NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 17a0321n.06
Case No. 16-2303
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

NATALIE REESER, Plaintiff-Appellant,

v. HENRY FORD HOSPITAL, Defendant-Appellee. ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

O P I N I O N BEFORE: BOGGS, MOORE, and McKEAGUE, Circuit Judges. McKEAGUE, Circuit Judge. Plaintiff Natalie Reeser appe als the district court’s order granting in part and denying in part her moti on for attorneys’ fees. Reeser sought $315,133.32 in fees pursuant to Michigan’s Whistleblowers’ Protection Act (WPA), M ICH

. C OMP

. L AWS § 15.364, but the district court determined that she was only entitled to $10,000. Her primary argument on appeal is that the district court did not follow the corr ect process required by Michigan law when it calculated this fee. We agree. As recently confirmed by the Michigan Supreme Court in Pirgu v. United Services Automobile Ass’n , 884 N.W.2d 257 (Mich. 2016), when Michigan statutes, such as the WPA, entitle litigants to r ecover a “reasonable attorney fee,” courts are required to follow a particular three- part framework when awarding the fee. This mandatory framework was not followed here. Becau se this oversight constituted an abuse of discretion, we vacate the district court’s orde r and remand for recalculation in line with Pirgu

.Case No. 16-2303 Reeser v. Henry Ford Hospital

- 2 - Additionally, while this appeal was pending, Henry Ford Ho spital filed a motion to strike portions of Reeser’s appellate briefing that it claims ra ised new arguments not made in the proceedings below. We deny this motion and order Henry Ford’s counsel to show cause within 14 days why it should not be sa nctioned under 28 U.S.C. § 1927.
I Natalie Reeser and Henry Ford Hospital have been embroiled in contentious litigation for approximately three years. Reeser brought federa l and state retaliatory-discharge claims against Henry Ford after it fired her for leaving the clinic, where she worked as a laboratory assistant, unattended during the lunch hour. According to R eeser, she was fired for reporting Henry Ford to state regulatory author ities after it forced he r to work through lunch w ithout pay. Reeser filed the instant suit, alleging that Henry Ford unlawfully retaliated against her in violation of the Fair Labor Standards Act (FLSA), 29 U. S.C. § 215(a)(3). She also sought state-law relief under the WPA, which prohibits an employer from discha rging an employee for “report[ing] . . . a violation or a suspected viola tion of a law . . . [of] the United States to a public body.” M ICH

. C OMP

. L AWS §15.362. After a hostile discovery process that incl uded more than fifteen non-dispositive motion filings, the parties went to tr ial. Reeser sought $730,000 in ec onomic and emotional distress damages. After seven days, the jury returned a no-cause verdict on Reeser’s FLSA claim, but found in her favor on the WPA retaliation claim. It awarded her actual damages of $3,200 for lost wages and fringe benefits. Reeser then filed a motion for attorneys’ f ees pursuant to the WPA, which provides a court with discretion to award “r easonable attorney fees . . . if the court determines that the award is appropriate.” M ICH

. C OMP

. L AWS §15.364. Reeser request ed $315,133.32. She arrivedCase No. 16-2303 Reeser v. Henry Ford Hospital

- 3 - at this figure by multiplying 1,189.7 hours expende d by hourly rates ranging from $250 to $300 for the four attorneys involved. Reeser primarily blamed Henry Ford’s hostile tactics for the large number of hours accumulated. The district court granted Rees er’s motion in part. First, it concluded that Reeser was entitled to attorneys’ fees under th e statute. Second, it determined that Reeser was entitled to a “modest” fee of $10,000. The district court did not i ndicate how it arrived at this specific figure, although it justified awarding a s ubstantially lower amount than R eeser requested by referring to certain factors delineated by the Michigan Supreme Court in Wood v. Detroit Au to. Inter-Ins. Exch. , 321 N.W.2d 653 (Mich. 1982) (“the Wood factors”). The district court did not explicitly discuss each Wood factor, finding that “the modest results achieved and the unnecessary protraction of the li tigation outweigh[ed] the other[ s].” R. 129 at 4, 7, PID 4599, 4602 (emphasizing that Reeser’s ultimate recove ry of $3,200 was less than 0.5% of the $730,000 she sought at trial). It also did not calculate a lodestar, instead concluding th at Reeser’s claimed hours “w[ere] not reasonable” and that the hourly rates she proposed were “irrelevant.” Id. at 4, PID 5499. This appeal followed.
II “Under both Michigan and federal law, a trial court’s award of attorney fees is generally reviewed under the abuse-of -discretion standard.” Bailey v. Scoutware , 599 F. App’x 257, 258 (6th Cir. 2015) (quoting Shields v. Gov’t Emps. Hosp. Ass’n , 490 F.3d 511, 514–15 (6th Cir. 2007)). A trial court abuses its discre tion when it makes an error of law. Pirgu , 884 N.W.2d at
260. When a state statute authorizes the grant of attorneys’ fees, state law governs both whether the fees should be awarde d and the amount of those fees. See Shimman v. Int’l Union ofCase No. 16-2303 Reeser v. Henry Ford Hospital

