Court Opinion

ID: 8984718
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:38:39.742934+00
Date Added: 2024-06-11T17:10:45.034659
License: Public Domain

McMILLIAN, Circuit Judge,
concurring in part and dissenting in part.
I agree with the majority opinion’s decision to affirm the district court order denying Armco, Inc. attorney’s fees under ERISA and under the bad faith exception to the American Rule. (No. 89-1570WM, Armco, Inc.’s cross-appeal). However, I do not agree with the majority’s decision to affirm the district court order granting attorney’s fees to Armco under the bad faith exception (No. 89-1409WM, Hoover’s appeal). Accordingly, I respectfully dissent from that part of the majority opinion.
Bad faith requires a showing of “an intentional advancement of a baseless contention that is made for an ulterior purpose, e.g., harassment or delay.” Ford v. Temple Hospital, 790 F.2d 342, 347-49 (3d Cir.1986); accord Actors’ Equity Ass’n v. American Dinner Theatre Institute, 802 F.2d 1038, 1043 (8th Cir.1986). With respect to Hoover’s untimely March 1982 demotion claim, the mere filing of a time-barred claim is not frivolous as a matter of law and thus cannot be in bad faith. Ford v. Temple Hospital, 790 F.2d at 348. The statute of limitations is an affirmative defense; unless it is properly raised by the defense, it is waived. Fed.R.Civ.P. 8(c). Furthermore, once it became clear that the March 1982 claim was in fact untimely, Hoover did not continue to litigate this claim as a separate claim. Under these circumstances, I would hold the district court erred in finding that Hoover filed and litigated the March 1982 demotion claim in bad faith.
With respect to the retaliatory discharge claim, I cannot agree that this claim is wholly frivolous, at least for purposes of the bad faith exception. The district court did not summarily dispose of this claim; it was submitted to the jury. Moreover, even assuming for purposes of analysis that the retaliatory discharge claim was wholly frivolous, the district court did not find that Hoover advanced this claim for an ulterior purpose such as harassment or delay. Bad faith requires both a wholly frivolous contention and an ulterior purpose. See Actors’ Equity Ass’n v. American Dinner Theatre Institute, 802 F.2d at 1043. In the absence of a finding of an ulterior purpose, I would hold the district court erred in finding that Hoover litigated the retaliatory discharge claim in bad faith.
Although I agree that Hoover’s claims are certainly less than substantial, I think courts should be particularly reluctant to award attorney’s fees under the bad faith exception, especially against unsuccessful plaintiffs in civil rights cases. The award of attorney’s fees can have an “undesirable chilling effect on an attorney’s legitimate ethical obligation to represent his [or her] client zealously.” Ford v. Temple Hospital, 790 F.2d at 349. As noted by the Supreme Court in Christianburg Garment Co. v. EEOC, 434 U.S. 412, 421-22, 98 S.Ct. 694, 700-01, 54 L.Ed.2d 648 (1978),
[i]t is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his [or her] action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success. No matter how honest one’s belief that he [or she] has been the victim of discrimination, no matter how meritorious one’s claim may appear at the outset, the course of litigation is rarely predictable. Decisive facts may not emerge until discovery or trial. The law may change or clarify in the midst of litigation. Even when the law or the facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit.