* Pursuant to 5th Cir. R. 47.5, the Court has determined that this opinion should not be

published and is not precedent except under the limited circumstances set forth in 5th Cir. R.

47.5.4. United States Court of Appeals

Fifth Circuit



## FILED

November 22, 2005

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_________________________

No. 05-30077

Summary Calendar

________________________

DONALD STEWART,

Plaintiff-Appellant,

versus

COURTYARD MANAGEMENT CORPORATION, ET AL,

Defendants,

COURTYARD MANAGEMENT CORPORATION,

Defendant-Appellee.

_______________________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

(03-CV-2747)

_______________________________________

Before WIENER, BENAVIDES, and STEWART, Circuit Judges.

PER CURIAM: *2

Plaintiff-Appellant Donald Stewart (“Stewart” ) appeals from the district court’s order

granting Defendant-Appellee Courty ard Management Corporation”s (“Cour tyard”) m oti on for

summary judgment. Courty ard requests attorney fees pursuant to Federal Rule of Civil Procedure 38

and 28 U.S.C. § 1927. For the following reasons, we AFFIRM.

I.

FACTUAL AND PROCEDURAL BACKGROUND

Donald Stewart was an hourly employee of Courty ard. He worked as a front desk clerk for

one of its hotels in New Orleans. Courtyard and Stewart had no employment contract.

Courty ard used the Loss Prevention Department of the New Orleans Marriott Hotel (“Loss

Prevention”) as its security service. On March 28, 2003, Wen dell Johnson, a front desk clerk at a

different Courty ard hotel, prepared a written statement admitting to her participation in a fraudulent

credit card scheme, and naming Stewart as a party to the fraud. She claimed that she had been

approached by a hotel guest and a Loss Prevention officer, who asked for her help in collecting the

credit card information of other hotel guests. Johnson stated that these two men provided her and

Stewart with a hand-held mechanical device that would allow her to r et ain t his information via an

inconspicuous swipe of guest credit cards at check-in.

Loss Prevention then questioned the officer implicated by Johnson. The officer admitted he

knew about the credit card fraud scheme and prepa red a writ ten statement that also implicated

Stewart.

Loss Prevention notified Latonia Bickham, Courtyard’s Guest Care Manager, and Jay Dahlke,

General Manager of the hotel where Stewart worked, of the situation. When Stewart arrived at the

hotel for his night shift, Bickham and two Loss Prevention agents asked to speak with him privately.3

They told Stewart they knew of the credit card fraud, and the fact that two o ther employees had

attested to his involvement in it. In a written statement, Stewart denied any knowledge of the scheme.

Bickham then placed Stewart on a three-day sus pensio n pending investigation and review of the

evidence by Dahlke.

Three days later, Stewart met with Bickham and Dahlke and again denied involvement in the

credit card scheme. Dahlke terminated Stewart’s employment based on the evidence recovered in the

investigation up to that point. He presented Stewart with a disciplinary action sheet that described

the credit card fraud scheme, which Stewart refused to sign. Stewart appealed his termination, but

Courtyard denied the appeal.

At some time after Stewart’s termination, Nina Casnave, who contacted Stewart whenever

she needed reservations at the hotel, called asking for him about three times in March 2002. She

asserts that someone who identified himself as an employee of the hotel stated that “Donald Stewart

no longer worked there due to his involvement in fraud issues at the hotel.”

Stewart sued Courty ard in Civil District Court for the Parish of Orleans for wrongful

termination and defamation. Courtyard timely removed the suit to the United States District Court

for the Eastern District of Louisiana based on diversity jurisdiction. The district court granted

Courtyard’s motion for summary judgment, and Stewart filed the instant appeal.

II.

STANDARD OF REVIEW

We review the grant of summary judgment de novo, applying the same legal standards as the

district court applied t o det ermine whether summary judgment was appropriate. F lock v.

Scripto-Tokai Corp.

, 319 F.3d 231, 236 (5th Cir. 2003) (citing Ramirez v. City of San Antonio

, 3124

F.3d 178, 181 (5th Cir. 2002)). A district court’s determination of state law is also reviewed de novo.

