Charles H. BERRY, Jerald S. Reynolds, and Jesse L. Carter,
Jr. Plaintiffs-Appellees/Cross-Appellants,
v.
STEVINSON CHEVROLET, a Colorado corporation; Stevinson
Toyota, a Colorado corporation; Stevinson Toyota East,
Inc., doing business as Mark Toyota, a Colorado corporation;
and Charles Stevinson, individually,
Defendants-Appellants/Cross-Appellees,
and
Reggi Bonino, individually, Defendant.
The Lawyers' Committee for Civil Rights; The Colorado
Hispanic Bar Association; Equal Employment
Opportunity Commission, Amici Curiae.
Nos. 93-1031, 93-1055, 93-1072, 93-1127 and 93-1354.
United States Court of Appeals,
Tenth Circuit.
Jan. 19, 1996.
Lynn D. Feiger (Darold W. Killmer, Gilbert M. Roman, and John A. Culver with her on the briefs) of Feiger, Collison & Killmer, P.C., Denver, Colorado, for Plaintiffs-Appellees/Cross-Appellants.
John M. Husband of Holland & Hart (Gregory A. Eurich and Brian M. Mumaugh of Holland & Hart, and Thomas S. Nichols of Davis, Graham & Stubbs, with him on the briefs), Denver, Colorado, for Defendants-Appellants/Cross-Appellees.
Paul D. Ramshaw, Attorney (James R. Neely, Jr., General Counsel, Gwendolyn Young Reams, Associate General Counsel, and Vincent J. Blackwood, Assistant General Counsel, with him on the brief), U.S. Equal Employment Opportunity Commission, Washington, DC, for Amicus Curiae EEOC.
Brian E. Bates of Antonio Bates Bernard Haenel, Professional Corporation, Denver, Colorado; and Richard T. Seymour and Shаron R. Vinick of Lawyers' Committee for Civil Rights Under Law, submitted a brief for Amicus Curiae Lawyers' Committee.
Roberto L. Corrada, Assistant Professor of Law, University of Denver College of Law, Denver, Colorado, submitted a brief for Amicus Curiae The Colorado Hispanic Bar Association.
Before SEYMOUR, Chief Judge, HENRY, Circuit Judge, and COOK,* District Judge.
SEYMOUR, Chief Judge.
Jesse L. Carter, Jr., Charles H. Berry, and Jerald S. Reynolds, who are African Americans, filed this action under 42 U.S.C. Sec. 2000e-5 (Title VII) and 42 U.S.C. Sec. 1981 against several auto dealerships owned and principally managed by defendant Charles Stevinson. All plaintiffs alleged discriminatory discharge under Title VII. In addition, Mr. Berry alleged a failure to promote claim under 42 U.S.C. Sec. 1981, and Mr. Reynolds brоught a retaliation claim under Title VII. After a bench trial, the district court concluded that defendants were liable for back pay to Mr. Berry under Title VII and section 1981. The court also held defendants liable for compensatory damages to Mr. Reynolds for unlawful retaliation. The court rejected Mr. Reynolds' Title VII claim on the basis of race discrimination, and rejected Mr. Carter's Title VII claim as time-barred. It granted plaintiffs attorney's fees pursuant to 42 U.S.C. Sec. 1988 and 42 U.S.C. Sec. 2000e-5. See Berry v. Stevinson Chevrolet,
Defendants appeal the court's holding with respect to Mr. Reynolds' claim, and the award of attorney's fees. In the cross-appeal, all plaintiffs contend that the 1991 Civil Rights Act's provisions for damages and a jury trial should apply retroactively to this case. Mr. Reynolds also asserts that the court abused its discretion in denying his post-trial motion to conform to the evidence and in dismissing his state law claims. We affirm in part and reverse in part.
I.
A.
Mr. Carter was originally employed at Toyota West. He was transferred to Mark Toyota in 1985 and discharged in July 1987. He filed an EEOC race discrimination charge that month. Although the EEOC mailed his right to sue notice in June 1988, the post office returned the unclaimed notice after three delivery attempts. Almost two years later, Mr. Carter joined Mr. Berry and Mr. Reynolds in filing this action.
