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Rau v. United Parcel Service, Inc.

United States District Court, Ninth Circuit

December 6, 2013

SHEILA RAU, an individual, Plaintiff,
UNITED PARCEL SERVICE, INC., a Delaware corporation; and UNITED PARCEL SERVICE, INC., an Ohio corporation, Defendants.


B. LYNN WINMILL, Chief District Judge.


In a prior order, the Court granted UPS's motion for summary judgment on Sheila Rau's claims for gender discrimination in violation of Title VII and the Idaho Human Rights Act; wrongful termination; breach of the implied covenant of good faith and fair dealing; intentional infliction of emotional distress; and negligent infliction of emotional distress. July 31, 2013 Memo. Dec. & Order, Dkt. 41. UPS now seeks to recover the attorney fees it expended during its successful defense. For the following reasons, the Court will deny the award.


1. Statutory Claims

UPS seeks attorney fees under 42 U.S.C. § 2000e-5(k) and I.C. § 12-121. Both statutes vest in district courts the discretion to award to a prevailing defendant in a gender discrimination claim a reasonable attorney fee upon finding that the plaintiff's action was "frivolous, unreasonable, or without foundation." See Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978); Hoagland v. Ada Cnty., 303 P.3d 587, 603 (Idaho 2013). Awarding attorney fees to prevailing defendants under only these "exceptional circumstances" ensures that vigorous enforcement of Title VII is not stymied. Harris v. Maricopa Cnty. Superior Court, 631 F.3d 963, 971 (9th Cir. 2011). The parties dispute whether Rau's Title VII claim was "frivolous, " i.e., whether it lacked a foundation, had no hope of success, or was brought in bad faith. See United States v. Manchester Farming P'ship, 315 F.3d 1176, 1183 (9th Cir. 2003); Hoagland, 303 P.3d at 603.

UPS argues that because Rau failed to establish a prima facie case on two essential elements (adverse employment action and disparate treatment), her claims lacked a factual foundation. While Rau's failure to prove a prima facie case is an important consideration, it does not necessarily mean that her case is frivolous. See Quintana v. Jenne, 414 F.3d 1306, 1309 (11th Cir. 2005). The amount of proof necessary to establish a prima facie case, though minimal, depends upon the circumstances of the individual case before the court. See Furnco Constr. Corp. v. Waters, 438 U.S. 567, 575-76 (1978) ("The facts necessarily will vary in Title VII cases, and the specification... of the prima facie proof required from respondent is not necessarily applicable in every respect to differing factual situations." (quoting McDonnell Douglas Corp v. Green, 411 U.S. 792, 802 n.2 (1973)). When the question of whether the plaintiff met her burden is "a close one, " a plaintiff should not be dissuaded from testing her claim. See Garner v. Cuyahoga Cnty. Juvenile Court, 554 F.3d 624, 637 (6th Cir. 2009) ("In the context of a disparate-treatment claim, the question of whether a plaintiff has provided sufficient evidence to establish a prima facie case of discrimination might be a close one. A claim likely would not be frivolous under such circumstances."). This is just such a case.

Rau's evidence of discrimination - the sequence of events leading up to UPS's seeming about-face over Rau's reinstatement - is not wholly lacking in merit. Ultimately, the Court stands by its conclusion that this sequence is not prima facie evidence of discrimination on UPS's part, but that is a conclusion on which reasonable minds could disagree.

Nor does the Idaho Human Right Commission's ("Commission") opinion offer the support for UPS's argument that UPS suggests.[1] The Commission did conclude that there was "no probable cause to believe that [UPS]... engaged in unlawful discrimination." Dkt. 53, Ex. C, at 9 (emphasis in orginial). However, the Commission reached that conclusion only after discussing the McDonnell Douglas burden-shifting framework and considering UPS's explanation for offering Rua a separation agreement. Id. This suggests the Commission believed that Rau had made a prima facie showing of discrimination. Moreover, it is likely that the Commission would disagree with the Court's conclusion that Rau did not suffer an adverse employment action. See id. at 6 ("[Rau's] understanding that she was being terminated on January 28, 2011 is supported by the language in the Separation Agreement...."). Ultimately, the Court does not believe that Rau's Title VII and Idaho Human Rights Act claims were frivolous.

2. Contract Claims

UPS also seeks an award of attorney fees under I.C. § 12-120(3), because it defeated Rau's wrongful termination and implied covenant of good faith and fair dealing ("implied covenant") claims. Idaho Code § 12-120(3) mandates an award of attorney fees to the prevailing party on a claim based on contracts for the sale of goods and services. See Troupis v. Summer, 218 P.3d 1138, 1142 (Idaho 2009). The Idaho Supreme Court has held that the at-will employment relationship is a contract for the sale of services. Atwood v. W. Constr., Inc., 923 P.2d 479, 486 (Idaho 1996). Because Rau's claims for wrongful termination and the implied covenant sound in contract, see id. (implied covenant); Stout v. Key Training Corp., 158 P.3d 971, 974 (Idaho 2007) (wrongful termination), UPS argues that it is entitled to attorney fees under the statute.

Rau counters by arguing that awarding UPS fees under I.C. § 12-120(3) would run afoul of 42 U.S.C. 2000e-5(k) in that § 12-120(3) requires an award even when a civil rights plaintiff brings nonfrivolous but unmeritorious claims. Thus, Rau concludes, § 12-120(3) cannot be applied to her contract claims.

Generally, the Erie doctrine requires federal courts exercising supplemental jurisdiction over state law claims to apply "state law denying the right to attorney[] fees or giving a right thereto." See MRO Commc'ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1281 (9th Cir. 1999) (quoting Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 259 n.31 (1975) (internal quotation mark omitted)). However, the general rule applies only "so long as state law does not run counter to a valid federal statute or rule of court." Id. (internal quotation mark omitted).

In Hubbard v. Sobreck, LLC, 554 F.3d 742 (9th Cir. 2008), the Ninth Circuit considered a situation similar to the conflict presented in this case. There, the plaintiffs sued the defendants under the ADA and California Disabled Persons Act ("CDPA") alleging that they were denied equal access to the defendants' restaurant. Id. at 744. After obtaining a judgment in their favor, the defendants moved for attorney fees under the ADA and § 55 of the CPDA. Id. Under the ADA, a prevailing defendant is eligible for fees only when a plaintiff ...

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