Equal Employment Opportunity Commission v. Complete Dewatering, Inc. 00-12967-E IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 00-12967-E EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. COMPLETE DEWATERING, INC.; COMPLETE DEWATERING PUMPS AND WELLPOINTS, INC., Defendants-Appellees. On Appeal from the United States District Court for the Southern District of Florida REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel ROBERT J. GREGORY Senior Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4059 INTRODUCTION In its opening brief, the Commission argued that the district court erred in granting attorney's fees to Complete Dewatering under the "substantially justified" standard of the Equal Access to Justice Act, 28 U.S.C. § 2412 ("EAJA"). The Commission argued, as a matter of law, that the EAJA's "substantially justified" standard does not apply to actions brought by the Commission under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. ("ADEA"). Alternatively, the Commission argued that its action had a "reasonable basis in law and fact," Pierce v. Underwood, 487 U.S. 552, 566 n.2 (1988), thus defeating the award of fees under the "substantially justified" standard. Finally, the Commission argued that the EAJA's "special circumstances" exception applied in this case due to Complete Dewatering's misleading statements to the court, which statements directly contributed to the grant of summary judgment in Complete Dewatering's favor. In its brief in response, Complete Dewatering argues that the the EAJA's "substantially justified" standard is applicable to government actions under the ADEA because the "plain language of the EAJA supports application to the ADEA." Complete Dewatering Br. at 18. Complete Dewatering also contends that the Commission "has never substantially justified its position in the instant matter." Id. at 30. Finally, Complete Dewatering claims that the "special circumstances" exception does not apply in this case because Complete Dewatering has not taken positions in this litigation that are inconsistent with prior on-the-record admissions. Id. at 50-53. Complete Dewatering's arguments are without merit and should be rejected for the reasons discussed below and in the Commission's opening brief. ARGUMENT 1. There Is One Piece Of Evidence, Standing Alone, That Requires Reversal Of The District Court's Fee Award. The Commission's principal argument in this appeal is that the the EAJA's "substantially justified" standard does not apply to the Commission's ADEA actions. It is clear from Complete Dewatering's brief, however, that this case can be decided without resolving that important legal question. Complete Dewatering concedes in its brief that "the single most important issue in this case was, and for appeal purposes continues to be, . . . who made . . . the decision to terminate Winnemore." Complete Dewatering Br. at 31. This point is critical because the Commission's evidence of age bias on the part of Steve Mogle (see EEOC Br. at 5-6) is certainly sufficient to clear the "substantially justified" threshold, assuming that Mogle can be linked to the decision to terminate Winnemore's employment. Complete Dewatering asserts that the "undisputed facts" demonstrate that "Mogle had no involvement in Winnemore's termination." Complete Dewatering Br. at 31. Complete Dewatering's factual recitation overlooks a critical piece of evidence in this case. In his deposition, Winnemore described his meeting in March 1990 with then CEO Fred Share. Winnemore testified that, during this meeting, Share informed Winnemore that the idea for shifting Winnemore to a commission-only payment structure had been Mogle's. Specifically, Share informed Winnemore that "Mogle had made the decision that they could phase this out and go into an independent contractor deal and everything would be fine." Doc.71-Pg.61. This evidence directly links Mogle to the very employment decision -- the March 1990 decision to shift Winnemore to a commission-only payment structure -- that Complete Dewatering claims resulted in Winnemore's termination. See Complete Dewatering Br. 31-38. The evidence makes hash out of Complete Dewatering's principal contention in support of the fee award -- that the "undisputed facts . . . demonstrate that Winnemore was terminated in March of 1990 by Mogle's predecessor, Fred Share," with "no involvement" by Mogle.<1> Id. at 31. Complete Dewatering has two responses to this evidence, both of which border on the frivolous. First, Complete Dewatering claims that Winnemore's "allegation" on this point "is nothing more than an unsupported conclusory allegation." Complete Dewatering Br. at 42. Winnemore's sworn testimony is not an "allegation." It is a recitation of what Winnemore was told during his meeting with Share. That recitation is clear and specific. Share was proposing that Winnemore be shifted to a commission-only payment structure. Share stated that this idea had come from Mogle. Share did not characterize this as a mere "suggestion by Mogle . . . with respect to [Complete Dewatering] employees generally." Id. Share stated that Mogle "had made the decision." Doc.71-Pg.61. Share, moreover, linked that decision to Winnemore and his (Winnemore's) division. As Share put the matter: "Steve Mogle had made the decision that they could phase this out and go into an independent contractor deal and everything would be fine. If not, they would probably just close that division down." Doc.71-Pg.61 (emphasis added). Second, Complete Dewatering contends that Winnemore's testimony "is in the nature of an inadmissible, double