- 4 - Operating Eng’rs, Local 18 , 744 F.2d 1226, 1238 (6th Cir. 1984) (“Federal courts must generally apply state law regard ing attorney fees to a state law claim pendent to a federal claim.”) (citing Aleyeska Pipeline Serv. Co. v. Wilderness Soc’y , 421 U.S. 240, 259 n.31 (1975)); Bailey , 599 F. App’x at 258 (applyi ng Michigan law to a review of the reasonableness of attorneys’ fees awarded under the WPA). Becau se the WPA is the source of authority for Reeser’s award, Michigan law applie s to the calculation of that fee.
A Historically, Michigan courts have app lied a multi-factor test when calculating reasonable attorneys’ fees. See Wood , 321 N.W.2d at 661. However, in 2008 the Michigan Supreme Court eschewed this flexible method in favor of a more structured approach.
In Smith v. Khouri , the Michigan Supreme Court re viewed the reasonableness of attorneys’ fees awarded under the st ate’s case-evaluation statute, M ICH

. C OMP

. L AWS § 2.403(O). 751 N.W.2d 472, 479 (Mich. 2008). In doing so, it pr ovided a three-part framework for lower courts to follow. Step 1: “[A] trial cour t should begin its analysis by determining the fee customarily charged in the locality for similar legal services.” Id. Step 2: “This number should be multiplied by the reasonable number of hours expended in the case.” Id. The product of these two figures—i.e., the lodestar—“serv es as the starting poi nt.” Step 3: “Thereafter, the court should consider the remaining Wood /MRPC factors to determine whether an up or down adjustment is appropriate.” Id. at 479–80. This last step entails considering the Wood factors previously delineated by the Michigan Supreme Cour t as well as those listed in Rule 1.5(a) of the Michigan Rules of Professional Co nduct (MRPC). The trial court in Smith did not follow this prescribed framework, as it failed to determine a reasonable hourly rate fo r each attorney. The Michigan Supreme Court held that this was an abuse of discretion. Id. at 475, 481.Case No. 16-2303 Reeser v. Henry Ford Hospital

- 5 - In 2015, our own court applied the Smith framework to a review of attorneys’ fees awarded under the WPA—the same statute at issue here. See Bailey , 599 F. App’x at 257 (“Under Michigan law, when calcu lating a fee award, the trial court must first determine the hourly fee . . . and multiply that fee by the numb er of hours reasonably expended in the case. The court must then consider whether an adjustment is warranted based on other specified factors . . . .”) (emphases added) (citing Smith , 751 N.W.2d at 478–80). After Smith , some Michigan Courts of Appeals grew uncertain as to whether its attorneys’ fees framework was applicable beyon d the case-evaluation context; however, in June 2016, the Michigan Supreme Court decided Pirgu v. United Services Automobile Ass’n and resolved this uncertainty. In Pirgu , the Michigan Supreme Court confirmed our earlier belief that the Smith framework applied to all fee-shif ting statutes that provided for “ a reasonable fee .” Pirgu , 884 N.W.2d at 263 (“The operative language triggering the Smith analysis is the Legislature’s instruction that an attorney is entitled to a reasonable fee .”). It also reiterated that following this framework was not optiona l for lower courts: “a trial court must begin its analysis” by calculating the two figures that comprise the lodestar and then “ must consider and briefly discuss on the record the remaining Wood factors and the factors in MRPC 1.5(a).” Id. (emphasis added). Since many of these factors overlapped, the Pirgu court distilled them into a single, eight-factor list. See id. at 264. Although trial courts were required to consider all eight factors, they were also permitted to consider other relevant factors as well. Id. “In order to facilitate appellate review ,” trial courts were directed to “bri efly discuss . . . each of the factors [] on the record and justify the relevance and use of any additional factors.” Id. at 264–65. As in Smith , the Pirgu court found the trial court abused its discretion by not following this framework when it awarded attorneys’ fees under Michigan’s no-fau lt insurance act: “TheCase No. 16-2303 Reeser v. Henry Ford Hospital

- 6 - trial court erred by not starting its analysis by multiplying a reasonable hourly rate by the reasonable number of hours expended.” Id. at 265. Moreover, it erre d in “primarily relying on only one [ Wood /MRPC] factor—the amount sought and the results achieved—and failing to briefly discuss its view of the other factors.” Id.
B In this case, the district court did not follow Smith and Pirgu when it awarded Reeser $10,000 in attorneys’ fees. Instead, it relied on Michigan’s outdated, multi-factor approach under Wood . This was error. The WPA contains the Smith framework’s triggering language: it provides courts with discretion to award “ reasonable attorney fees.” M ICH

