Theresa L. Sheppard v. Riverview Nursing Center, Incorporated, Equal Employment Opportunity Commission, Amicus Curiae

88 F.3d 1332, 35 Fed. R. Serv. 3d 522, 1996 U.S. App. LEXIS 15454, 68 Empl. Prac. Dec. (CCH) 44,111, 71 Fair Empl. Prac. Cas. (BNA) 218, 1996 WL 379859

• Court: Court of Appeals for the Fourth Circuit
• Decided: June 27, 1996
• Docket: 95-1091
• Status: Published

Opinions

Vacated and remanded by published opinion. Chief Judge WILKINSON wrote the majority opinion, in which Judge WILLIAMS joined. Judge MICHAEL wrote a dissenting opinion.

OPINION

WILKINSON, Chief Judge:

This appeal requires us to examine the district court’s award of attorney’s fees in a mixed-motive employment discrimination case. Appellee Theresa L. Sheppard prevailed in a mixed-motive claim against appellant Riverview Nursing Center (“River-view”), but Riverview established that it would have reached the same decision even absent any discrimination. In such eases, the Civil Rights Act of 1991 provides that a court “may” grant attorney’s fees. 42 U.S.C. § 2000e-5(g)(2)(B).

The district court granted Sheppard declaratory relief, costs of $167.02, and attorney’s fees in the amount of $40,000. River-view appeals the fee award. Because the district court failed to appreciate its full discretion under the statute regarding whether to grant attorney’s fees, and because we believe that certain concerns of proportional!ty should inform that inquiry, we remand for reconsideration of the fee award.

I.

In September 1993, Sheppard filed a gender discrimination claim against Riverview under Title VII, alleging that she was laid off because of her pregnancy. 42 U.S.C. § 2000e(k). Five weeks after initiation of the suit, Riverview tendered a $5,000 settlement offer, which Sheppard rejected. A jury trial was held beginning on October 31,1994.

Following trial, the district court instructed the jury in accordance with the standards applicable to mixed-motive claims under the Civil Rights Act of 1991.¹ The jury was asked to determine whether Sheppard’s pregnancy was a “motivating factor” in the decision to lay her off. 42 U.S.C. § 2000e-2(m). The court then asked the jury to decide whether, even if discrimination had been a motivating factor, Riverview would have discharged Sheppard in any case for nondiscriminatory reasons. See 42 U.S.C. § 2000e-5(g)(2)(B).

The jury answered both questions in the affirmative, determining that discrimination had motivated Riverview’s decision, but that Sheppard would have been laid off for legitimate reasons. Before the Civil Rights Act of 1991, such a finding would have insulated Riverview from liability. See Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989). After the Act, however, a plaintiff is eligible for limited recovery in such situations — declaratory relief, certain types of injunctive relief, and attorney’s fees and costs — as is provided for in 42 U.S.C. § 2000e-5(g)(2)(B):

On a claim in which an individual proves a violation under section 2000e-2(m) of this title and a respondent demonstrates that the respondent would have taken the same action in the absence of the impermissible motivating factor, the court—

(i) may grant declaratory relief, injunctive relief (except as provided in clause (ii)), and attorney’s fees and costs demonstrated to be directly attributable only to the pursuit of a claim under section 2000e-2(m) of this title; and

(ii) shall not award damages or issue an order requiring any admission, reinstatement, hiring, promotion, or payment, described in subparagraph (A).

Pursuant to these provisions, the district court awarded Sheppard a declaratory judgment, but denied injunctive relief because it found insufficient danger of a continuing violation.

Sheppard then filed a motion requesting attorney’s fees of $40,000 and costs of $4,509.74.² Riverview challenged the fee request, arguing that under Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), a civil rights plaintiff who prevails as a technical matter but who receives only nominal damages should not recover any attorney’s fees. The district court disagreed, reasoning that Farrar was based on 42 U.S.C. § 1988, whereas Sheppard’s request arose from 42 U.S.C. § 2000e-5(g)(2)(B). The latter provision already limits the types of available relief, the court concluded. As a result, hinging the recovery of attorney’s fees on the degree to which plaintiffs secure relief would, in the court’s view, effectively nullify the availability of fees.