hearsay statement wherein Share allegedly told Winnemore what Mogle allegedly told Share." Complete Dewatering Br. at 43. Complete Dewatering is confused. Winnemore testified that Share told Winnemore that Mogle was the man behind the decision to shift Winnemore to a commission-only payment structure. Winnemore did not testify that Share told Winnemore "what Mogle allegedly told Share." Id. Share was the CEO of the company. Share was in a position to know, from his first-hand knowledge, whether Mogle had played a role in the decision. The only level of hearsay at issue is Share's statement to Winnemore. That statement, however, qualifies as an "admission" of a party, as Complete Dewatering concedes. Id. at 43 n.4; see Fed.R.Evid. 801(d)(2)(D). The issue is not whether Winnemore's testimony is "in the nature of" double hearsay. Complete Dewatering Br. at 43. The issue is whether Winnemore's testimony is, in fact, double hearsay. The answer, without question, is no. Complete Dewatering accuses the Commission of "unbridled audacity" in litigating this case without any evidence linking Mogle to Winnemore's termination. Id. at 39. This hyperbole cannot disguise the fact that Complete Dewatering has no credible answer to Winnemore's deposition testimony. That testimony provides clear, specific, non-hearsay evidence -- through the admission of Fred Share -- that Mogle was the man behind the events of March 1990, the very events that Complete Dewatering claims resulted in Winnemore's termination. It may be true, as Complete Dewatering argues, that "the age-related comments attributed to Mogle do not permit an inference of discrimination," assuming "Mogle was not involved in any manner in the decision to terminate Winnemore." Id. at 44. Winnemore's testimony, however, provides direct evidence that Mogle was involved in Winnemore's termination, even accepting a March 1990 termination date, thus providing a substantial basis for linking Mogle's discriminatory statements (e.g., Winnemore was terminated because he was "over the hill" and "about ready to retire anyway") to the termination decision.<2> The EAJA's "Substantially Justified" Standard Does Not Apply To The Commission's ADEA Actions. This factual point aside, there are other grounds for reversing the district court's fee award. First, as the Commission argued in its main brief, the ADEA contains its own fee-shifting provision. That provision permits the award of attorney's fees to prevailing defendants under the "bad faith" standard. See Turlington v. Atlanta Gas Light Co., 135 F.3d 1428, 1437 (11th Cir.), cert. denied, 525 U.S. 962 (1998). Here, Complete Dewatering does not invoke the "bad faith" standard, which is made applicable to the Commission's ADEA actions by virtue of subsection (b) of the EAJA, 28 U.S.C. § 2412(b).<3> Instead, Complete Dewatering argues that fees are proper under the EAJA's "substantially justified" standard, which applies to those businesses and individuals who meet the qualifying criteria set forth in subsection (d) of the EAJA, 28 U.S.C. § 2412(d). In the Commission's view, the EAJA's "substantially justified" standard does not apply to the Commission's ADEA actions. Complete Dewatering contends that "the plain language of the EAJA unambiguously establishes its applicability to the ADEA." Complete Dewatering Br. at 18. Complete Dewatering brandishes the "plain language" label but fails to back it up with any meaningful analysis of the statute's text. Complete Dewatering, for example, ignores the critical distinction between the caveats of subsections (b) and (d) of the EAJA. See EEOC Br. at 36-37. Subsection (b) subjects the United States to liability for attorney's fees and expenses "to the same extent that any other party would be liable." That subsection has a caveat: "[u]nless expressly prohibited by statute." Subsection (d), by contrast, states that the "substantially justified" standard applies "[e]xcept as otherwise specifically provided by statute." There is no doubt that subsection (b) exposes the United States to an award of attorney's fees unless "another statute specifically provides that prevailing [parties] cannot get such fees from the United States." Complete Dewatering Br. at 29. The same, however, cannot be said of subsection (d), which excepts from its reach any statute that "otherwise provides" for an award of attorney's fees under its own fee-shifting provision. It must be assumed that Congress acted "'intentionally and purposely'" in including "differing language" in the caveat provisions of subsections (b) and (d). Russello v. United States, 464 U.S. 16, 23 (1983). Any doubt concerning the scope of EAJA's subsection (d) is put to rest by another provision of the EAJA's text also ignored by Complete Dewatering -- the EAJA's savings clause. That clause, passed as a freestanding provision, explicitly states that nothing in subsection (d) "alters, modifies, repeals, invalidates, or supersedes any other provision of Federal law which authorizes an award of such fees and other expenses to any party other than the United States that prevails in any civil action brought by or against the United States." Pub. L. No. 96-481, § 206, 94 Stat. 2325, 2330 (1980) (lapsed), as reenacted by Pub. L. No. 99-80, § 3, 99 Stat. 184, 186 (1985). The manifest purpose of the savings clause is to prohibit the "substantially justified" standard "from either narrowing or broadening the award of fees allowed by other provisions of federal law." Huey v. Sullivan, 971 F.2d 1362, 1367 (8th Cir. 1992). Complete Dewatering argues that the "substantially