The Honor able Curtis L . Colli er, Chief United States District J udg e for the Easter

n District * of Tenne ssee, sitting by

desig nation. NO T R EC OM M EN DE D F OR P UB LIC AT ION File Na me: 07a0382n.06 Filed: June 11, 2007 Nos. 05-6068/05-6108 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
Ge rard Bailey, P laintif f-App ellant,
v. P apa John ’s USA, Inc. Defendan t-Appellant. ) ) ) ) ) ) ) ) ) ) ) ON AP P EAL FROM THE U NI TED STATES DI STRI CT COURT FOR THE WES TERN DI STRI CT OF KENTUCKY

BEFORE: Mer ritt and Moore , Circuit Judges; Collier, D istrictJudge. * MERRITT, Circuit Judge. Plaintiff Gera rd B ailey filed a complaint in this action alleg ing (1) ter mination resulting f

rom rac ial discrimination in violation of Titl e VI Iof the Civil Ri g hts Act of 1964 and ( 2) fa ilure to compensate for ove rtime worke d in violation of the Fa ir L abor Standa rds Ac t. T he dis tr ic t c ourt

g ra nte d s umm ary ju dg me nt t o d e fe nd ant P a pa John ’s USA , Inc . o n b oth counts. S e e B a il e y v . P a p a J o h n ’ s USA, Inc

. , No
. 04-6499, 2006 WL3740991 (6th Cir. Dec . 20, 2006). B ased on the district court’s ruling , Papa John’s filed a motion for attorne y fee s, liti g ation expenses and costs incur

red in de fending the case . Plaintiff’s counsel, Rober t J . Martin, pursued the Fa ir L abor Standards Act claim to summar y judgme nt after

the evidenc e cle arly

demonstrated thatNos. 05-6068/05-6108

Bailey v . Papa John’s

Salaried employ ees a

re e x empt from the pr ovisions of the Fa ir L abor Standa rds Act. The 1 re g ulatio ns imp le me nti ngthe Ac t se t f or th t he “ te st” fo r de te rm ini ng wh e the r an e mpl oy e e is p a id
“ on a sa lary ba sis ” and

the re fo re e xemp t f

ro m th e Ac t’ s p ro vis ion s: if under h i s empl oy

ment ag ree ment he re g ularly rec eives e ach pa

y period on a we e kly , o r l e ss fr e qu e nt ba sis , a pr e de te rm ine d amou

nt c on sti tut inga ll o r p art

of his -2- the re wa s no f

a c tu a l b a s i s t o s u

p p o rtt h e c l a i m . T h e d i s t r i c tc o u rta w ar d e d c o s t s an d

$ 5 , 0 0 0 in
a tto rn e y fe e s to de fe nd ant. B oth

pa rt ie s app e a l the ru lin g . Th e iss ue s spe c if ic a lly be fo re us in t

his
a pp e a l are (1 ) wh e the r the dis tr ic t c ourt a bu se d it s d isc re tio n in

imp os ingsa

nc tio ns on

Mr . M a rt in
un de r R ule 11 and

in i mpo sin g a tto rn e y

fe e s o n him und e r 28 U. S.C. § 192 7 an d (2) wh e the r c os ts
wer e justified under

Fe dera l Rule of Civil Procedur e 54 and, on d ef en d an t ’s cr oss-appe al, (3) whether the amount of attorney

fee s awa rded w as suffic ient to reimburse de fenda nt for excessive attorney fee s incurre d as a r esult of plaintiff’s c ounsel conduc t. We reviewa district cour t’ s decision to impose sanctions under Rule 11 or attorne y

fee s under § 1927 f

or abuse of discre tion. Ridder v. City of Springfield, 109 F.3d 288, 293, 298 ( 6th Cir. 1997). F or the re asons set for th below, we a ffirm the judg ment of the district cour t. I. To brief ly rec ap the f

acts unde rlying the merits of t he action, plaintiff, a f ormer ma nag er at Papa John’s, alleg ed two counts in his complaint: (1) ter minat i o n resulting from ra cial dis c ri min a tio n in

vio la tio n o f T itl e VI Iand (2 ) fai lure to c omp e ns a te fo r o ve rt ime wo rk e d in violation of the Fa ir L abor Standa rds Act. Plaintiff w as deposed on October 21, 2003, and conc eded in his deposition t hat he wa s an exempt employ ee unde r the F air L abor Standa rd s Act and w as there fore not entitled to overtime pay
. Ba sed on the lac k of evide nce s u p p o rt ing the Fa ir L abor 1Nos. 05-6068/05-6108