. C OMP

. L AWS § 15.364 (emphasis added); Pirgu , 884 N.W.2d at 263. The district court’s principal error was in failing to follo w the first two steps of the Smith framework, that is, in failing to calculate the lode star. As to Step 1, th e district court did not calculate a reasonable hourly rate for each of Reeser’s four attorneys, finding instead that “the court’s determination of an appr opriate hourly fee is irrelevant here because [Reeser’s] limited recovery necessitates a signifi cant fee reduction.” R. 112 at 4, PID 4599. As to Step 2, the district court did not calculate the reasonable number of hours e xpended by Reese r’s attorneys, stating only that the 1,189.7 hours proffered “w as not reasonable given the weakness of [Reeser’s] damages evidence and the size of her ultimate recovery.” Id.
But Smith required the district court to calculate a lodestar in order to establish a baseline figure from which to adjust downwards based on Reeser’s limited recovery. Without such a baseline, courts are left with nearly unfette red discretion to award any seemingly arbitrary amount—a result that the Michigan Supreme C ourt expressly sought to prohibit. Moreover, Michigan law provides no exceptions to calculating a lodestar, even if, as the district court foundCase No. 16-2303 Reeser v. Henry Ford Hospital

- 7 - here, the results achieved are disp roportionate to th e hours expended. See Pirgu , 884 N.W.2d at 1261 (holding that “a trial court must begin its reasonableness anal ysis [by calculating the lodestar]”) (citing Smith , 751 N.W.2d at 479). While the district court was not obligated to accept Reeser’s proposed number of hours, it was re quired to formulate a r easonable alternative. Finally, as to Step 3, the court appeared to consider at most onl y four of the eight Wood /MRPC factors. Pirgu , however, dictates that a district court consider “ all of the [] Wood and MRPC 1.5(a) factors.” Id. at 264. Here, the district court made the same misstep as the trial court in Pirgu by relying primarily on one factor—the amount in question and the results obtained—which was erroneous. Id. at 264, 265; see also Kennedy v. Robert Lee Auto Sales , 882 N.W.2d 563, 568 (Mich. Ct. App. 2015) (reversing th e trial court’s award of fees where it “focused myopically on the amount obtained by plaintiff”). Although the district court was correct that Reeser’s jury verdict of only $3,200—compared to the $730,000 sought—may undoubtedly be relevant, this factor comes into play only after the lodestar is calculated, and is considered alongside seven other factors. This si ngle factor alone cannot serve as a substitute for dispensing with the Smith framework altogether. 1 In urging us to uphold the $10,000 award, He nry Ford primarily argues that the Smith framework does not apply and that, even if it does, the result a party obtains at trial is the most critical factor and can exclusively justify lowe ring an award. These arguments are unavailing. As to the former, our circuit had already applied the Smith framework to the WPA in 2015, and the Michigan Supreme Court’s language in Pirgu removed any lingering doubt as to its applicability. Furthermore, Henr y Ford cites exclusively federa l law in support of its latter

1 The district court also c onsidered an additional, non- Wood /MRPC factor in determining Reeser’s fee award: Henry Ford’s prior settleme nt offers. This was a ppropriate and the trial court may do so again on remand, as Pirgu states that a “trial cour t may consider any additional relevant factors.” Pirgu , 884 N.W.2d at 264.Case No. 16-2303 Reeser v. Henry Ford Hospital

- 8 - argument. But, as even it recognizes in its brief, Michigan law applies here. See Appellee Br. at 30 n.2. And while federal law may perhaps be more favorable to Henry Ford’s position, Michigan has “rejected the federal lodestar method,” instead prefer ring a stricter, more comprehensive analysis. See Smith , 751 N.W.2d at 483. The Michigan Supreme Court implemented and reaffirmed the Smith framework with the intent that it would “lead to gr eater consistency in awards.” Id. at 479. And as that court has reiterated, a failure to follow it amounts to an abuse of discretion. Because the district court did not calculate a lodestar nor consider all eight Wood /MRPC factors—both of which are required by Smith and Pirgu —it abused its discretion in calc ulating Reeser’s $10,000 fee award. 2
III Next, Henry Ford filed a motion while this appe al was pending to strike parts of Reeser’s briefing referring to the MRPC 1.5(a) factors, Pirgu , and two other cour t cases discussing various reformulations of the Wood /MRPC factors. A motion to strike may at times be warranted, for example, in asking the court to st rike extraneous materials from the appellate record. See Bailey , 599 F. App’x at 257–58. But the motion is not a t ool to strike words, sentences, or even arguments from an opponent’s brief. See Redwood v. Dodson , 476 F.3d 462, 471 (7th Cir. 2007). Using the motion in this fa shion “waste[s] everyone’s time,” “increase[s] the amount of reading the merits panel must do,” and only serves “to aggravate the opponent.” Id