justified" standard applies to the Commission's ADEA actions because the ADEA "really does not incorporate a fee-shifting provision." Complete Dewatering Br. at 20. Complete Dewatering is mistaken. The ADEA adopts its own fee-shifting provision, borrowed from the Fair Labor Standards Act. See 29 U.S.C. § 626(b) (incorporating 29 U.S.C. § 216(b)). That provision states that a court "shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant." Id. Although the provision, by its explicit terms, does not authorize fee awards to prevailing defendants, courts have construed the provision as permitting the award of attorney's fees to prevailing defendants under the "bad faith" standard. See, e.g., Turlington, 135 F.3d at 1437. The "bad faith" standard applies to the Commission's ADEA actions by virtue of subsection (b) of the EAJA, which subjects the United States to liability for fees "to the same extent that any other party would be liable." 24 U.S.C. § 2412(b). The ADEA has a self-contained fee-shifting provision that authorizes fee awards to prevailing parties, albeit under standards that are more accommodating to prevailing plaintiffs. Awarding fees to a prevailing ADEA defendant under the EAJA's "substantially justified" standard nullifies the ADEA's fee-shifting provision in direct contravention of the EAJA's savings clause and the statute's explicit statement that the "substantially justified" standard does not apply where fees are "otherwise specifically provided by statute." 28 U.S.C. § 2412(d). Notably, the Supreme Court has recognized that the ADEA "really does" incorporate a fee-shifting provision, Complete Dewatering's argument to the contrary notwithstanding. In Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 260 (1975), the Supreme Court noted that Congress has adopted "specific and explicit provisions for the allowance of attorney's fees under selected statutes granting or protecting various federal rights." In a lengthy string cite, the Court provided a list of the various federal statutes with fee-shifting provisions. The Court included on that list such statutes as the Freedom of Information Act, the Fair Housing Act of 1968, and Title VII of the Civil Rights Act of 1964. Id. at 261-62 n.33. The Court also included Section 16(b) of the Fair Labor Standards Act, the very fee-shifting provision incorporated into the ADEA. Id. Plainly, the ADEA "really does" have its own fee-shifting provision. Just as plainly, Congress intended to place statutes with their own fee-shifting provisions outside the reach of the EAJA's "substantially justified" standard. The textual points aside, there are compelling indications in the EAJA's legislative record that Congress intended to except civil rights statutes such as the ADEA from the EAJA's "substantially justified" standard. There were concerns raised throughout the legislative process that the EAJA's "substantially justified" standard could have a "chilling effect" on "vigorous" prosecution of "civil rights violations." E.g., Award of Attorneys' Fees Against the Federal Government: Hearings Before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the Judiciary, 96th Cong. 92 (1980). The EAJA's sponsors repeatedly assured the objectors that the "substantially justified" standard would not supersede well-established fee-shifting rules for civil rights cases. Specifically, it was the sponsors' view that "statutes, such as the Freedom of Information Act and civil rights laws, which contain special fee-shifting provisions remain unaffected by [the 'substantially justified' standard], even if the standard for awarding fees under the statute has evolved through case law and is not set out in the statute itself." E.g., 125 Cong. Rec. 21445 (July 31, 1979). Complete Dewatering suggests that this history is inapposite to the ADEA because the ADEA is not a "Civil Rights Act." Complete Dewatering Br. at 24-25. This startling assertion would come as a surprise to the Congress that enacted the ADEA as a means of promoting "employment of older persons" and prohibiting "arbitrary age discrimination in employment." 29 U.S.C. § 621(b). It would also come as a surprise to the Supreme Court, which has described the ADEA as "but part of a wider statutory scheme" aimed at "eradicat[ing] discrimination in the workplace," a scheme that includes both the ADEA and Title VII. McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352, 357 (1995). As one court has put the matter, the ADEA is a "sister[] under the skin" with other civil rights statutes, a "'civil rights' type" of statute "similar to earlier, more traditional [civil rights] enactments." Freeman v. Package Mach. Co., 865 F.2d 1331, 1347 (1st Cir. 1988). Contrary to Complete Dewatering's argument (at 25), the ADEA does in fact adopt a "dual standard" for the award of attorney's fees, highly analogous to the "dual standard" found in Title VII. Title VII, on its face, draws no distinction between the award of attorney's fees to prevailing plaintiffs and prevailing defendants. See 42 U.S.C. § 2000e-5(k). In Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417-21 (1978), however, the Supreme Court construed Title VII as authorizing an award of fees to prevailing plaintiffs "in all but special circumstances," while permitting an award of fees to prevailing defendants only "upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation." The Court ruled that this dual standard was necessary "to promote the vigorous enforcement of the provisions of Title VII." Id. at 422. The ADEA, in effect, codifies the dual standard that the Supreme Court read into