Bailey v . Papa John’s

compensation, which amount is not subjec t to reduction bec ause of variations in t he quality or quantity

of the wor

k perf ormed. 29 C.F.R. § 541.602(a)
. -3- Standards Ac t claim at t he conclusion of Bailey ’s deposit ion, defe ndant’s counse l wrote letter s on two differ ent occ asions to pla intiff’s counsel asking him to withdraw the Fa ir L abor Standa rds Act claim. Plaintiff’s counse l failed to re spo n d t o ei t h er le tter and did not withdraw the claim. He explained at oral a

rg ument that he was experiencing family difficulties during that time. Defe ndant filed its motion for summary judgme nt four months l ater , on Fe bruar y 2, 2004. Plaintiff rec eived
se ve ra l e xten sio ns in f

ili nghis re sp on se to t

he su mma

ry jud g me nt m oti on and ult imate ly fi le d it i n September 2004. The arg ument in support of the F air L abor Standa rds Act c laim was only

one pag e. J .A. at 843. On Novembe r 14, 2 0 0 4 , t h e district cour t gr anted summary

judgme nt to defenda

nt Papa J ohn’s on both counts. Ba iley appea led only

the Title VI Iclaim to our C ourt and specifically waived his right to appe al his Fa ir L abor Standa rds Act c laim. We affirme d t h e d i strict court’s judg ment for defenda

nt; but, beca

use pl aintiff did not appea l the Fair L abor St andar ds Act claim, we did not discuss the claim in the opi nion on the merits. See B ailey v. P apa John’s USA , Inc. , No. 04-6499, 2006 WL 3740991 (6th Cir. Dec . 20, 2006). During the pende ncy of the appea l on the merits, defe ndant filed a motion in t he district cour t for attorney

fee s totaling a

bout $95 , 0 0 0 an d fo r litigation expenses and c osts in the amount of $3,334.50 (Memora

ndum in Support of Moti on, J .A. at 1026; B ill of Costs, J .A. at 1054). De fenda nt
so ug ht attor

ne y fe e s and c os ts fo r bot h the Ti tle VI I c la im an d the F a ir L a bo r S tand ard

Ac t c la im.Nos. 05-6068/05-6108

Bailey v . Papa John’s

Rule 54(d)(1) provides in per tinent part: “[C] osts other than attorne y s’ fee s shall be allowe d 2 as of c ourse to the pr evailing party unless the cour

t otherwise dire cts.” -4- The motion wa s based on three g rounds: Fe dera l Rule of Civil Procedur e 11, 28 U.S.C. § 1927 and the district court’s inherent power t o awa rd fe es as de scribed in Roadway Expre ss, Inc. v . Piper , 447 U.S. 752 (1981). Def

endant did not seek attorney fee s under the statutory provisions in Titl e VI Ior the Fa ir L abor Standa

rds Act. Th e dis tr ic t c ourt

awa rd e d c os ts t o Pa

pa John ’s a s th e pr e va ili ngpa rt y un de r F e d. R. C iv. P. 54 (d )( 1) fo r t

he fu ll a mou nt o f $ 3, 33 4. 50 , a

nd a tto rn e y fe e s in the a mou

nt o f $ 5, 00 0 –

a lit tle le ss 2 tha n 5 % o f t he de fe nd ant’ s r e qu e st. (J.A
. a t 11 12 ) Th e a tto rn e y fe e s we re awa rd e d p ur su ant t o Ru le 11 and 28 U.S.C. § 1927 beca use the district c ourt found that plaintiff’s counse l knew or should have known by the completion of plaintiff’ s deposition on October 2 1 , 2 003, that plaintiff was e x empt from the pr ovisions of the Fa ir L abor Standa rds Act a nd the claim l ac k ed a fa ctual basis, ther eby
re nd e ri ngc ouns e l’ s d e c isi on t o p u r s u e t h e c l a i m f u r t h e r t o th e su mma