Salve Regina Coll. v. Russell , 499 U.S. 225, 231 (1991). A summary judgment motion is properly

granted only when, viewing t h e evidence in the light most favorable to the nonmoving party, the

record indicates that there is “no genuine issue as to any material fact and that the moving party is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett , 477 U.S.

317, 322 (1986).

In a diversity case such as this one, federal courts must apply the choice of law rules of the

forum state in which the court sits. Klaxon Co. v. Stentor Elec. Mfg. Co.

, 313 U.S. 487, 496 (1941).

Louisiana choice of law rules dictate that Louisiana substantive law governs our decision. See Erie

R.R. Co. v. Tompkins , 304 U.S. 64 (1938).

III.

DISCUSSION

A. Wrongful Discharge

Stewart argues that, defendants “terminat[ed] an innocent employee under the guise of at-will

employer defense. However, the exercise of othe rwise valid right in bad faith at the detriment of

another person is not favored in our jurisprudence.” Brief of Appellant at 14. The argument continues

by asserting that, “[e]ven though Louisiana is an at-will employment state, there are federal and state

rules that regulate same[,]” and that if this court “found that this innocent plaint iff was terminated

unjustly, then his termination would be a wrongful termination.” Id. at 14-15.

Under Louisiana law , when a person is employed for an indefinite period of time, he is

considered an employee at-will. Gilbert v. Tulane Univ.

, 909 F.2d 124, 125 (5th Cir. 1990). “Absent

a specific contract or agreement establishing a fixed term of employment, an employer is at liberty

to dismiss an employe e at any t ime for any reason without incurring liability for the discharge.”5

Robinson v. Healthw orks Int’l., L.L.C. , 36,802 (La. App. 2 Cir. 1/29/03); 837 So.2d 714, 721. In

the case of ambiguity as to the nature of the employment, Louisiana courts have construed in favor

of at-will employment. Thorns v. Monroe City Sch. Bd.

, 542 So.2d 490, 492 (La. 1989). Accordingly,

provided that the termination does not violate any statutory or constitutional provisions, employers

will not be held liable. Wallace v. Shreve Mem’l Library

, 95-30223 (La. App. 5th Cir. 3/20/96); 79

F.3d 427, 429.

Stewart has no t asserted that he was employed under a contract. Absent an employment

contract, Stewart was an at-will employee who could be dismissed at any time for any reason or for

no reason. He cites no statutory or jurisprudential support for his assertio n t hat, if we find he was

“unjustly” terminated then his termination was “a wrongful termination.”

Stewart’s Petition for Damages alleges that (1) Courty ard employees questioned him about

the credit card fraud scheme and accused him of participating in it, even though he denied knowledge

about it; (2) after hours of questioning and accusation, he was escorted off the premises and told not

to return until they contacted him; (3) three days later, Stewart was terminated; (4) Courty ard denied

his appeal of the termination; and (5) Stewart has since been afraid to apply for another job because

he believes Courtyard “will give negative false information.”

Stewart has not alleged any statutory or constituti o nal violations and therefore has neither

stated nor shown in this record a cause of action against Courtyard arising from this termination of

an at-will employee. Accordingly, we find that the district court did not err by granting Courtyard’s

motion for summary judgment with respect to Stewart’s wrongful discharge claim.

B. Defamation6

It is arguable whether Stewart’s petition alleges a cause of action for defamation. Stewart’s

assertion tha t an unidentified Courtyard employee told Nina Casnave that Stewart was no longer

employed there due to his involvement in credit card fraud and theft, and Casnave’s written affidavit

which states that a Courty ard emp lo yee informed her of Stewart’s termination “due to his

involvement in fraud issues at the hotel” constitute the sole support for Stewart’s d efamati on

argument.

Louisiana law places the burden on a plaint iff suing for defamation to prove five elements: (1)

defamatory words, (2) publication, (3) falsit y, (4) malice (actual or implied) and, (5) resulting injury.