Title VII. The ADEA mandates an award of attorney's fees to prevailing plaintiffs. The ADEA severely restricts the award of fees to prevailing defendants. The only distinction between Title VII and the ADEA is that the ADEA makes it even more difficult for the prevailing defendant to recover its fees, limiting the defendant to the "bad faith" standard. In keeping with this view, a number of courts have a drawn an explicit link between the policies of the ADEA's dual standard on fee-shifting and those of the Christiansburg standard. See, e.g., Monroe v. Children's Home Ass'n of Illinois, 128 F.3d 591, 594 (7th Cir. 1997) (noting that the ADEA adopts the same "asymmetric" approach to fee shifting as other civil rights laws; "[p]revailing plaintiffs recover their fees routinely, while defendants recover only [in limited circumstances]"). If Congress intended to place civil rights statutes such as Title VII outside the reach of the "substantially justified" standard, it likewise intended to place the ADEA outside the reach of that standard. Next, Complete Dewatering contends that the "EEOC's proposed rule is unworkable" because, "[u]nder the EEOC's interpretation," the "EAJA would never apply." Complete Dewatering Br. at 26. This is a straw man argument. It is not the Commission's position that the "traditional default common law rule" (of bad faith) trumps the "substantially justified" standard in all cases such that the absence of a fee-shifting provision in a statute "is sufficient to trigger the 'specifically provided' language of the EAJA and prevent application of Section 2412(d)." Id. at 26-27. It is the Commission's position that the "specifically provided" language is triggered (at least potentially) by a statute that contains its own fee-shifting provision, albeit one that singles out prevailing plaintiffs for an award of fees. There are scores of federal statutes that have no fee-shifting provision at all. Those statutes are fully subject to the EAJA's "substantially justified" standard. There is a critical distinction between a statute that contains no fee-shifting provision, which is subject to the "substantially justified" standard, and one that contains the type of fee-shifting provision found in the ADEA. The ADEA is not silent on the issue of attorney's fees. The ADEA contains a provision mandating the award of attorney's fees to a prevailing plaintiff. Having chosen to override the common law rule and mandate the award of fees to prevailing plaintiffs, Congress could have easily extended this statutory override to prevailing defendants. Congress chose not to do so. That choice is pregnant. It reflects "an intention to impose the additional burden of paying attorney's fees only on employers who violate the statute." Richardson v. Alaska Airlines, Inc., 750 F.2d 763, 767 (9th Cir. 1984). It reflects the same "asymmetrical" approach to fee-shifting found in almost all of the civil rights statutes, Monroe, 128 F.2d at 594, an approach deemed necessary to "encourage vigorous enforcement" of these statutes. H.R. Rep. No. 96-1418, 96th Cong., 2d Sess. 18 (1980), reprinted in 1980 U.S.C.C.A.N. 4984, 4997 [EAJA legislative history]. Applying the "substantially justified" standard to the Commission's ADEA actions would not fill a "void" inadvertently left in the ADEA. Complete Dewatering Br. at 29. It would trump Congress' specific intent to disfavor the award of attorney's fees to prevailing ADEA defendants.<4> Finally, Complete Dewatering invites this Court to follow the circuit court decisions in EEOC v. O & G Spring and Wire Forms Specialty Co., 38 F.3d 872 (7th Cir. 1994) and EEOC v. Clay Printing Co., 13 F.3d 813 (4th Cir. 1994). See Complete Dewatering Br. at 27-29. These decisions are unpersuasive for the reasons discussed in the Commission's opening brief (at 48-50). Neither decision offers a coherent interpretation of the phrase "except as otherwise specifically provided by statute." Neither decision addresses the meaning of the EAJA's savings provision. The principal rationale of O & G Spring, 38 F.3d at 883 -- that it is "untenable" to concede that "EAJA sec. 2412(b) (the bad faith standard) applies to the ADEA," while maintaining that "the ADEA preempts application of sec. 2412(d) (the substantial justification standard)" -- ignores the critical distinction in the caveat language of the two subsections. It is entirely possible for subsection (b), but not subsection (d), to apply to the Commission's ADEA actions. At bottom, Complete Dewatering has no answer to the central question posed in the Commission's opening brief -- why, among all the civil rights statutes, Congress would have subjected the ADEA, and only the ADEA, to the EAJA's "substantially justified" standard? Courts have uniformly held that the EAJA's "substantially justified" standard does not apply to the Commission's Title VII actions. See EEOC Br. at 44 (citing cases). The only difference between the ADEA and Title VII is that the ADEA makes it even more difficult for prevailing defendants to recover their fees, a distinction that, if anything, makes a stronger case for not applying the "substantially justified" standard to the Commission's ADEA actions. A court should avoid any interpretation of a statute that leads to an absurd or irrational result. See, e.g., Green v. Bock Laundry Machine Co., 490 U.S. 504, 527-29 (1989) (Scalia, J., concurring). Complete Dewatering's interpretation of the EAJA leads to just such a result. The Commission Has Substantially Justified Its Position In This Case. As discussed in its main brief (at 50-58), the Commission