ry jud g me nt s ta g e un re a so na ble under the circ umstances a nd in violation of his duty to the court unde r Rule 11. The district c ourt did not awar d the fe es pursua nt to its inhere nt power be cause it did not find that plaintiff’s c ounsel acte d in bad fa ith, a require ment for suc h an aw ar d
. Nor did the district cour t awar d any

attorney fee s to defenda

nt for the Title VI Iclaim, findi ng that the claim wa s not meritless beca use it was not
unrea sonable unde r the fa cts or the law for plaintiff to have pursued that claim t hroug h the summary judgme nt phase. II.Nos. 05-6068/05-6108

Bailey v . Papa John’s

(b ) Re p rese ntations to Court . By prese nting to the c ourt (whe ther 3 by signing , filing, submitting, or later advocating) a pleading , written mo ti on, o r o the r p a

pe r, an atto rn e y

or un re pr e se nte d p art

y is cer tify ing that to the best of the pe rson' s knowledg e, information, and belief, f ormed a fter an inquiry

rea sonable unde r the c ircumstance s,-- (1) it is not being prese nted for a ny improper pur

pose, such a s to hara ss or to cause unnece ssary delay or needle ss increa se in the cost of litig ation; (2) the claims, def

enses, a nd other leg al conte ntions t h e r e i nar e w ar

r an t e d b y e x i s t i n g l aw o r

b y a nonfrivolous arg ument for the e x t en s i o n, modification, or rev er sal of existi ng law or the establishment of newlaw; (3) the alleg ations and other f actua l contentions have evidentiar y support or, if spec ifically so identified, ar e lik e ly to h a ve e vid e nti ary

su pp or t a ft e r a re a so na ble opportunity

for further investigation or discovery ; and (4) the denials of f

actua l contentions are war rante d on -5- The standa

rd for g ranting attorney fee s to a preva iling employ er is more stringe nt than that for a war ding f ees to a preva iling employ ee. Christ iansburg Garment Co. v. EEOC , 434 U.S. 412, 417-18 (1978) . The e mploy er ma y be aw arde d at t orney

fee s where the plaintiff’s c laim was

“ fr ivo lou s, un re a so na

ble , o r wi tho ut fo un datio n, ” or wh e re the pla int if

f c on tin ue d to lit ig a te a ft e r i t beca me clea r that his claim was f

rivolous, unrea sonable or wi t h out foundation. Id . We fi rs t deter mine whether

any sanctions or attorney

fee s were war

rante d under this standar d. Rul e 11 re qu ir e s atto rn e y s to make re a so na ble inq uir ie s to de te rm ine that

the ir ple a din g s, mot ion s and

oth e r p a pe rs are “ we ll g ro un de d in fa c t” and “ wa rr ante d by e xistin g law or g oo d f a ith argument for the e x tension, modification or re versa l of exist ing la w . . . .” Freem an v. Mi ch i gan De p’ t of Sta te , 808 F.2d 1174, 1180 (6th Cir. 1987). Plaintiff’s opposition to defendant’ s motion fo r su mma

ry jud g me nt c on sti tut e d a wr itt e n mot ion or oth e r pa pe r un de r Rul e 11(b)
. Th e F a ir 3Nos. 05-6068/05-6108