Riverview also challenged the fee award under Rule 68 of the Federal Rules of Civil Procedure, which requires a plaintiff who rejects a settlement offer to pay her own post-offer “costs” if the offer turns out to be more favorable than her eventual recovery. Riverview asserted that its settlement offer of $5,000 exceeded Sheppard’s recovery, and that the $40,000 attorney’s fee award thus should be reduced by the amount of fees attributable to post-offer services. The district court disagreed, ruling that under the language of 42 U.S.C. § 2000e-5(g)(2)(B), attorney’s fees are not part of the post-offer “costs” subject to Rule 68. Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). The court did, however, reduce Sheppard’s recovery of costs from $4,509.74 to $167.02 pursuant to Rule 68. Riverview appeals the $40,000 fee award.

II.

The district court apparently believed that an award of attorney’s fees was mandatory in mixed-motive cases, and that Farrar v. Hobby ’s concerns with the relationship between the fees and the degree of success achieved in the underlying litigation had no application here. To the contrary, we believe that the award of fees is discretionary under 42 U.S.C. § 2000e-5(g)(2)(B), and that concerns of proportionality do play a part in the analysis.

A.

The statute under which the attorney’s fees were awarded in this case, 42 U.S.C. § 2000e-5(g)(2)(B), provides that a court “may” grant attorney’s fees. The word “may” means just what it says: that a court has discretion to award (or not to award) attorney’s fees. The terms of § 2000e-5(g)(2)(B) make evident that the granting of fees is discretionary rather than mandatory — the provision later states that a court “shah” not award damages or require reinstatement. Plainly, if Congress had wished to require recovery of attorney’s fees, it would have provided that courts “shall” grant fees instead of that they “may” do so. See Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983); Persinger v. Islamic Republic of Iran, 729 F.2d 835, 843 (D.C.Cir.) (“When Congress uses explicit language in one part of a statute ... and then uses different language in another part of the same statute, a strong inference arises that the two provisions do not mean the same thing.”), cert. denied, 469 U.S. 881, 105 S.Ct. 247, 83 L.Ed.2d 185 (1984).

Here, the district court appeared to misperceive the discretionary nature of its inquiry, assuming instead that an award of attorney’s fees was essentially mandatory. Its analysis of Sheppard’s motion for attorney’s fees dealt primarily with whether the amount of fees requested was reasonable, not with whether fees should be granted in the first instance. In the court’s view, a “wholesale denial of fees ... is completely unjustified and flies in the face of the statute making such fees available.” Sheppard v. Riverview Nursing Centre, 870 F.Supp. 1369, 1381 (D.Md.1994). But a denial of fees only “flies in the face” of a statute that requires courts to award fees, not a statute, like § 2000e-5(g)(2)(B), that leaves the determination to a court’s discretion. By its nature, the latter sort of provision contemplates that courts may decide not to grant fees in particular cases.

The decision whether to award fees under § 2000e-5(g)(2)(B) is thus plainly a discretionary one. We turn now to an examination of the considerations that should inform a court’s exercise of that discretion.

B.

In Farrar v. Hobby, 506 U.S. at 103, 113 S.Ct. at 569, the Supreme Court discussed the factors that should guide a court’s determination of whether to award attorney’s fees. In that case, Dale Farrar sought $17 million in damages in a § 1983 action, but ultimately received only one dollar as a nominal award. The district court nevertheless granted him $280,000 in attorney’s fees under 42 U.S.C. § 1988, which states that a court “may” in its discretion award to a “prevailing party” in a civil rights action a “reasonable attorney’s fee.” The Supreme Court held that Farrar qualified as a “prevailing party” so as to be eligible for attorney’s fees, but that considerations of proportionality should guide the decision whether to award fees. Given the minimal success achieved by Farrar, the Court found, the appropriate fee recovery in the circumstances was “no fee at all.” Farrar, 506 U.S. at 115, 113 S.Ct. at 575.