also believes that it satisfied the "substantially justified" standard in this case. Complete Dewatering agrees with the Commission's recitation of the "fundamental state of the law" concerning the standards for awarding fees under the EAJA's "substantially justified" provision. Complete Dewatering Br. at 30. Thus, Complete Dewatering agrees with the Commission that, at the EAJA stage, "'the court is not wedded to the underlying judgment on the merits'" but is required to undertake "'an independent evaluation [of the evidence] through an EAJA perspective.'" EEOC Br. at 51-52 (quoting Federal Election Comm'n v. Rose, 806 F.2d 1081, 1087 (D.C. Cir. 1986)). Complete Dewatering also acknowledges that "the decision with respect to [Complete Dewatering's] Motion for Summary Judgment, standing alone, cannot determine the substantial justification issue under the EAJA." Complete Dewatering Br. at 30.<5> Complete Dewatering argues, however, that the Commission should pay Complete Dewatering some $215,000 in attorney's fees because the "undisputed facts" demonstrate that Winnemore was terminated in March, rather than May, 1990. Id. at 31. For over nine pages of its brief (at 31-40), Complete Dewatering marshals the supposed "undisputed" evidence establishing this supposed critical fact. The Court should see this argument for what it is -- the same smokescreen that Complete Dewatering has successfully deployed throughout this litigation. The critical issue in this case is not when the termination occurred, March or May, although the evidence on that point is not nearly as one-sided as Complete Dewatering would have this Court believe.<6> The critical issue is who may have been involved in the termination decision. If there is evidence to link Mogle to that decision, it is clear that fees are not proper in this case.<7> If Mogle cannot be linked to the decision, the Commission's proof of discriminatory bias arguably lacks probative value (although the Commission still has the argument, discussed below, that its evidence was sufficient under an indirect method of proof). The Commission was substantially justified in believing that its proof was sufficient to link Mogle to the termination decision, even assuming a termination date of March 1990. First, as discussed above (supra pp. 2-6), there is direct evidence that Mogle was the man behind the decision, in March 1990, to shift Winnemore to a commission-only payment structure (the decision that Complete Dewatering claims resulted in Winnemore's termination). That evidence is strongly supported by the context. Mogle began working for Complete Dewatering in February 1990. Doc.72-Pgs.14,36-37; Doc.73-Pgs.16,24. During the months of February and March, Mogle participated in the terminations of some 40 employees. Doc.73-Pg.16. According to one company official, Mogle was active in employment decision-making as soon as he came on board. Doc.77-Pgs.14-16. Mogle was not a stranger to the March 1990 meeting with Winnemore. Mogle showed up at the meeting with Share. Mogle sat right outside the office door as Share met with Winnemore. Doc.73-Pg.27. Given this context, Share's admission, during his meeting with Winnemore, that Mogle was the man behind the commission-only payment idea is hardly a surprise. The Commission had an additional reason for believing that Mogle was a decision-maker with respect to Winnemore's termination -- Complete Dewatering admitted as much in its formal position statement. See EEOC Br. at 4-5. In that statement, Complete Dewatering asserted that "[a] decision was made by Mr. Fred Share . . . and Mr. Steve Mogle" to "attempt to salvage the branch" by advising Winnemore that "he would have to go on a commission basis." Doc.117-Exh.4 (emphasis added). The position statement plainly identifies Mogle as one of the company officials involved in the events of March 1990. It also refers to Mogle as "the then president of the company," Doc.117-Exh.4, confirming that Mogle, if not yet the CEO (as of the March meeting with Winnemore), was a high-ranking company official intimately involved in the company's employment decision-making. As it has throughout this litigation, Complete Dewatering relies heavily on a letter written by a Commission investigator, Theodore Bonstedt. See Complete Dewatering Br. at 32-34. There are two things to note about this letter. First, the letter does not state, as Complete Dewatering implies, that "Share terminated Winnemore in March of 1990." Id. at 32, 51. The letter merely offers the investigator's opinion that "the date of alleged violation is 3/30/90" (with the caveat that "[i]t may be argued that the final word on your status did not occur until May"). Doc.106-Exh.E. The letter does not exclude the possibility that Mogle was a decision-maker with respect to the March 1990 decision. Second, the letter was not an official agency document (such as a letter of determination) but an informal correspondence between the investigator and Winnemore, written as a courtesy to Winnemore to "to remind [Winnemore]" of the "statute of limitations" in ADEA cases. Doc.106-Exh.E. The letter contains the investigator's opinion as to the date "by which a private lawsuit must be filed," counseling Winnemore to "consult a private attorney to discuss your rights and the procedures for filing a lawsuit under the ADEA." Doc.106-Exh.E. The letter merely advises Winnemore that should he choose to "file a lawsuit" on his own, the time for bringing suit could well run from the earlier "3/30/90" date. Doc.106-Exh.E. At most, Bonstedt's letter reflects the tentative conclusion of one of the Commission's non-attorney investigators that the date of Winnemore's termination decision was March 1990.