present[] strong evidence that what the prevailing party is requesting is commercially reasonable.” Peoplemark br. at 53-54. This is not the legal standard applicable to documentation of fees when those fees are imposed on the opposing party in the context of a fee-shifting statute such as Title VII.

The very cases that Peoplemark cites make clear that very different standards apply regarding billing details when a party is required to pay another party’s legal expenses under a fee-shifting statute, compared to the standards applicable between a client and lawyer or expert. Medcom, on which both Oldenburg Group and Synthroid rely, expressly distinguishes statutory fee-shifting cases from a party’s contractual agreement to indemnify another party for its legal expenses. In fee-shifting cases, “[i]temization is required …, at least when the judge employs the ‘lodestar’ method,” whereas an indemnity agreement requires “reimbursement for commercially reasonable fees no matter how the bills are stated.” Medcom, 200 F.3d at 520 (noting that “[i]temization is far less common when businesses pay their own lawyers, for having attorneys keep detailed records is a cost that many clients prefer to avoid”). Moreover, common fund settlement cases, like Synthroid, do not involve one party’s payment of another party’s legal fees. Courts in common-fund cases determine the proper fee for an attorney from the available settlement proceeds the client won, using principles appropriate for a client paying his own lawyer; and, in that situation, the level of detail required by the client controls.

The fact that Peoplemark found the level of detail in Cohen’s billing sufficiently satisfactory to pay his bills is wholly inadequate to justify shifting these fees to the Commission. As Chief Justice Burger explained in Hensley:

A claim for legal services presented by the prevailing party to the losing party pursuant to [42 U.S.C.] § 1988 presents quite a different situation from a bill that a lawyer presents to his own client. In the latter case, the attorney and client have presumably built up a relationship of mutual trust and respect; the client has confidence that his lawyer has exercised the appropriate "billing judgment," and unless challenged by the client, the billing does not need the kind of extensive documentation necessary for a payment under § 1988. That statute requires the losing party in a civil rights action to bear the cost of his adversary's attorney and there is, of course, no relationship of trust and confidence between the adverse parties. As a result, the party who seeks payment must keep records in sufficient detail that a neutral judge can make a fair evaluation of the time expended, the nature and need for the service, and the reasonable fees to be allowed.

Hensley v. Eckerhart, 461 U.S. 424, 441 (1983) (Burger, C.J., concurring). For these same reasons, contrary to Peoplemark’s argument (br. at 54), the level of detail contained in billing statements Dr. Madden submitted to the Commission is irrelevant to the question of whether Dr. Cohen’s fees are sufficiently documented to permit a court to evaluate their reasonableness. In the absence of such documentation, the district court abused its discretion in shifting the bulk of Cohen’s fees to the Commission. EEOC br. at 48 n.23. Accordingly, the expert fee award should be substantially reduced.

3. Dr. Cohen’s expert witness fees are excessive and cannot be part of a reasonable attorney’s fee under Christiansburg.

In response to the Commission’s argument that Dr. Cohen’s expert witness fees are excessive, Peoplemark (br. at 55-58) fails to adequately address the point of the Commission’s argument – that is, Dr. Cohen charged over $300,000 more than Dr. Madden for doing the same work as Madden, her company, and Valora. See EEOC br. at 49-52 & n.24 (Madden compared the same work that Madden, her company, and Valora performed (for which they billed $155,944.60), to the same work that Cohen and his firm performed (for which they billed $473,247.80)). Nowhere does Peoplemark dispute the accuracy of Madden’s factual conclusion in this regard.

Instead, Peoplemark simply offers general attacks on Madden’s credibility. For example, Peoplemark asserts that Madden contradicted her first declaration’s statement (RE #72-3) regarding the cost-effectiveness of “having a keypunching firm, such as Valora, code the data and then having a consulting firm, such as Econsult, analyze the data” (Peoplemark br. at 55),[8] because in Madden’s second declaration (RE #81-6) she stated that many aspects of data coding must be performed by an analyst, not a data entry clerk. Peoplemark br. at 56. The assertion that Madden contradicted herself is incorrect. Dr. Madden’s declarations make plain that, from the beginning, she anticipated a two-part data preparation process: after the litigation support vendor, Valora, created a database by entering the exact information written on each of the applications, Madden’s task was to review the data entered by the vendor, code the data into formats that a computer and statistical program would recognize, and perform a statistical analysis of the data to determine whether any racial difference in hiring by criminal record could arise from random variation or chance. See RE #72-3 at ¶¶ 5-6 (Madden’s first declaration), & RE #81-6 at ¶¶ 3-4 (Madden’s second declaration); see also RE #126-22 at ¶ 5 (Madden’s declaration in support of the EEOC’s response to Peoplemark’s fee request) (describing the data preparation process and distinguishing between “the clerical task of data entry and the more complex task of coding the data”).