The district court found that the notice was mailed to Mr. Carter by certified mail and that he failed to receive it as a result of his own neglect and inattention. Because a plaintiff must bring a Title VII claim within ninety days of receipt of the right to sue notice, the district court concluded that Mr. Carter's action was time-barred. On appeal, Mr. Carter contends that the 1991 Civil Rights Act provision for a jury trial applies retroactively and that a jury should therefore have decided whether he filed his claim in a timely manner.
B.
Mr. Berry, a used car salesperson at Stevinson Chevrolet (Chevrolet West), quit his job after eleven years of employment and filed a Title VII construсtive discharge suit on the basis of race discrimination. He presented significant evidence that the management at Chevrolet West consistently made derogatory racial comments to him and ultimately failed to promote him to a management position for race-charged reasons. The district court found that the management at Chevrolet West engaged in discriminatory conduct which produced working conditions that a reasonable person would consider intolerable. It further found that although Mr. Berry expressed his desire for a promotion and was qualified to receive one, the management at Chevrolet West refusеd to promote him because of race and instead gave the promotion to less qualified white individuals. Applying the framework set out in Texas Dep't of Community Affairs v. Burdine,
C.
Mr. Reynolds was new car sales manager at defendant Stevinson Toyota (Toyota West). While Mr. Reynolds was employed as sales manager, Toyota West was notified that it had earned a sales bonus from Toyota Motor Sales, U.S.A., Inc. (Toyota). Toyota West allocated $1000 to Steve Szekula and $500 to Dennis Swan, both of whom were sales managers at Toyota West. Mr. Szekula and Mr. Swan quit their jobs in April 1989, before the dealership received the resulting bonus checks. Mr. Stevinson, the owner of the dealership, noted on their personnel files that neither should be rehired.
After Mr. Szekula left Toyota West, he pestered Mr. Rеynolds about whether the bonus check had arrived. Mr. Reynolds then withdrew funds from his personal savings to cover both Mr. Szekula's and Mr. Swan's bonuses. On May 3, 1989, he gave Mr. Szekula the cash equivalent of both bonuses and asked Mr. Szekula to deliver Mr. Swan's bonus to him. The next day, the bonus checks arrived from Toyota. Mr. Reynolds believed "that he had implied authority to negotiate the checks for Szekula and Swan," Berry,
Toyota West terminated Mr. Reynolds in August 1989, after whiсh he began work at Douglas Toyota. In February 1990, Mr. Reynolds met Mr. Szekula for lunch to discuss Mr. Szekula's possible employment with Douglas Toyota. During lunch, Mr. Reynolds told Mr. Szekula that he was contemplating filing an EEOC race discrimination complaint against Toyota West. Mr. Szekula interviewed at Douglas Toyota and accepted a job there. Nonetheless, he interviewed for a new position at Toyota West shortly thereafter. Although the general sales manager at Toyota West told Mr. Szekula during the interview that no jobs were available, Mr. Szekula soon received instructions to contact Mr. Stevinson at home. Contrary to usual hiring practice, Mr. Stevinson did not discuss compensation or other terms of employment. Mr. Stevinson offered Mr. Szekula a management position at Toyota West despite having flagged his file with a "not for rehire" notation. Although Mr. Stevinson denied discussing Mr. Reynolds' EEOC complaint during his interaction with Mr. Szekula, the district court found Mr. Stevinson's testimony unbelievable and concluded that Mr. Szekula discussed the impending EEOC action both with Mr. Stevinson and the general sales manager. Id. at 130.