<8> The letter is not inconsistent with the Commission's claim that Mogle played a role in the decision to terminate Winnemore's employment, a claim that is confirmed by Complete Dewatering's own position statement filed in response to Winnemore's charge.<9> Even assuming that the Commission had no reasonable basis in fact for linking Mogle to the decisional process, the Commission also proceeded under a traditional, McDonnell Douglas method of proof, relying upon Winnemore's replacement by a series of younger branch managers. Complete Dewatering has little to say about this aspect of the case and for good reason -- almost any argument that it would make on this point is belied by its own on-the-record admissions. Complete Dewatering admitted in its district court filings that Cipully assumed Winnemore's duties as branch manager, at least on an interim basis. See EEOC Br. at 12 (citing evidence). Complete Dewatering admitted in its position statement that Robert Freeze was ultimately hired as Winnemore's "replacement." See id. at 13. Although it now claims that "the sales aspect of Winnemore's branch manager duties was assigned to [Frank] Hornbrook," Complete Dewatering Br. at 47, the company never made that argument in the district court. Indeed, it acknowledged that Cipully assumed Winnemore's sales duties as "acting branch manager," with Hornbrook having additional sales responsibilities for the "South Florida" region. Doc.65-Pg.11; Doc.72-Pg.42. To see that the Commission was substantially justified in relying upon its replacement evidence, one need look no further than the testimony of Complete Dewatering's own man, Steve Mogle. When asked point blank, "[a]re you saying then that [Cipully] was the one who replaced Al Winnemore?", Mogle replied, "[w]ell, if you really -- yeah. Dominic was given the title of branch manager." Doc.73-Pgs.43-44.<10> Complete Dewatering also claims that the Commission's replacement evidence provides no support for a finding of pretext. It may be true that, when an employer proffers a performance-based explanation for a termination decision, "evidence of replacement by a younger individual, standing alone, cannot prove that a defendant has engaged in discrimination." Complete Dewatering Br. at 48. In this case, however, Complete Dewatering did not proffer a performance-based explanation for Winnemore's termination. It claimed that Winnemore was terminated as part of an effort to cut personnel costs by eliminating jobs. Doc.66-Pg.13. Proof that Winnemore's job was not eliminated, that Winnemore was replaced by a succession of younger individuals, is obviously probative on the issue of pretext. Although Complete Dewatering claimed that it needed to put somebody in the branch manager position who was willing to be paid on a commission-only basis, Doc.66-Pg.19, the individual who ultimately filled Winnemore's position (Freeze) was not paid on a commission-only basis; he was a salaried employee who received twice the compensation paid to Winnemore. See EEOC Br. at 10 (citing evidence). Under these circumstances, the Commission was substantially justified in believing that it could establish that Complete Dewatering's proffered explanation for Winnemore's termination was a pretext for discrimination. The "Special Circumstances" Exception Does Apply In This Case. Finally, fees should be denied in this case because Complete Dewatering has engaged in the type of litigation misconduct sufficient to implicate the EAJA's "special circumstances" exception. See EEOC Br. at 58-62. Complete Dewatering first contends that the Commission has waived this argument by failing to advance the argument "at the District Court level." Complete Dewatering Br. at 50. This contention, however, "mistakes the failure to raise a claim below [which may result in waiver] with the failure to make an argument in support of that claim." Gallenstein v. United States, 975 F.2d 286, 290 n.4 (6th Cir. 1992). It is true that the Commission did not invoke the "special circumstances" exception by name. The Commission, however, vigorously argued that the positions advanced in support of Complete Dewatering's fee petition were contradicted by the company's prior on-the-record admissions, the very contradictions that support application of the "special circumstances" exception. Doc.157-Pg.19 (arguing that it was "confusing" for Complete Dewatering to focus on the "date of termination and the [identity of the] decision maker" given the fact that "when the defendant itself provided a position statement to the EEOC [it] admit[ted] that Steve Mogle made that decision as well"). More generally, the Commission asserted the claim that fees were not proper under subsection (d) of the EAJA, the very subsection that contains the "special circumstances" exception. 