The same logic should bar recovery of attorney’s fees here, Riverview asserts, because Sheppard only obtained declaratory relief. The district court rejected this argument on the ground that Farrar construed 42 U.S.C. § 1988, whereas in this case the fee award arises under 42 U.S.C. § 2000e-5(g)(2)(B).³ In our view, however, any difference between the two provisions does not justify disregarding Farrar. It is true that Farrar examined whether a plaintiff who receives only nominal damages qualifies as a “prevailing party” under § 1988, and that § 2000e-5(g)(2)(B) contains no prevailing party requirement. But the Court’s discussion of the prevailing party threshold was only one of the decision’s two principal elements, dealing solely with whether a particular plaintiff was eligible to receive fees. Far-rar also addressed a second issue, one that lies at the heart of this ease: Assuming that a given plaintiff is eligible to receive attorney’s fees, what factors should inform a district court’s exercise of its statutory discretion in deciding whether to award fees? With respect to that question, sections 1988 and 2000e-5(g)(2)(B) require similar inquiries.

When assessing whether to grant fees, Farrar requires that courts consider the relationship between the fees and the degree of the plaintiffs success. Farrar, 506 U.S. at 114-16, 113 S.Ct. at 574-76. The district court seemed to be of the view that, because § 2000e-5(g)(2)(B) already limits the scope of recovery, Farrar’s concern with proportionality makes little sense in this context: “Denying recovery of attorney’s fees in this situation on the rationale of ‘lack of success’ would render the statute ineffective and practically meaningless.” Sheppard, 870 F.Supp. at 1381. Section 2000e~5(g)(2)(B) does prohibit any recovery of damages, and so we agree with the trial court that simply comparing the extent of damage recovery with the attorney’s fees would amount to an empty exercise. Nevertheless, if denial of fees would invariably render the statute “ineffective” and “practically meaningless,” Congress would have written a mandatory provision requiring that attorney’s fees be awarded in every case. That it did not do so suggests that Congress was wary of enacting legislation whose benefit inures primarily to lawyers in the form of a substantial fee recovery, even if relief to the plaintiff is otherwise trivial and the lawsuit promotes few public goals.

Factoring proportionality concerns into the analysis helps guard against this result. In appropriate cases, for instance, courts should consider the reasons why injunctive relief was or was not granted, or the extent and nature of any declaratory relief. Moreover, Farrar’s concern was not only with whether the extent of recovery accords with the amount of attorney’s fees. The decision suggested a more general proportionality consideration as well: whether the public purposes served by resolving the dispute justifies the recovery of fees. See Farrar, 506 U.S. at 121-22, 113 S.Ct. at 578. (O’Connor, J., concurring) (a plaintiffs “success might be considered material if it also accomplished some public goal other than occupying the time and energy of counsel, court, and client”).

Such an analysis should apply here. By definition, an illicit factor will have played some role in cases subject to § 2000e-5(g)(2)(B). See 42 U.S.C. § 2000e-2(m). But within that category of cases, there are large differences. Some mixed-motive cases will evidence a widespread or intolerable animus on the part of a defendant; others will illustrate primarily the plaintiff’s unacceptable conduct which, by definition, will have justified the action taken by the defendant. The statute allows district courts to distinguish among cases that are in reality quite different.

Factoring Farrar’s principles into the analysis under § 2000e-5(g)(2)(B) will not suppress the incentive to file Title VII actions. A host of contingencies affects the course of every civil rights lawsuit. There is always the risk that a plaintiff will not prevail on the merits, yet this is not a disincentive to the initiation of Title VII actions. Moreover, because a case generally does not become a mixed-motive or pretext ease until after the evidence is developed, see Fuller v. Phipps, 67 F.3d 1137, 1142-43 (4th Cir.1995), plaintiffs ordinarily will not know whether their claim implicates § 2000e-5(g)(2)(B) at the time of filing suit. And in cases governed by § 2000e — 5(g)(2)(B), an award of attorney’s fees will often be appropriate for the reasons we have already expressed.

III.

Riverview contends that under Fed. R.Civ.P. 68, Sheppard should be forced to bear the cost of attorney’s fees that accrued after the date of the $5,000 offer of judgment. We disagree that Rule 68 applies of its own force to the award of attorney’s fees in § 2000e-5(g)(2)(B) cases. We do believe, however, that a court may consider a plaintiffs rejection of a settlement offer as one of several factors generally informing its discretionary inquiry under § 2000e-5(g)(2)(B).

Rule 68 states that “[i]f the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.”⁴ Fed.R.Civ.P. 68 (emphasis added). Whether attorney’s fees fall within the category of “costs” subject to Rule 68’s cost-shifting requirement depends upon the precise language of the statute providing for the fee award. Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 3016, 87 L.Ed.2d 1 (1985). Marek involved 42 U.S.C. § 1988, which allows courts to award “attorney’s fees as part of the costs.” 42 U.S.C. § 1988(b) (emphasis added). The Supreme Court held that the language of § 1988 plainly contemplates that “costs” include attorney’s fees, and so fees recovered pursuant to that statute are subject to Rule 68’s cost-shifting requirement. Marek, 473 U.S. at 9, 105 S.Ct. at 3016.

The award of attorney’s fees in this case, however, was pursuant to § 2000e-5(g)(2)(B), which provides for the recovery of “attorney’s fees and costs.” 42 U.S.C. § 2000e-5(g)(2)(B)(i) (emphasis added). In expressly distinguishing attorney’s fees from “costs,” Congress was aware that it was deviating from the language in § 1988, and that under Marek, the Rule 68 implications depend upon the precise wording of the fee-enabling statute. See H.R.Rep. No. 102-40(1), 102d Cong., 1st Sess. 82 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 620. This explicit congressional recognition, coupled with Marek’s emphasis on the exact language of the particular attorney’s fee provision, makes clear that fees granted under § 2000e-5(g)(2)(B) are not part of “costs” subject to Rule 68.

That Rule 68 may not require plaintiffs to bear their own post-offer attorney’s fees in § 2000e-5(g)(2)(B) cases does not, however, prohibit courts from considering a plaintiffs rejection of a settlement offer as one factor affecting its decision whether to award fees or in what amount. In fact, such a consideration seems a sensible one in light of Farrar’ s concerns with the degree of success achieved by the plaintiff and the public purposes served by the litigation. See Marek, 473 U.S. at 11, 105 S.Ct. at 3017-18. After all, refusing a reasonable offer of settlement promotes few public interests when the plaintiff ultimately receives a less favorable recovery after trial. Consequently, courts may consider a plaintiffs refusal of a settlement offer as one of several proportionality factors guiding their exercise of discretion under § 2000e-5(g)(2)(B), and the district court may do so here on remand.

IV.

Our good colleague on this panel has written a fine dissenting opinion. We shall explain briefly why we disagree with it.

The dissent contends essentially that district courts must award a lodestar attorney’s fee in all cases subject to § 2000e-5(g)(2)(b), “even when ‘special circumstances’ exist that would render a grant of fees ‘unjust.’ ” Infra at 1342. This conclusion cannot be squared with the statutory language. Congress, as we have discussed, wrote that a district court “may” grant attorney’s fees. It did not write that fees “shall” or “must” be awarded in every mixed-motive case, and we are not at liberty to place in its mouth words which are not there. Any difference in language between § 1988 and § 2000e-5(g)(2)(B) is outweighed by their matching dispositive verb, “may,” which signifies that district courts retain discretion under both provisions. See Fogerty v. Fantasy, Inc., 510 U.S. 517, -, 114 S.Ct. 1023, 1033, 127 L.Ed.2d 455 (1994); Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 415-16, 98 S.Ct. 694, 697, 54 L.Ed.2d 648 (1978).