Bailey v . Papa John’s

the evidenc e or, if specif ically so identified, ar e rea sonably

based on a

lack of information or be lief. Fe dera l Rule of Civil Procedur e 11. § 1927. Counsel's l iabil ity for exce ssive costs 4 Any attorney or other pe rson admitted to conduct c ases in any co u rt of the United State s o r a

ny Te rr ito ry

the re of wh o s o mu lti pli e s th e pr oc e e dings in any c a se unrea sonably

and vexatiously

may be required by

the cour t to satisfy

persona lly

the excess costs, expenses, and attorne y s' fee s rea sonably incurre d b eca

use of suc h c on du c t. 28 U.S.C. § 1927. -6- L a bo r Stand ard s Ac t c la im re la tin g to the ov e rt ime ho ur s d id n ot h a ve the ne c e ssa ry fa c tua l su pp or t, wh ic h M r. Mart in k

ne w o r s ho uld

have kn ow n in depend e ntl y of B a ile y ’s c on c e ssi on

in h is depositi o n t es t imony

that he wa s a salar ied employ ee. B ailey ’s primary duty at Papa John’s was
mana g e me nt: he re g ula

rl y dir ect ed the w or

k o f a pp ro xima te ly

37 or 38 oth e r e mpl oy e e s; int e rv ie we d, hir e d a

nd the n tr a ine d o the r em

plo y e e s; re c omm e nd e d ra ise s; pla nn e d wor k s c he du le s; and dire cted the w ork of his employ ees, thereby easily meeting the cr iteria of a n exempt employ ee under the Fa ir L abor Standa rds Act. The ref

ore, the district court c o rre ctly found that B ailey ’s counsel’s de cision to pursue the F air L abor Standa rd s Act cla im to sum mary judgme nt was
unrea sonable unde r the c ircumstance s and in violation of his duty to the court unde r Rule 11. Simi larl y , atto rn e y fe e s un de r 28 U. S.C. § 19 27 are wa rr ante d wh e n an atto rn e y

ob je c tiv e ly 4 “fa lls short of the obligations owed by a member of t he bar to the court a

nd which, as a

result, ca uses ad d i t i o n al expense to the opposing party .” In re Rube n , 8 2 5 F
. 2 d 9 7 7 , 9 8 4 ( 6 th

Ci r . 1 9 8 7 )
. T he purpose is to deter

dilatory litigation pra ctices. See Jones v. Continental Corp., 789 F.2d 1225, 1230-Nos. 05-6068/05-6108

Bailey v . Papa John’s

-7- 31 (6 th Cir . 198 6)
. B e c a

us e Se c tio n 192 7 impo se s an o bje c tiv e sta nd ard of c on du c t on

a tto rn e y s, courts nee d not make a f

inding of subjective ba d faith bef

ore a ssessing monetary

sanctions under

§ 1927. Id. I nstead, a

district court may impose liability for attorney fee s under se ction 1927 when it determines that “a

n attorney re as o n ab l y

should know that a cla im pursued is frivolous.” Id. Whil e imposition of section 1927 sanctio n s does not requir e a show ing of subjective ba d faith, somethi n g m o re t han neg lige nce or incompetenc e must be demonstrated. See I n Re Rube n, 82 5 F .2 d at 98 4; J

on es, 78 9 F .2 d at 12 30 (“we ho ld that 28 U. S.C. § 1 92 7 a uth or ize s a

c ourt to
a sse ss f e e s a g a ins t an a tto rn e y fo r ‘u nr e a so na ble and ve xati ou s’ mul tip lic a tio n o f l iti g a tio n d e sp ite the abse nce of

any consciou s i m p ropriety .”). A n attorney become s sanctionable w hen he int e ntion all y abu se s th e jud ic ia l pr oc e ss o r k no wi ng ly dis re g ard s th e ri sk

that hi s a c tio ns wi ll needle ssly

multipl y proce eding s. See U

nited States v. W

allace, 964 F.2d 1214, 1220 (D.C. Cir.1992) (obser ving that rec klessness i s a lower standar d than bad f aith, requiring“deliber ate a ction in the fac e of a known risk, the likelihood or impact of w hich the ac tor [inex cusably ] underestimates or ignor es.”)
. I n th is c a s e , p la in ti f

f f il e d a tw o - c o u n t c o mp la in t. Wh e no n e c o u n t o f a multi-count complaint t urns out to be base less afte r discover y , as her e, that cla im should be withdrawn. Howeve r, a claim is not gr oundless simply beca use it was ultimately

unsucce ssful. Chr ist ian sb ur g Garment Co. v. EEO C , 43 4 U. S. 41 2, 42 1- 22 (1 97 8)
. Whe the r a c a se is w e ll- g ro un de d in

fa c t w ill sometimes not be evide nt until a plaintiff has bee n g iven a c hance to conduct discove ry . See Ru nfo la & Assoc., Inc . v. Spec trum Reporting II, Inc

