The Employer Strikes Back  by Louis Pechman

The Employer Strikes Back
by Louis Pechman*

A common question for a company on the receiving end of an employment lawsuit is whether litigation with employees has to be a one way street. In general, the visceral desire of a company to countersue, recover its costs and attorneys’ fees, or otherwise equalize the pain of litigation, is left unfulfilled. But, some employers have taken the offensive. This article will review some of the tactics by which employers under attack have aggressively responded to claims by their employees.

Recovery of Attorneys’ Fees

Title VII of the Civil Rights Act of 1964 provides for an award of attorneys’ fees to a “prevailing party,” but a defendant is not entitled to an award of fees on the same basis as a prevailing plaintiff. In Christianburg Garment Co. v. EEOC,1 the Supreme Court held that a district court may, in its discretion, award attorneys’ fees to a prevailing defendant upon a finding that the claim was “frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith.”

The stricter standard for awarding attorneys’ fees against a plaintiff has created an environment where an employee who successfully prosecutes a discrimination case is routinely awarded fees. In contrast, it is the exceptional case for an employer to be awarded fees against an employee who does not prevail on a discrimination claim. The policy consideration creating this imbalance is that successful plaintiffs are vindicating public policy against a violator of the anti-discrimination laws. That same public policy does not apply to a defendant corporation.2

The difficulty in imposing attorneys’ fees on plaintiffs was illustrated in Parker v. SONY Pictures Entertainment, Inc.,3 where Judge Kaplan found that a terminated employee’s theory of disability discrimination was “a work of fiction” and had “repeatedly lied.” After the claim of disability discrimination was dismissed, defendants sought an award of attorneys’ fees and expenses of $350,000 — which was less than the cost of defending the case. Judge Kaplan found that the discrimination claim was frivolous and pursued in bad faith, but only awarded fees of $12,500 given plaintiff’s inability to pay.4

The Second Circuit, however, reversed Judge Kaplanıs decision to award attorneys’ fees to the defendants. Because the claims had survived summary judgment, the court was “extremely reluctant” to conclude that the claim was nonetheless “frivolous, unreasonable, or groundless.”5 The Second Circuit reasoned that since there were no aggravating circumstances that rendered it improper for plaintiff to proceed to trial on a claim that was strong enough to get to a jury, an award of attorneys’ fees was not warranted.

In Briskovic v. Our Lady of Mercy Medical Center,6 the claim of a terminated employee, who alleged he was discriminated against because of his Yugoslavian national origin, was rejected. Rather, Judge Martin found that the evidence was clear that the employee was fired for calling a supervisory employee “a black bitch” and threatening to “blow up the fucking building.” Judge Martin cautioned that the discrimination laws are not “vehicles to be used by disgruntled employees to punish employers and unions that have acted responsibly in response to totally inappropriate conduct. When baseless litigation is commenced with the knowledge that it will require the defendants to expend substantial sums, both the plaintiff and the lawyer must understand that the Court will hold them responsible and require them to reimburse the victims of their actions.”7 Judge Martin lamented that he would have held the employee liable for the full amount of defendants’ fees if he was a “wealthy man,” but given his limited resources, Judge Martin was constrained to order payment of only $5,000 in fees and $5,116 in costs.

The court in Stefanoni v. Burlington,8 was less reluctant to award fees against an employee who was terminated from the sheriff’s office in Burlington County, New Jersey, because of her unprofessional conduct and policy violations. The court found that the plaintiff’s sex harassment claims “fell far short” of a prima facie case under any theory and castigated her claims as lacking “a coherent theory of liability.” Moreover, the Court pointed out that settlement of the case was made impossible by plaintiff’s refusal to budge from her million dollar settlement demand. Applying a lodestar method, the court awarded defendants attorneys’ fees and expenses in the amount of $90,309.

Sanctions

Various bases for imposing sanctions, such as Rule 11, are available to courts in the face of frivolous litigation, albeit these sanctions are sparingly used. Any attorney who vexatiously and unreasonably multiplies the proceedings in a case may be required by a federal court, pursuant to 28 U.S.C. § 1927, to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct. Section 1927 was recently utilized by the court in Murphy v. Hous. Auth. & Urban Redevelopment Agency,9 where counsel fees of $56,885 and costs of $2,330.60 were imposed against plaintiffs’ counsel, who failed to present a “scintilla” of evidence in a reverse race and sex discrimination case. According to the court, plaintiff’s attorney “callously disregarded his professional obligations to this Court, his adversary, and his clients” and continued to pursue the lawsuit even when it became clear that there was no basis in law or fact upon which the claim could prevail. The court chastised counsel’s “Rambo” tactics and concluded that his “zeal” had more to do with the recovery of his counsel fees than his client’s interests.  

Defamation

An employer who is the object of a malicious discrimination claim may sue for defamation. In this regard, the First Department has concluded that “statutory provisions prohibiting retaliatory conduct do not confer, upon bad-faith complainants making false discriminatory-related charges, absolute immunity from defamation actions that may arise out of those charges.”10 Defamation, however, is neither easy to plead nor prove in the context of a discrimination claim. As the court recently pointed out in Woodford v. Community Action of Greene County, Inc.,11 “courts are rightly reluctant to impose any impediment to the strong public policy favoring filing of complaints for the vindication of one’s rights under the law, and to the candid and forthright pleading of causes of action.” In Woodford, an employer’s counterclaim for defamation against a plaintiff who brought suit under the Family and Medical Leave Act was dismissed as defendant failed to show that plaintiff’s statements were unrelated to her claim against the employer.

Retaliation

Before filing a counterclaim against a suing employee, an employer must carefully consider whether the counterclaim may create a separate additional claim by the employee for retaliation. In Yankelevitz v. Cornell University,12 for example, Judge Leisure found that Cornell’s counterclaim for an accounting of income from a female employee who was suing for sex discrimination could constitute retaliation. Judge Leisure pointed out that the allegations and implications of the counterclaim constituted an adverse “employment action” as they shed a negative light on the employee’s professionalism and ethics.

The concern that a counterclaim may be deemed retaliation is somewhat different for an individual defendant. In Scrivner v. Socorro Independent School District,13 a plaintiff filed a sexual harassment suit against both her school and the alleged harasser, her principal. The principal filed a counterclaim against the plaintiff in his individual capacity, and therefore the court held that his conduct could not be attributed to the school district nor constitute retaliation in violation of the discrimination laws. The court noted that “companies and citizens have a constitutional right to file lawsuits, tempered by the requirement that the suits have an arguable basis.”14

In Jacques v. DiMarzio, Inc.,15 the defendant corporation in a disability discrimination case filed a $500,000 counterclaim for harassment and interference with “business operations” and “employee morale.” Judge Block characterized the counterclaim as “nothing more than a naked form of retaliation.” Commenting that plaintiff should not be subjected to in terrorem tactics, Judge Block invited defense counsel to show cause why Rule 11 sanctions should not be applied against them. Judge Block also took the opportunity, in his opinion, to “admonish the practicing bar against asserting baseless, retaliatory counterclaims” as they “constitute the type of abusive, harassing practices proscribed by Rule 11.”16

Internet Issues

The Internet has created outlets for voicing employee discontent that has provoked a sharp response by some employers. In Intel Corp. v. Hamidi,17 Intel sued Kourosh Hamidi, a former employee, for repeatedly flooding Intel’s internal e-mail system with his grievances about Intel. Hamidi had obtained Intel’s e-mail address list and on several occasions sent e-mails to between 8,000 and 35,000 Intel employees. Hamidi ignored Intel’s request to stop and even took steps to evade Intel’s security measures. Intel’s employees spent significant time attempting to block and remove Hamidi’s e-mail from the Intel computer systems. Utilizing the theory of trespass to chattels, Intel successfully applied that tort to enjoin Hamidi’s e-mails. The tort of trespass to chattels was applied by the court because (1) the electronic signal is “sufficiently tangible to support a trespass cause of action,” and (2) Hamidi’s e-mails caused disruption to Intel’s workers, who were drawn away from their jobs to deal with the messages. The court stated, “Intel is as much entitled to control its e-mail system as it is to guard its factories and hallways. No citizen has the general right to enter a private business and pester an employee trying to work.”18

In another California case, Felch v. Day,19 two disgruntled former employees of Varian Medical Systems, Inc. posted scathing remarks about the company and their supervisors on the Internet. Through some 14,000 Internet postings on 100 message boards and their own website, the former employees falsely accused managers at Varian, inter alia, of having extramarital affairs, being a danger to children, being homophobic, videotaping office bathrooms, discriminating against pregnant women, being chronic liars, and hallucinating. The court found that the former employees’ conduct was defamatory, permanently enjoined them from posting specific statements, and ordered them to pay a total of $775,000 in compensatory and punitive damages.

Conclusion

It is often said that the best defense is a good offense, but the same does not necessarily hold true for the world of employment litigation. The public policy seeking eradication of discrimination in the workplace gives substantial leeway to discrimination plaintiffs to prosecute their claims. In general, it is only when plaintiffs and their attorneys file frivolous claims or proceed in bad faith that they are susceptible to legal counterattacks which may hold them accountable for their actions.

Endnotes

1. 434 U.S. 412, 421 (1978).

2. Id. at 418-419.

3. No. 97-0264, 2000 U.S. Dist. LEXIS 12677, at *3 (S.D.N.Y. Sept. 5, 2000).

4. No. 97-0264, 2000 U.S. Dist. LEXIS 15063, at *6 (S.D.N.Y. Oct. 17, 2000).

5. Parker v. SONY Pictures Entertainment, Inc., 260 F.3d 100, 111-112 (2d. Cir. 2001).

6. Nos. 96-7452, 96-8932, 2000 U.S. Dist. LEXIS 9191 (S.D.N.Y. July 5, 2000).

7. Briskovic v. Our Lady of Mercy Med. Ctr., Nos. 96-7452, 96-8932, 1999 U.S. Dist. LEXIS 13232, at *3 (S.D.N.Y. Aug. 27, 1999).

8. No. 99-CV-2754, 2002 U.S. Dist. LEXIS 461 (D. N.J. Jan. 15, 2002).

9. 158 F. Supp. 2d 438 (D. N.J. 2001).

10. Herlihy v. Metropolitan Museum of Art, 214 A.D.2d 250, 257, 633 N.Y.S.2d 106, 110 (1st Depıt 1995).

11. 103 F. Supp.2d 97, 101 (N.D.N.Y. 2000), affıd 268 F.3d 51 (2d Cir. 2001).

12. 1996 U.S. Dist. LEXIS 11298 (S.D.N.Y. August 7, 1996).

13. 169 F.3d 969 (5th Cir. 1999).

14. Id. at 972.

15. No. 97-CV-2884, 2002 U.S. Dist. LEXIS 3399 (E.D.N.Y. Feb. 27, 2002).

16. Id. at *31.

17. 114 Cal. Rptr. 2d 244 (Cal. App. 3d Dist. 2001).

18. Id. at 257.

19. No. 780187 (Cal. Super. Ct., Santa Clara Co., Feb. 13, 2001).

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