28 U.S.C. § 2412(d). "Once a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below." Yee v. Escondido, 503 U.S. 519, 534 (1992); see also United States Dep't of Labor v. Rapid Robert's, Inc., 130 F.3d 345, 348 (8th Cir. 1997) (holding that "special circumstances" exception applied even though the government had not invoked the exception in the district court; issue could be taken up "for the first time on appeal" where awarding fees would be "'inconsistent with substantial justice'"). On the merits of this argument, Complete Dewatering has little to say. Complete Dewatering suggests that its position statement merely referenced Mogle as someone who "observe[d] the nuances of the dewatering business and provide[d] suggestions to [Complete Dewatering] prior to April 1, 1990." Complete Dewatering Br. at 51. This is simply not the case. The position statement clearly identified Mogle as one of the decision-makers with respect to Winnemore's termination. When discovery revealed that Mogle had made age-discriminatory comments with respect to the reasons for Winnemore's termination, Complete Dewatering did an about face, suddenly claiming, quite emphatically, that Mogle had absolutely nothing to do with the decision to terminate Winnemore's employment. At no point did Complete Dewatering disclose to the court its prior contradictory admission. Cf. Cleveland v. Policy Management Sys. Corp., 526 U.S. 795, 805-07 (1999) (ADA plaintiff required to provide the court with an explanation for any "inconsistency" between current litigation position and prior statements on a disability benefit application). In a similar vein, Complete Dewatering misled this Court by making arguments on the replacement issue that contradicted its prior on-the-record admissions concerning the replacement status of Cipully and Freeze. As the Commission stated in its opening brief (at 62), "[t]his is the paradigmatic case in which a party seeking an equitable remedy has dirtied its hands 'in acquiring the right [it] now asserts.'" Finally, even assuming that the Commission has waived the "special circumstances" argument, the facts invoked in support of that argument still have relevance. Complete Dewatering's admissions, on the critical factual issues in this case, cannot be ignored. These admissions make a mockery of Complete Dewatering's hyperbolic claims concerning the Commission's prosecution of this action. E.g., Complete Dewatering Br. at 35 ("The EEOC's unjustified persistence based on its unsupported position has resulted in a waste of judicial resources for the last eight-plus years."); id. at 44 ("Despite the mountain of evidence emphasizing the EEOC's bad-faith pursuit of this action, the EEOC has continued to litigate the fees and costs issue for three years."); id. at 49 ("The foregoing establishes that despite having ample evidence counseling against the filing and pursuit of this matter, the EEOC inexplicably required the American taxpayers and [Complete Dewatering] to subsidize a meritless case for over eight years."). If nothing else, Complete Dewatering's admissions provide strong support for the Commission's argument that its position in this case was substantially justified. CONCLUSION The district court's fee decision should be reversed. Respectfully Submitted, C. GREGORY STEWART, General Counsel PHILIP B. SKLOVER, Associate General Counsel LORRAINE C. DAVIS, Assistant General Counsel ROBERT J. GREGORY, Senior Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 October 27, 2000 CERTIFICATE OF COMPLIANCE I, Robert J. Gregory, hereby certify that this brief complies with the type-volume limitations imposed under F.R.A.P. 32(a)(7)(B)(ii). The brief contains 6827 words. Robert J. Gregory CERTIFICATE OF SERVICE I, Robert J. Gregory, hereby certify that on this 27th day of October, 2000, two copies of the attached brief were sent by first-class mail, postage prepaid, to each of the following counsel of record: Mark J. Neuberger Jeffrey M. Goodz Buchanan Ingersoll Professional Corporation Suite 2100 Bank of America Tower 100 Southeast Second Street Miami, Florida 33131 Matthew W. Clarke Smith, Gambrell & Russell, LLP Suite 3100 Promenade 2 1230 Peachtree Street, N.E. Atlanta, Georgia 30309-3592 Robert J. Gregory 1 Although this evidence, standing alone, is enough to defeat Complete Dewatering's fee petition, there is other evidence linking Mogle to the decisional process. See infra pp. 20-23. 2 The Commission cited Winnemore's deposition testimony in response to Complete Dewatering's fee petition. Doc. 117-Pg.13. Although the magistrate judge drew support from this testimony in recommending against fees, Doc.131-Pg.8, the district court judge ruled that the testimony merely reflected "Winnemore's speculation that Mogle may have been involved in" the decision "to change Winnemore's compensation package." Doc.135-Pg.6. The district court judge, however, focused on a different passage of Winnemore's deposition. Doc.135-Pg.6. The judge did not address the portion of Winnemore's deposition reciting Share's explicit statement that Mogle was the man behind the change in Winnemore's compensation package. 3 Nevertheless, Complete Dewatering peppers its appellate brief with references to the Commission's supposed "bad faith." See Complete Dewatering Br. at 34, 36, 44, 50, 54. If Complete Dewatering really believed that the Commission acted in bad faith in pursuing this litigation, it would have sought fees under that standard, at least as an alternative to its argument that fees are proper under the "substantially justified" standard. 4 This is not to say that this Court is required to treat every statute, containing a party-specific fee-shifting provision, as falling outside the reach of the "substantially justified" standard. The ADEA is a civil rights statute and, as such, must be read in the context of the established, dual standard approach to fee-shifting in civil rights cases. Other statutes with "plaintiff-only" fee-shifting provisions may not have the same connection to the policies that support the dual-standard approach and, thus, may not, by necessity, preclude the application of the "substantially justified" standard. Cf. Fogerty v. Fantasy, Inc., 510 U.S. 517, 523-25 (1994) (refusing to adopt a "dual standard" for the award of attorney's fees under the Copyright Act, despite the similarity in language between the fee-shifting provisions of the Copyright Act and Title VII; the "goals and objectives" of the two Acts differ, there being no basis under the Copyright Act, as there is under Title VII, for "treating successful plaintiffs more favorably than successful defendants in terms of the award of attorney's fees"). 