The dissent suggests, however, that “may” and “shall” can be synonymous. Infra at n. 2. Even young children would say otherwise. They learn early on that “may” is a wonderfully permissive word. “Shall,” by contrast, is more sternly mandatory. And whatever the merits of believing “may” means “shall,” they do not apply when Congress has employed the two different verbs in neighboring statutory passages. See Anderson v. Yungkau, 329 U.S. 482, 485, 67 S.Ct. 428, 430, 91 L.Ed. 436 (1947) (“when the same Rule uses both ‘may¹ and ‘shall,’ the normal inference is that each is used in its usual sense — the one act being permissive, the other mandatory”).⁵

Alternatively, the dissent maintains, “may” only operates to show that district courts are under no obligation to grant injunctive relief under the statute. This suggestion, too, is disproved by the statutory language. The word “may” qualifies the award of all forms of relief, not just injunctive relief: According to § 2000e-5(g)(2)(B), a district court “may grant declaratory relief, injunctive relief ... and attorney’s fees and costs.” So if “may” gives district courts discretion on whether to award an injunctive remedy, it must do the same with regard to attorney’s fees as well.

The dissent’s spin on the statute, moreover, entails an anomalous outcome: It places mixed-motive plaintiffs in a more favorable position than plaintiffs for whom discrimination is the sole cause of an adverse employment decision. In cases falling under § 2000e-5(g)(2)(B), the employer by definition “would have taken the same action in the absence of [any] impermissible motivating factor” — here, the jury made that very finding on its verdict form. Suppose that a plaintiff was discharged for embezzling funds, divulging company secrets, or acting abusively toward his or her co-workers, but that an illicit factor also played some role in the dismissal. Such a plaintiff would automatically recover attorney’s fees under the dissent’s view of § 2000e-5(g)(2)(B). A plaintiff who engaged in no misconduct, by contrast, would find any recovery of fees subject to Farrar’s proportionality standards. This could not have been Congress’ intention.

The dissent confuses eligibility for attorney’s fees with an entitlement to a lodestar award. The premise seemingly underlying the dissent’s interpretation of the statute is that, because mixed-motive plaintiffs are barred from receiving an award of money damages, they are entitled on that account to a grant of attorney’s fees. There is no indication in the statute, however, that Congress sought to take money from the pockets of plaintiffs solely to deposit it in the pockets of attorneys. Of course, § 2000e-5(g)(2)(B)’s express prohibition against any award of damages does affect the proportionality inquiry — we agree with the dissent that a plaintiffs “lack of success in obtaining a money judgment cannot ... preclude an award of attorney’s fees,” infra at 1344, and we state so above. Just as plaintiffs should often receive attorney’s fees when they prevail in non-mixed-motive cases, see Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 1937, 76 L.Ed.2d 40 (1983), they will often recover fees when they prevail in mixed-motive cases as well, despite the unavailability of damages.

This does not mean, however, that § 2000e-5(g)(2)(B) completely strips district courts of their traditional discretion to tailor the fee award to the plaintiffs degree of success. See Hensley, 461 U.S. at 434-37, 103 S.Ct. at 1940-42. So while we heartily agree with the principle that the “workplace is no place for discrimination,” infra at 1346, we simply believe that district courts may consider the circumstances of each ease in fashioning any award of attorney’s fees— indeed, one of the relevant factors is the extent to which a plaintiff succeeds in showing that an employer’s discrimination, and not the employee’s own misconduct, drove the employment decision. In short, district courts retain discretion in awarding attorney’s fees under § 2000e-5(g)(2)(B), just as they have discretion under other civil rights fee statutes, but with Farrar’s proportionality considerations modified to fit the parameters of § 2000e-5(g)(2)(B) along the lines we have outlined.

V.