After Mr. Szekula returned to work at Toyota West, Mr. Stevinson informed the general sales manager that Mr. Szekula had received an IRS Form 1099 concerning his bonus and that Mr. Szekula had not received the money. Mr. Szekula then ordered a cоpy of his bonus check from Toyota's national distributor and met with an investigator from the Jefferson County Sheriff's Office to complain of forgery. The investigator learned that a secretary at Toyota West had signed Mr. Szekula's name to the bonus check. Based on a complaint by Mr. Szekula, the Jefferson County District Attorney filed criminal charges of theft and forgery against Mr. Reynolds. Pursuant to regular practice, the bank at which Mr. Reynolds deposited the bonus checks filed a civil action against him. Mr. Reynolds was acquitted on the criminal charges.
Mr. Reynolds filed a two-pronged Title VII claim, alleging that Toyota West discriminated against him on the basis of raсe and that it unlawfully retaliated against him for filing a complaint with the EEOC. The district court rejected his discriminatory discharge claim, finding that the sole reason for his termination was his unsatisfactory performance. Mr. Reynolds does not appeal this holding.
The district court concluded, however, that Toyota West had violated Title VII's anti-retaliation provision, 42 U.S.C. Sec. 2000e-3(a), and awarded Mr. Reynolds damages. The court found it "more probable than not that Stevinson and others in management at Toyota West caused Szekula to initiate the criminal complaint with the sheriff's office for the purpose of retaliating against Reynolds for his having filed a discrimination charge with the EEOC." Berry,
II.
Title VII Liability
Defendants contend the district court erred in applying Title VII's anti-retaliation provision to this case. Section 2000e-3(a) provides in relevant part:
It shall be an unlawful employment practice for an employer to discriminate against any of his employees or applicants for employment ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge ... under this subchapter.
42 U.S.C. Sec. 2000e-3(a). In particular, defendants argue that (1) section 2000e-3(a) does not protect former employees from retaliation; (2) filing criminal charges is not an "unlawful employment practice" and therefore plaintiffs have not presented a prima facie case; and (3) even if the section applies in these circumstances, defendants nonetheless offered a legitimate, nondiscriminatory reason for causing the report of Mr. Reynolds' forgery. We address each of defendants' allegations in turn.
A.
In concluding that defendants were liable to Mr. Reynolds on his retaliation claim, the district court relied on Rutherford v. American Bank of Commerce,
In Ruthеrford, the plaintiff sued her former employer under section 2000e-3(a) upon learning that the employer had revealed in reference letters and conversations that the plaintiff had filed Title VII sex discrimination charges against the former employer. The section states that employers may not retaliate against "employees" or "applicants for employment." After noting that "[a] statute which is remedial in nature should be liberally construed," we interpreted "employee" in section 2000e-3(a) to include former as well as present employees. Rutherford,
Defendants concede that we construed section 2000e-3(a) to protect former employees but nonetheless encourage us to "reconsider" our decision in Rutherford. Absent an intervening Supreme Court or en banc decision justifying such action, we lack the power to overrule Rutherford. See United States v. Walling,
Defendants argue that the Supreme Court's decision in EEOC v. Aramco Services Co.,
B.
The general approach to Title VII suits set forth in McDonnell Douglas Corp. v. Green,
In the instant case, the district court concluded that Mr. Reynolds established a prima facie case of retaliation by Toyota West and Mr. Stevinson. In reaching this conclusion, the court found that (1) Mr. Reynolds filed an EEOC complaint; (2) Mr. Stevinson and Toyota West caused individuals to report a purported forgery; and (3) that such adverse action would not have occurred if Mr. Reynolds had not filed his EEOC complaint. Berry,
Defendants contend on appeal that reporting a suspected crime is not an unlawful employment practice and therefore is beyond the scope of the anti-retaliation provisions. Defendants distinguish reporting a suspected crime from adverse employment actions, such as failing to provide a letter of recommendation, demotion, and giving adverse evaluations, on the grounds that the latter are integrally connected with the employment relationship. We reject this argument for two reasons. First, those courts that follow Rutherford include malicious-prosecution-like scenarios within the ambit of section 704(a). Second, retaliatory prosecution can have an adverse impact on future employment opportunities and therefore can be an adverse employment action.