Landry v. Duncan , 04-1432 (La. App. 5 Cir. 4/26/05); 902 So.2d 1098, 1103. “Malice (or

fault), for purposes of the tort of defamat io n, is a lack o f reasonable belief in the truth of the

statement giving rise to the defamation.” Costello v. Hardy

, 2003-1146 (La. 1/21/04); 864 So.2d 129,

143. Because of the circumstances surrounding Courtyard’s investigation of the fraudulent credit card

scheme and the fact that other employees had implicated Stewart in this scheme, Courty ard did have

a reasonable basis for belief in the truth of the unidentified employee’s statement to Casnave. Thus

the malice prong of Loui siana’s defamation claim is not met. The district correctly granted

Courtyard’s motion for summary judgment on Stewart’s defamation claim.

C. Sanctions

In its Moti on for Sanctions Against Appellant’s Counsel for Frivolous Appeal filed with this

court pursuant to 28 U.S.C. § 1927 and Federal Rule of Appellate Procedure 38, Courty ard asserts

that this summary judgment record contains abundant and uncontroverted evidence that Stewart’s

claims are completely without merit. Courtyard asserts that the documents filed in support of its

summary judgment motion show t hat St ewart was an at-will employee and that the alleged7

defamatory statement was true, made in good faith, and not published to any third party. Courty ard

further asserts that nothing in the record rebuts this showing. Moreover, Courty ard emphasizes that

there is no factual basis and no statutory or jurisprudential support for the statements and argument

made in Stewart’s appellate brief. Therefore, Courty ard asserts, appeal of the district court’s decision

is frivolous. We agree that this is a frivolous appeal.

Courts of Appeals may award an appellee damages, including attorney’s fees and single or

double costs, when an appeal is frivolous. Caldw ell v. Palmetto State Sav. Bank of S. C. , 811 F.2d

916, 919 (5th Cir. 1987) (citing 28 U.S.C. § 1912; Fed. R. App. P. 38). An appeal is frivolous “if

the res ult is obvious or the arguments of error are wholly without merit.” S piller v. Ella Smithers

Geriatric Ctr. , 919 F.2d 339, 348 (5th Cir. 1990) (quoting Coane v. Ferrara Pan Candy Co. , 898

F.2 d 1030, 1034 (5th Cir.1990)). Federal Rule of Appellate Procedure 38 provides that once it is

determined that an appeal is frivolous, the court “may, after a separately filed motion or notice from

the court and reasonable opportunity to respond, award just damages and single or double costs to

the appellee.” This court imposes Rule 38 sanctions only “when the claim advanced is unreasonable,

or it is not brought with a reasonable good faith belief that it is justified.” Stelly v. Comm’r of Internal

Revenue , 761 F.2d 1113, 1116 (5th Cir.1985).

Under 28 U.S.C. § 1927, federal courts can assess costs and attorney’s fees against a party’s

attorney who has unreasonably mult iplied the proceedings in a case. Caldwell

, 811 F.2d at 919. “All

that is required to support §1927 sanctions is a determination

. . . that an attorn ey mult iplied

proceedings in a case in an unreasonable manner.” Lyn-Lea Travel Corp. v. Am. Airlines, Inc.

, 283

F.3d 282, 291 (5th Cir. 2002).8

Under the plain language of the statute, three essential requirements must be satisfied

with respect to an award of sanctions under § 1927. First, the attorney must engage

in “unreasonable and vexatious” conduct. Second, that “unreasonable and vexatious”

conduct must be conduct that “mult iplies the proceedings.” Finally, the dollar amount

of the sanction must bear a financial nexus to the excess proceedings, i.e., the sanction

may not exceed the “costs, expenses, and attorneys’ fees reasonably incurred because

of such conduct.” See 28 U.S.C. § 1927.

Peterson v. BMI Refractories , 124 F.3d 1386, 1396 (11th Cir. 1997). Proving that a counsel’s

behavior was both “vexatious” and “unreasonable” requires “evidence of bad faith, improper motive,

or reckless disregard of the duty owed to the court.” Temple v. Am. Airlines, Inc.