Farrar was designed to prevent a situation in which a client receives a pyrrhie victory and the lawyers take a pot of gold.⁶ The district court in this case awarded $40,000 in attorney’s fees under the impression that it lacked the discretion customarily accorded trial courts in the area of attorney’s fees. For the foregoing reasons, we vacate the award and remand the case, so that the district court may reconsider it, describing its application of the factors set forth herein.

VACATED AND REMANDED

1 . Whether this case was properly submitted to the jury as a mixed-motive case is not at issue in this appeal. See Fuller v. Phipps, 67 F.3d 1137 (4th Cir.1995).

2 . Sheppard actually claimed to have incurred attorney's fees in the amount of $80,899.50, but she voluntarily reduced her fee request to $40,-000 because of her failure to prove that she would not have been laid off absent any discrimination.

3 . We reject Riverview’s suggestion that either 42 U.S.C. § 1988 or 42 U.S.C. § 2000e-5(k) governs the analysis of attorney’s fees in this case. Both provisions generally allow for attorney’s fees for plaintiffs who prevail in civil rights lawsuits, the latter dealing with Title VII and the former with a broader range of actions. As the district court correctly found, 42 U.S.C. § 2000e-5(g)(2)(B) controls the award of attorney's fees here, because that provision is a more specific one applying uniquely in the context of mixed-motive cases. See HCSC-Laundry v. United States, 450 U.S. 1, 6, 101 S.Ct. 836, 839, 67 L.Ed.2d 1 (1981) (per curiam) (”[I]t is a basic principle of statutory construction that a specific statute ... controls over a general provision ... particularly when the two are interrelated and closely positioned.”).

4 . In this case, "the judgment finally obtained” by Sheppard was “not more favorable than” the $5,000 offer. Fed.R.Civ.P. 68. The $5,000 offer included damages as well as fees and costs then accrued. The relevant comparison is thus with the damages actually awarded plus that portion of the fees and costs actually awarded that is attributable to the period preceding the offer. See Marryshow v. Flynn, 986 F.2d 689, 692 (4th Cir.1993). Here, Sheppard received no damages, and the portion of the fees and costs awarded relating to the period preceding the offer was calculated by the district court to be $3,509.32. Because this figure is less than the $5,000 offer. Rule 68 would require that Sheppard pay for her own post-offer “costs.” The question we address here is whether attorney’s fees are part of these "costs.”

5 . Contrary to the dissent's implication, the Supreme Court did not suggest otherwise in Gutierrez de Martinez v. Lamagno, - U.S. -, 115 S.Ct. 2227, 132 L.Ed.2d 375 (1995). That opinion states that " ‘shall’ generally means ‘must,’ ” but that "legal writers sometimes use, or misuse ‘shall’ to mean ‘should,’ ‘will,’ or even ‘may.’ ” Id. at - n. 9, 115 S.Ct. at 2235 n. 9 (emphasis added).

6 . The district court echoed this very concern in quite humorous fashion, stating at the conclusion of its opinion:

On my office wall, there hangs a nineteenth century English print entitled The Lawsuit, showing two farmers fighting over a stationary cow — one pulling her by the horns and the other by the tail — while a bewigged barrister happily milks her. This case certainly demonstrates that nothing much has changed. The plaintiff and the defendant are right where they started, while the lawyers’ pails hold all the milk.

Sheppard, 870 F.Supp. at 1384.

1 . The majority makes no claim that either section 1988 or section 2000e-5(k) controls here and in fact rejects the proposition altogether, ante at 1336 n. 3, though the appellant’s principal argument on appeal was that section 1988 controlled or, in the alternative, that section 2000e-5(k) controlled. See Appellant's Br. at 12-13 ("Riverview contests the District Court’s finding that § 2000e-5(g)(2)(B) governs with respect to determining an award of attorney's fees in this case.... [T]he applicable statute to be considered with her request for attorney's fees is the Civil Rights Attorney's Fees Award Act of 1976, § 1988.... Alternatively, the appropriate attorney’s fees provision ... [is] in Title VII ... at § 2000e-5(k)....”).