. , 88 F.3d 368, 373- 74 (6th Cir. 1996) (The “g rava man of Rule 11 [is not in] the filing of the c laim that e ventually turns out to be meritless, but r ather theNos. 05-6068/05-6108

Bailey v . Papa John’s

-8- persistenc e in pur suing that claim afte r the pleade r has or should have be come a war e of its lack of
me ri t.” ). F e e awa

rd s b e c ome pr op e r onl y

a ft e r c ouns e l kn e w o r s ho uld have kn ow n th a t th e c la im has no fa ctual or le g al basis. I n Ru nfo la , th e dis tr ic t court imp os e d san c tio ns no t be c a us e pla int if

f’ s c la im w a s u lti ma te ly meritless, but beca

use plaintiff e x cessively leng thened th e d i s co v ery proce ss and then fa iled voluntarily

to dismi ss the action af ter be coming awa re of the inability to assert a

ny competent evidenc e to support the cla im. W e based our decision on plaintiff’s counse l’s discovery abuse a nd fa ilure to d ism iss the c a se a ft e r be c omi ngawa re that it la c ke d me ri t, n ot o n b ri ng ingthe ini tia l c la im. As in Ru nfo la , it is not sanctionable for plaintiff’ s counsel to have broug ht the claim in the first plac e be c a us e the sta

nd ard fo r e xemp tio n und e r t

he Ac t is g e ne ra l and

op e n to int e rp re ta tio n, and a va lid basis may

have e x isted prior to discover y . We will n o t d i s t u rb the district court’s e x erc ise of discretion whe re, a s here , it de cided not to awa rd attorney fee s back to the time of the filing of the
case . By

failing to acknowle dg e that B ailey did not have a c og nizable Fair L abor Standa

rds Act
c la im, B a ile y ’s a tto rn e y pr olo ng e d the ine vit a ble a t a c os t to Pa

pa John ’s
. B y re fu sin g to v olu nta ri ly claim dismissed, counsel unre asonably protrac ted the proc eeding s. Acc ording ly , attorney fee s are
war rante d. III . Once it is establis h ed t h at sanc tions are wa rra nted, the district cour

t must determine the
a mou nt. I n c ir c ums tanc e s su c h a s th is, wh e re the re is n o ba d fa ith and wh e re a c la im’ s la c k of me ri t beca me clea r only afte r discover

y , a def enda n t s h ould be awa

rded attorney

fee s only to the extentNos. 05-6068/05-6108

Bailey v . Papa John’s

-9- counsel for defe ndant worked on the claim afte r pl aintiff knew or should have know n the claim wa s frivolous and should be withdra wn. I f a party or t he court is unlikely to have e x pended sig nificant
c os t or inc ur

re d sig nif ic ant inc on ve nie nc e ba se d on a pa rt y ’s fa ilure to w ith dr aw a

me ri tle ss c la im, fee s are g ener ally

not warr anted in the a

bsence of bad f

aith on the part of pl aintiff. Lisl e v. M etro. Go v ’t of N as hv ill e , Nos. 01-6049, 02-5706, 2003 WL21580642, at *8 (6th Cir. J uly 9, 2003). I n awa rding the def

endant $5,000 in attorney fee s, the district court stated “ the Court believes [$5,000] rea sonably

ref lects the amount of time added to the litigat i o n b y P l aintiff’s c ounsel’s improper de cision to pursue the [Fair L abor Standa

rds Act] claim to summary judgme n t
. ” Op. at 9, J .A. at 1120. The district court did not expl ain i n detail how it rea ched the amount of $5,000. Documents in t he record refle ct onl y how m any hours defendant’s c ounsel spent on the entire case , which includes both claims. We c annot find in the rec ord a doc ument in which either party or the district court disentang led the costs of defe nding the Title VI Iclaim from the F air L abor Standa rds Act cla im. Al tho ug h w e wo uld