. Yet this is precisely what Henry Ford has done . The appropriate tool for Henry Ford to have contested Reeser’s allegedly new argumen ts was through its own responsive briefing. Id. It failed to utilize any of its 45-page merits brief for this purpos e. Seeking to circumvent this

2 While the district court must follow the corr ect framework on remand, we express no opinion on the amount of the fee awar d that may be appropriate.Case No. 16-2303 Reeser v. Henry Ford Hospital

- 9 - oversight by way of its later filed motion to stri ke was improper. And it is worth noting that Henry Ford used the motion in a similarly ina ppropriate fashion below, where it filed three separate motions to strike specific claims from Reeser’s complaint. The district court, in substantially denying each of these motions, concl uded that Henry Ford should have raised its arguments in its earlier mo tion for summary judgment. See R. 83 at 88, PID 2893. Moreover, what Henry Ford claims are new arguments are at most citations to new authorities unfavorable to its position. The argument R eeser raised below, and the one before us on appeal, are the same: that she should be entitle d to reasonable attorneys’ fees under Michigan law. And to the extent Reeser cites new author ities, there is no rule prohibiting a party from doing so. See Costantino v. TRW, Inc. , 13 F.3d 969, 981 n.13 (6th Cir. 1994). In fact, “a new citation to relevant, binding au thority is as welcome on appeal as in the court below.” Id. For example, asking us to ignore Pirgu , a recent, binding authority from the state’s high court, is akin to asking us to shirk our duty to say what the law is, and if anything, signals Henry Ford’s awareness of the weaknesses Pirgu exposes in its own case. Besides being improper, we also find that Henry Ford’s motion was disingenuous. Contrary to Henry Ford’s assertions, Reeser exp licitly asked the district court to consider the factors listed in “Rule 1.5(a) of the Michigan Rules of Profe ssional Conduct” in her motion for attorneys’ fees. R. 112 at 6, PID 3422. And the two other cases cited by Reeser to which Henry Ford objects are nothing more than examples of recent courts applying the same Wood /MRPC factors that Reeser mentioned below. See Grow v. WA Thomas Co. , 601 N.W.2d 426 (1999) ; Hemlock Semiconductor Corp. v. Solarworld Indus. Sachsen GmbH , No. 13-CV-11037, 2016 WL 6471192 (E.D. Mich. Nov. 2, 2016).Case No. 16-2303 Reeser v. Henry Ford Hospital

- 10 - In her response to the motion to strike, Rees er asks us to sancti on Henry Ford’s counsel under 28 U.S.C. § 1927, specifically, to order that he reimburse her attorneys for the time spent having to respond to this motion. Section 1927 provides that “[a]ny attorney . . . who so multiplies the proceedings in any case unreasona bly and vexatiously may be required by the court to satisfy personally the ex cess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” The purpose of § 1927 sanctions is “to deter dilatory litigation practices and to punish aggressive tact ics that far exceed zealous advocacy.” Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater , 465 F.3d 642, 646 (6th Cir. 2006). Sanctions may be appropriate when an attorney “intentionally abus es the judicial process or knowingly disregards the risk that his actions will ne edlessly multiply proceedings.” Id. No finding of bad faith is necessary, but something more than negligen ce or incompetence must be demonstrated. Id. Although both parties are partly to blame for th e acrimonious nature of this case, it seems that Henry Ford’s counsel initiated much of the dilatory conduct. His co ntinued improper use of the motion to strike and overall antagonistic be havior below, coupled with the frivolous allegations contained in his most recent motion to strike, convince us that sanctions may be warranted. Reeser’s entire objec tive in filing this appeal was to be awarded more fees for the thousand-plus hours that her attorneys spent litigating this case—hours she claims were accumulated in large part due to Henry Ford’s obs tructionist tactics. Henry Ford’s motion to strike certainly seems to support Reeser’s theor y. Accordingly, we order Henry Ford’s counsel to show cause, pursuant to 28 U.S.C. § 1927, w hy he should not be sanctioned for filing the motion to strike and be required to pay Reeser’s attorneys the f ees associated with having to respond.Case No. 16-2303 Reeser v. Henry Ford Hospital

- 11 - IV For the foregoing reasons, we VACATE Reeser’s award of attorneys’ fees and REMAND the case to the district cour t for a recalculation based on Pirgu v. United Services Automobile Ass’n , 884 N.W.2d 257 (Mich. 2 016). Additionally, we DENY Henry Ford’s motion to strike and ORDER its counsel to show cause why he should not be sanctioned. Counsel will have 14 days to submit a response to the clerk of this court.