, 48 Fed. Appx. 480

(5th Cir. 2002) (quoting Edwards v. Gen. Motors Corp

., 153 F.3d 242, 246 (5th Cir.1992); Procter

& Gamble Co. v. Amw ay Corp. , 280 F.3d 519, 525 (5th Cir. 2002) (quoting Edwards , 153 F.3d at

246)).

The court may require an attorney who “unreasonably” and “vexatiously” mult iplies a case’s

proceeding “to satisfy personally the excess costs, expenses, and attorney’s fees reasonably incurred

because o f such conduct. 28 U.S.C. § 1927. Section 1927 only authorizes shifting fees that are

associated with the persistent prosecution of a meritless claim.” P rocter & Gamble

, 280 F.3d at 525

(quoting Brow

ning v. Kramer , 931 F.2d 340, 345 (5th Cir.1991)).

To shift the entire cost of defense, the claimant must prove, by clear and convincing

evidence, that every facet of the litigation was patently meritless, and counsel must

have lacked a reason to file the suit and must wrongfully have persisted in its

prosecution through discovery, pre-trial motions, and trial.

Procter & Gamble , 280 F.3d at 526 (citations omitted).

Courtyard’s motion for sanctions points out acts and omissions before the district court by

Stewart’s attorney in support of its request that Stewart’s attorney be sanct io ned for pursuing the

instant appeal. But it is the failure of Stewart’s counsel to provide this court with even arguably viable1 See also

, Zick v. Verson Allsteel Press Co. , 623 F. Supp. 927, 932-33 (D.C. Ill. 1985),

where the court noted that the plaintiff might have had a good faith argument if made in state

court because, though unlikely and highly remote, there was a possibility the argument might

persuade the state court to extend, modify, or reverse existing law. The Zick court concluded that

“[a]rguments that might have persuaded [the state court] simply cannot be accepted here,”

because the federal court is bound to follow, not lead, state court jurisprudence. Zick , 623 F.

Supp. at 932-33.

9 arguments that have some factual basis of record and some statutory or jurisprudential support that

makes this appeal frivolous.

Stewart’s appellate brief does not pose even one remotely plausible argument. The brief

contends that witness statements were made under duress, and alleges that Courtyard attempted to

“get rid of their experienced high paid employees as a matter of economic convenience.” The brief

suggests that these alleged but uncorroborated circumstances render his termination “unjust” and that,

if unjust, his termination could be found wrongful by this court. Yet these content io ns and

suggestions, like all the arguments in this brief, tend to neit her prove nor disprove the prima facie

elements of Stewart’s wrongful discharge and defamation claims. Therefo re, even if Stewart had

presented evidence to support these contentions there would be no error in the district court’s grant

of summary judgment against him. Stewart’s counsel has advanced claims before this court that are

neither grounded in a factual basis of record nor plausible in light of existing law. Cf. Matter of Reed

,

861 F.2d 1381, 1383 (5th Cir. 1988) (“C o unsel’s appellate claims do not advance propositions

well-grounded in fact nor are they warranted by existing law or any plausible good faith argument for

the extension, modification or reversal of existing law”). 1

Nevertheless, Courty ard has not pointed toward any evidence of bad faith, improper motive,

or reckless disregard of the duty owed to this court. This appeal is meritless and frivolous (as these

two terms are not synonymous). But it presents neither the persistent prosecution of a meritless claim10

or the bad faith, improper motive, nor reckless disregard n ecessary for a finding that counsel for

Stewart has vexatiously and unreasonably mult iplied the proceedings by filing this appeal. Although

the brief prepared by counsel for the appellant provides only meritless arguments unsupported by law,

we do not find sufficient evidence to impose 28 U.S.C. § 1927 personal sanctions against him.

Courtyard’s motion for sanctions against Stewart’s attorney asserts that it has had to defend

this appeal at considerable expense and seeks an award of reasonable attorney s fees a nd costs i n

defending this appeal. Courty ard does not seek sanctions against Stewart, and we decline to exercise

our discretion to assess against Stewart the attorney s fees and costs that Courty ard seeks to recover

from Stewart’s counsel. For these reasons, Courtyard’s motion for sanctions is denied.

III.

CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s grant of summary judgment for

Courtyard against Stewart.