Commercial Litigation and Arbitration

§ 1927 Sanctions — Failure to Respond to Portions of Summary Judgment Motion Directed to Claims Plaintiff Choose to Abandon Is Not Sanctionable — Duty Is to Abandon Unsustainable Claims

Adams v. Austal, USA, LLC, 2014 U.S. App. LEXIS 11318 (11th Cir. June 17, 2014):

Defendant-Appellant Austal USA, LLC appeals the March 2, 2012 order of the United States District Court for the Southern District of Alabama denying Austal's motion for attorneys' fees and sanctions against Plaintiff-Appellee Gloria Sullivan and her counsel. After a thorough review of the record and the arguments presented on appeal, we find that the district court did not abuse its discretion in denying Austal's motion. We affirm.

I. Background

On March 20, 2008, Sullivan and 21 others filed a putative class action against Austal under 42 U.S.C. § 1981 and Title VII, 42 U.S.C. §§ 2000e, et seq. The plaintiffs amended the complaint three times and added one other plaintiff through amendment. The class was not certified, and the case proceeded with 23 plaintiffs. While all of the plaintiffs asserted a common set of events at the workplace, each plaintiff added allegations  [*2] about his or her own experiences and knowledge.

Sullivan's third amended complaint alleged that she began working for Austal in September 2003. Sullivan asserted claims for hostile work environment, disparate treatment, disparate impact, and retaliation. Her claims were based on allegations that white coworkers used racial epithets and made racist comments to black coworkers; racist comments were written on bathroom walls; nooses and racist pictures appeared in the workplace; and white coworkers wore confederate-flag emblems at work. She alleged that the company retaliated against her when she complained about these events and did nothing to address them. She also alleged that she was not provided the training that Austal gave white employees and that promotions were not posted but were given to white males.

Because the claims were proceeding individually, Austal filed 23 summary-judgment motions. The district court granted 13 of those motions. On August 29, 2011, the district court granted Austal's summary-judgment motion against Sullivan and dismissed all of her claims. Austal then moved the district court to award $60,000.00 in attorneys' fees under 42 U.S.C. § 1988 and 42 U.S.C. § 2000e-5(k),  [*3] and to require Sullivan's counsel to pay the fees as a sanction under 28 U.S.C. § 1927. On March 2, 2012, the district court denied the motion.


B. Austal's Motion for Sanctions

Austal also appeals the denial of its motion for fees and costs as a sanction under 28 U.S.C. § 1927. Under § 1927, an attorney who unreasonably and vexatiously multiplies proceedings may be sanctioned for the extra fees and costs incurred because of that conduct. 28 U.S.C. § 1927. The defendant must show that the conduct was "'so egregious that it is tantamount to bad faith.'" Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir. 2010) (quoting Amlong & Amlong, P.A. v. Denny's, Inc., 500 F.3d 1230, 1239 (11th Cir. 2007)). We review for abuse of discretion. Peterson v. BMI Refractories, 124 F.3d 1386, 1390 (11th Cir. 1997).

The  [*7] district court did not abuse its discretion in declining to sanction Sullivan's counsel under § 1927. Austal emphasizes that Sullivan did not respond to some of the claims that the summary-judgment motion addressed. But Austal acknowledges that its motion included claims that Sullivan had not asserted in her complaint. The fact that Sullivan did not respond to the parts of Austal's motion seeking summary judgment on claims she had not alleged or on claims she had decided not to pursue is not a basis for sanctions under § 1927. See, e.g., Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir. 1991) ("[W]hen it becomes apparent that discoverable evidence will not bear out the claim, the litigant and his attorney have a duty to discontinue their quest." (quotation omitted)). Neither this nor Austal's remaining arguments persuade us that the district court erred in denying sanctions.

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