5 Complete Dewatering repeatedly states that this action was twice dismissed for "lack of prosecution," e.g., Complete Dewatering Br. at 1, but does not argue that these "dismissals" support the award of attorney's fees. The facts surrounding these "dismissals" are discussed in the Commission's Response to Defendants' Joint Motion for Award of Attorney's Fees and Costs, Doc.117-Pgs.19-22. In a nutshell, the Commission's action was dismissed once, not twice, for lack of prosecution. That dismissal was overturned by the district court because the Commission had in fact been prosecuting the case. The case remained on the court's docket for several years because the original judge assigned to the case recused himself, resulting in the cancellation of a status conference, and the successor judge did not set a status conference until October 1996, despite the Commission's request for such a conference in 1993 and 1994. Any additional delay was caused by Complete Dewatering's failure to obtain counsel in the early stages of the litigation. 6 Complete Dewatering, for example, cites a contemporaneous letter written by Winnemore, in which Winnemore refers to his employment being terminated in March 1990. Complete Dewatering Br. at 35. Yet, in his initial filings with the Commission, Winnemore identified the termination date as May 1990. Doc.117-Exhs.1-3. Winnemore later explained, in his deposition, that his contemporaneous letter referred to the termination of his "salary position." Doc.71-Pgs.82-84. Complete Dewatering stresses that Winnemore was removed from the payroll, as of March 30, 1990, Complete Dewatering Br. at 36, but fails to mention that Winnemore continued to work for Complete Dewatering, performing the same work that he had always performed in his capacity as branch manager. Doc.71-Pg.48. During this post-March 30 time period, moreover, Winnemore, at Complete Dewatering's invitation, was formulating a counterproposal to the commission-only payment structure discussed at the March meeting. Doc.65-Pg.9; Doc.71-Pgs.47-48. Winnemore's counterproposal, which Mogle eventually rejected, would have allowed Winnemore to continue his employment as a salaried employee. See Complete Dewatering 11th Cir. Merits Br. at 10 n.1, citing Doc.72-Pg.40. There was a reasonable basis for concluding on this record that Winnemore was not terminated until Mogle dispensed with Winnemore's services in May 1990. 7 This is true even if Mogle's discriminatory statements were made in reference to the events of May, rather than March, 1990. See, e.g., Burns v. Gadsden State Community College, 908 F.2d 1512, 1518-19 n.9 (11th Cir. 1990) ("direct evidence of the decisionmaker's discriminatory motive regarding one employment decision may be used as evidence of that decisionmaker's motive in making a similar employment decision"); EEOC v. Alton Packaging Corp., 901 F.2d 920, 923-24 & n.6 (11th Cir. 1990) (manager's statement that "he wouldn't hire any black people" if it were his company provided direct evidence that a discriminatory motive entered into his later decision to oppose the promotion of a black employee). Notably, Complete Dewatering effectively concedes that Mogle's most damaging statement -- that he had to let Winnemore go because he was "over the hill" -- was made in reference to the events of March 1990. Complete Dewatering argues that Jerome Golden identified the date of termination as March 1990. Complete Dewatering Br. at 38. Yet, in his deposition, Golden testified that Mogle made the "over the hill" statement "immediately after" Winnemore's termination. Doc.77-Pgs.16-18. If Mogle made this statement "immediately" after Winnemore's termination and Winnemore was terminated in March 1990, the statement was made in direct reference to the events of March 1990. 8 The Commission's official letter of determination, issued at the conclusion of the investigation of Winnemore's charge, makes no mention of the termination date, one way or the other. Doc.117-Exh.5. 9 Complete Dewatering states that it "belies comprehension and defies logic as to how the EEOC could perform a careful and detailed analysis resulting in its determination that Winnemore was terminated in March of 1990 and then file a Complaint alleging that Winnemore was terminated in May of 1990 by Mogle." Complete Dewatering Br. at 33. Apart from the fact that the Bonstedt letter is not the "smoking gun" that Complete Dewatering claims, id. at 32, Complete Dewatering has its facts wrong. The Commission did not file a complaint alleging that "Winnemore was terminated in May of 1990." Id. The Commission filed a complaint alleging that Winnemore was terminated "on or about May 1990." Doc.52-Par.8 (emphasis added). The phrase "on or about May 1990" is certainly broad enough to encompass March 1990. 10 With respect to Timothy Fruits, Complete Dewatering repeats the tired argument that the Commission's evidence on this point is "double hearsay." Complete Dewatering at 45. This is a baseless argument for the reasons set forth in the Commission's opening brief (at 16 n.5). It is clear that Complete Dewatering is fond of the "double hearsay" argument. It is equally clear that this argument has no place in this case