Peoplemark also asserts that Cohen’s services would have been less expensive if he could have waited until after Madden issued her report before conducting his own work. Peoplemark br. at 56. This argument should be rejected for three reasons. First, Madden made her analytical approach clear as early as September 24, 2009. RE #72-3 at ¶¶ 3-6; see also RE #81-6 at ¶¶ 2-3. Madden’s approach is standard in disparate impact cases – it is difficult to determine the effect of an employment practice on applicants without identifying the applicants – and Dr. Cohen’s decision to reject that approach and rely solely on Census data should have saved him time and, therefore, should have reduced his costs. RE #126-22 at ¶¶ 5 and 7 (Madden declaration) (comparing the time involved in coding and aggregating applicant information to that involved in downloading and analyzing Census data). Second, if Madden had been able to complete a timely expert report, Cohen would have had to do an additional applicant flow analysis – considering actual applicants who were not hired as well as those who were hired – which he did not do. RE #126-22 ¶ 7 (Madden declaration). This would have increased, rather than reduced, Cohen’s costs as Peoplemark contends. And third, regardless of whether Madden was able to complete an expert report within the court’s deadlines as Cohen did, it was unreasonable for Cohen to charge over $300,000 more than Madden for doing the same work as Madden, her company, and Valora.

Accordingly, comparing only the amounts billed for work actually performed by both Cohen (and his firm) and Madden (and her company and Valora), Cohen’s fees are excessive and do not meet the standard that fees must be reasonable to be shifted to a plaintiff under Title VII. Bjornson v. Dave Smith Mot./Frontier Leasing & Sales, 578 F.Supp.2d 1269, 1289-90 (D. Idaho 2008) (to be recoverable under Title VII as part of a reasonable attorney’s fee, expert witness fees must be “reasonable”). The district court abused its discretion in making this award against the Commission, and the amount of expert witness fees should be reduced.

CONCLUSION

For the reasons set forth in the Commission’s opening brief and in its reply, this Court should reverse the judgment of the district court.

Respectfully submitted,

P. DAVID LOPEZ

General Counsel

LORRAINE C. DAVIS

Acting Associate General Counsel

CAROLYN L. WHEELER

Assistant General Counsel

/s/ Donna J. Brusoski

______________________________

DONNA J. BRUSOSKI

Attorney

EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

Office of General Counsel

113 M Street, N.E.

Washington, D.C. 20507

(202) 663-7049

donna.brusoski@eeoc.gov

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/s/ Donna J. Brusoski

_________________________________

Donna J. Brusoski

Attorney

EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

Office of General Counsel

113 M Street, N.E.

Washington, D.C. 20507

(202) 663-7049

donna.brusoski@eeoc.gov

Dated: July 9, 2012

[1] Moreover, as late as December 16, 2009, Osten provided deposition testimony that Peoplemark maintained a general policy of not hiring ex-felons due to client desires (EEOC br. at 12), and, thus, the extent to which Peoplemark relied upon, or made assumptions about, client preference regarding ex-felons remained at issue.

[2] Peoplemark’s reliance (br. at 41) on Cross v. U.S. Postal Serv., 639 F.2d 409 (8^th Cir. 1981), does not undermine the Commission’s position. In Cross, the Eighth Circuit held that plaintiff failed to establish that defendant had a policy of rejecting applicants who had been previously convicted because “[t]he record shows that persons with criminal records were hired by the Postal Service[,] and Postal Service witnesses testified without equivocation that Cross was not rejected because of her conviction record, and that testimony was credited by the trial judge.” 639 F.2d at 411 (emphasis added).

In contrast, here, the record shows (and Peoplemark does not dispute) that Peoplemark declined to hire charging party Sherri Scott because of her felony record, and numerous Peoplemark managers testified that they failed to hire applicants with felony records, largely based on client preferences. EEOC br. at 4, 10-12.

[3] In its opening brief, the Commission erroneously cited to internal page numbers in Pager’s report, at 7-8; the referenced material is found at RE #126-13 at pages 8-9 using the district court’s system of pagination imprinted across the top of the documents, the convention the Commission attempted to follow. EEOC br. at 1 n.1.

[4] Whether Pager’s report is unsworn hearsay for summary judgment purposes is beside the point. Peoplemark br. at 45-46 (citations omitted). The Commission did not introduce Pager’s report as evidence at summary judgment. Rather, the Commission attached her report as an exhibit to its response to Peoplemark’s attorney’s fees request (RE #126-13 (Pager report)), to counter Peoplemark’s assertion that the Commission’s case was frivolous or without foundation.

[5] Unlike attorney’s fees, awards of costs are governed by 28 U.S.C. § 1920, which enumerates the expenses allowable as costs and includes “[f]ees and disbursements for printing and witnesses.” However, this provision does not authorize reimbursement for premiums charged by expert witnesses. There is a clear distinction between witness fees that are considered costs under 28 U.S.C. § 1920 and expert witness fees under Title VII (and § 1988), which are considered part of an attorney’s fee, and therefore can appropriately be limited.

[6] If the Commission’s blanket policy allegation were viewed as a claim that was frivolous because it lacked a basis in fact, and the client-driven no-felony policy were viewed as a non-frivolous claim, the work that Cohen performed could not be compensated under the rule in Fox, because it clearly supported a defense to either type of challenge to Peoplemark’s policies.

[7] The Court also stated that “[t]he fee applicant (whether a plaintiff or a defendant) must, of course, submit appropriate documentation to meet ‘the burden of establishing entitlement to an award.’” Id., quoting Hensely, 461 U.S. at 437.

[8] The above-quoted language from Peoplemark’s brief does not refer to any specific statements in any of Dr. Madden’s declarations (RE #72-3, RE #81-6, RE #126-22); instead, it refers to Dr. Cohen’s interpretation of Madden’s statements contained in his declaration (RE #129-2).