We have not previously examined whether the filing of charges constitutes an adverse employment action. Other courts concluding that Title VII extends to former employees have held that the filing of charges can constitute the requisite adverse action. For example, in Beckham v. Grand Affair, Inc.,
We agree that malicious prosecution can constitute adverse emрloyment action. In Rutherford we stated that "[a] statute which is remedial in nature should be liberally construed."
Furthermore, we do not agree with defendants' assertion that retaliatory prosecution is not connected with present or future employment. While providing a tainted employment reference may have a more direct effect on a former employee's future employment prospects, criminal prosecution will also have an obvious impact. A criminal trial, such as that to which Mr. Reynolds was subjected, is necessarily public and therefore carries a significant risk of humiliation, damage to reputation, and a concomitant harm to future employment prospects. See generally, Passer v. American Chemical Soc.,
After the district court held that Mr. Reynolds had set forth a prima facie case, the burden of production shifted to defendants. The district court stated that "Toyota West and Stevinson advance no legitimate reason for their actions. As a matter of fact they deny they played any role at all in causing Szekula to report the alleged forgery." Berry,
Mr. Stevinson repeatedly denied any role in Mr. Szekula's decision to file charges. In fact, Mr. Stevinson denied any knowledge of the alleged forgery incident until investigators contacted him about the original bonus checks. Mr. Szekula bolstered this testimony, stating that he never discussed the forgery incident with Mr. Stevinson. While Mr. Stevinson allegedly believed that Mr. Reynolds had forged the checks, he claimed to have acquired this belief subsequent to the initiation of the investigation and Mr. Szekula's decision to file charges. This post hoc belief cannot be offered as a legitimate reason prompting the initiation of charges. Based on our review of the record, we agree with Mr. Reynolds that defendants did not raise at trial a legitimate reason for causing criminal charges to be filed and therefore waived the issue on appeal. See Gillihan v. Shillinger,
Even if defendants had properly raised their legitimate, nonretaliatory reason for their action at trial, they would not be relieved of liability. Once a plaintiff and a defendant meet their initial burdens and the plaintiff has been allowed to demonstrate that the defendant's purported reasons were actually pretexts, the court must decide " 'which party's explanation of the employer's motivation it believes.' " Love v. RE/MAX,
it to be more probable than not that Stevinson and others in management at Toyota West caused Szekula to initiate the criminal complaint ... for the purpose of retaliating against Reynolds for his having filed a discrimination charge with the EEOC. Thе sequence and timing of these events, including Szekula's delay in going to the authorities, is sufficient probative circumstantial evidence that Toyota West and Stevinson used and encouraged Szekula to initiate this investigation and prosecution.
Berry,
I closely observed Reynolds when he testified. My judgment of his demeanor and testimony, in light of all the evidence in this case, drives my determination that he was credible in all respects. To the contrary, defense witnesses lacked persuasive credibility in material aspects of their testimony. Stevinson may be devoid of racial bias. However, he presents himsеlf to be such a person to the point of hubris.
Id. Defendants do not contest the validity of these factual findings. Even if defendants had asserted a legitimate, nonretaliatory explanation for their actions, the district court found that the explanation was a mere pretext for defendants' retaliatory acts. We therefore hold that Mr. Stevinson and Toyota West are liable to Mr. Reynolds for retaliation.
III.
Title VII Remedy
After concluding that Mr. Stevinson and Toyota West were liable to Mr. Reynolds under section 704(a), the district court awarded Mr. Reynolds $265,000 in compensatory damages. Title VII authorizes courts to "order such affirmative action as may be apрropriate, which may include, but is not limited to, reinstatement or hiring of employees, with or without back pay ... or any other equitable relief as the court deems appropriate." 42 U.S.C. Sec. 2000e-5(g). Recognizing that "[t]he standard Title VII remedies of reinstatement and back pay are unavailable to Reynolds" and further recognizing that "no equitable relief [is] appropriate under the circumstances," the district court held that "all appropriate remedies are available to compensate him for his injuries" and awarded compensatory damages. Berry,
On appeal, Mr. Reynolds and defendants agree that Title VII did not expressly provide for damages at the time that plaintiffs filed this action. Defendants argue that the conspicuous absence of congressional provision for damages precludes relief in the instant case. Mr. Reynolds maintains that, given the broad language in Title VII's relief provision, courts are entitled to stray from traditional relief to make victims whole. Altеrnatively, all plaintiffs cross appeal, arguing that the Civil Rights Act of 1991, which expressly provides for compensatory damages, should apply retroactively to those cases pending at the time of its enactment, including this one.