have pr e fe rr e d a mor e de ta ile d ac c ounti ng , or s ome oth e r m or e sp e c if ic explanation from the district court supporting the $5,000 awa rd, in the absenc e of such an ac counting or explanation, we look to the amount of a rg ument devoted by defe ndant t o the Fair L abor Standa rds Ac t c la im i n it s summa

ry jud g me nt p a

pe rs . We fi nd

tha t de fe nd ant d e vo te d f

ar l e ss sp ace in it s paper s to th e F a ir L a

b o r St an d ar d s A c t c la im th an to th e T it le V I I c la im
. A c c o r d ing to our calc ulations based on Def endant’ s Motion for Attorney Fe es, L itigation Expenses, and Costs, Civ.Nos. 05-6068/05-6108

Bailey v . Papa John’s

E x h i b i t 1 t o t h e M o t i o n i s a d a i l y b r e a k d o w no f t h e t i m e w o r

k e d o nt h i s c a s e b y t h e a t t o r

n e ys 5 i nd e f e n d an t ’ s l aw f

i r m . T h e d o c u m e n tg i v e s t h e d a t e , w h i c h a t t o r n e y w o r k e d o nt h e c a s e t h a td a y, that attorney ’s rate, and the number of hours worke d that day
. There is no descr iption of the work and no bre akdown a s to whether t h e t i m e wa s spent on the Title VI Iclaim or the F air L abor Standards Ac t claim. -10- Ac t. N o. 5:0 2- CV -0 00 76 -R (W. D. Ky . f

ile d De c . 30, 20 04 ), duri ngthe a pp ro xima te ly

fo ur -m on th 5 time f rame betwee n taking Ba iley ’s deposition on October 21, 2003, and filin g t h e s ummary judgme nt motion on Fe bruar y 2, 2004, defe ndant expended $19,047 in attorne y fee s. L ooking at the
awa rd fr om that perspec tive, the $5,000 awa rd is about one- fourth of the amount expended during the time period in which the district court found that it was improper f or plaintiff’s c ounsel to have purs ue d th e F a ir

L a bo r S tand ard s A c t c la im ( Date of Ba ile y ’s de po sit ion on Oc tob e r 2 1, 20 03 , to fi l i ng of summary

judgme nt motion on Februa ry 2, 2004). Afte r study ing the fac ts in the recor d ob ta ine d b y

thi s Co ur t f ro m th e dis tr ic t c ourt , w e con clu de th a t th e dis tr ic t c ourt did no t a bu se its discretion in awa

rding $5,000 in at t o rney

fee s or appr ox imately

one-f ourth of the total amount expended by

defe ndant during the four- month pe riod betwe en plaintiff’ s deposition and the filing of def endant’ s summary

judgme nt motion. IV. F or the re a so ns dis c us se d a

bo ve in d e ny

i n g p l a i nt i f f ’ s a p p e a l , w e a lso de ny

de fe nd ant’ s c ro ssappea l for re imbursement of a ll of its attorney fee s. The Title VI I claim was not meritless, and w e have expl a in e d

th a t t h e c la im u n d e r th e F a ir L a b o r St an d ar d s A c t d id

n o t b e c o me r e c o g n iz e d

as entirely meritless until the tim e of pla intiff’s deposition.

ConclusionNos. 05-6068/05-6108

Bailey v . Papa John’s

-11- I t w a s c le ar b e fo re the su mma ry jud g me nt s ta g e that th e F a ir L a bo r S tan dards Ac t c la im lacke d the nec essar

y fa ctual basis and was without evidentiary support. Ba iley ’s attorne y either knew, or rea sonably should have known, that the Fa ir L abor Standa rds Act c laim was meritless and the district cour

t a p p r o p r iately

found counse l’s conduct in continuing to pursue the c laim to summ ary judgme nt violated section 1927 and Rule 11. For the fore g oing r easons, we aff irm the judg ment of the dis tr ic t c ourt
.