The Supreme Court has since held that the compensatory damages provisions in the 1991 Civil Rights Act would not be applied retroactively to cases filed before its effective date. Landgraf v. USI Film Prods., --- U.S. ----,
We now address whether the compensatory damages awarded Mr. Reynolds were available under Title VII prior to the enactment of the 1991 Civil Rights Act. We hold that they were not.
The district court's reliance upon Franklin to award compensatory damages was misplaced. As the court recognized, Franklin involved an implied right of action under Title IX. "Congress [had] given no indication of its purpose with respect to remedies." Franklin,
Moreover, we have held that compensatory damages are not available under Title VII. See Pearson v. Western Elec. Co.,
IV.
State Law Claims
Exercising its discretion, the district court declined to retain pendent jurisdiction over plaintiffs' state law claims. Berry,
We review the district court's denial of this motion for an abuse of discretion. Pallottino v. City of Rio Rancho,
V.
Attorney's Fees
The district court granted Mr. Reynolds and Mr. Berry $324,894 in attorney's fees under 42 U.S.C. Sec. 2000e-5 and 42 U.S.C. Sec. 1988. In arriving at this figure, the court concluded that Mr. Berry was a prevailing party with respect to his section 1981 and Title VII discrimination claims and that Mr. Reynolds was a prevailing рarty with respect to his Title VII retaliation claim. The court then calculated the lodestar for these plaintiffs' claims. After disallowing a few specific fee requests, see Order dated Mar. 30, 1993, Aplt.App., vol. I at 245-248, the court further reduced the lodestar by twenty percent to reflect the fact that monetary damages fell far short of the amount sought. Id. at 9.
Defendants first argue that the district court abused its discretion in failing to discount the lodestar for imprecise time entries. "An attorney's fee award by the district court will be upset on appeal only if it represents an abuse of discretion." Mares v. Credit Bureau of Raton,
Defendants also contend the district court's award of attorney's fees was incorrect because the lodestar amount should have been reduced by at least one-third given that plaintiffs recovered only thirteen percent of the damages they sought. "If a plaintiff has achievеd 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." Hensley v. Eckerhart,
Berry succeeded completely and Reynolds succeeded partially on the first goal, but neither succeeded satisfactorily on the second ... The monetary damages they received ... fell far short of those they sought. Furthermore, Reynolds was unsuccessful on his Title VII discrimination claim.... To reflect the degree of success Berry and Reynolds achieved in this case, I will reduce the lodestar by 20%.
Id. After a thorough review of the record, we conclude that the district court did not abuse its discretion in failing to further reduce the lodestar on the action as it then stood. In denying Mr. Reynolds relief on his retaliation claim, however, we affected his overall success level and clearly undermined one of his two main goals in maintaining this action. While we affirm Mr. Berry's attorney's fee award, we remand Mr. Reynolds' attorney's fee award for reconsideration in light of this decision.
VI.
We AFFIRM the district court's decision with respect to defendants' liability for Mr. Reynolds' Title VII retaliation claim. We also AFFIRM the district court's award of attorney's fees to Mr. Berry. We REVERSE the district court's award of compensatory damages to Mr. Reynolds and consequently REMAND his attorney's fees award. On remand, the district court may revisit its decision to dismiss the pendent state law claims.
Notes
The Honorable H. Dale Cook, Senior Judge for the United States District Court for the Northern District of Oklahoma, sitting by designation
Plaintiffs also assert that the jury trial provision of the 1991 Civil Rights Act should apply retroactively. This argument has likewise been foreclosed by Landgraf, --- U.S. at ----,