No. 03-6542 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ROBERTSON-CHEATHAM FARMERS COOPERATIVE, Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Middle District of Tennessee Hon. Thomas A. Wiseman, Jr., Presiding ______________________________________________ REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________ ERIC S. DREIBAND GAIL S. COLEMAN General Counsel Attorney CAROLYN L. WHEELER EQUAL EMPLOYMENT Acting Associate General Counsel OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 (202) 663-4055 TABLE OF CONTENTS Page TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . ii ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 A. Robertson-Cheatham's insurance policy does not guarantee payment of the judgment because Robertson-Cheatham has not earmarked the insurance funds for that purpose . . . . . . . . . . .2 B. Robertson-Cheatham did not inform the district court that it has assets worth millions of dollars and, even if this new claim is true, its assets are no guarantee of payment when Robertson-Cheatham has disclosed nothing about its liabilities. . . . . . . . . . . . .3 C. Contrary to Robertson-Cheatham's assertion, tax requirements will increase, not decrease, the amount of money that Robertson-Cheatham owes. . . . . . . . .5 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . .6 CERTIFICATE OF SERVICE TABLE OF AUTHORITIES Page Cases Dillon v. City of Chicago, 866 F.2d 902 (7th Cir. 1989) . . . .4 EEOC v. Kentucky State Police Dep't, 80 F.3d 1086 (6th Cir. 1996) . . . . . .5 Gerbec v. United States, 164 F.3d 1015 (6th Cir. 1999) . . . . . . . . . 5 Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Peacock v. Thomas, 516 U.S. 349 (1996) . . . . . . . . . . . . . . . . . 3 Rasimas v. Michigan Dep't of Mental Health, 714 F.2d 614 (6th Cir. 1983) . . . . . 5 United States v. Cleveland Indians Baseball Co., 532 U.S. 200 (2001) . . . . . . . 5 Statutes 26 U.S.C. 3111 . . . . . . . . . . . . . . . . . . . . . . . .6 26 U.S.C. 3301 . . . . . . . . . . . . . . . . . . . . . . . .6 Miscellaneous Rev. Rul. 55-203, 1955-1 C.B. 114, 1955 WL 9596 (IRS RRU 1955) .5 No. 03-6542 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. ROBERTSON-CHEATHAM FARMERS COOPERATIVE, Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Middle District of Tennessee Hon. Thomas A. Wiseman, Jr., Presiding ______________________________________________ REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________ ARGUMENT In its opening brief, the EEOC urged this Court to reverse the district court's order granting a stay of execution of the judgment without requiring the posting of a supersedeas bond. The EEOC argued that because Robertson- Cheatham has provided no evidence that it will be able to satisfy the judgment against it following appeal, the district court abused its discretion by staying execution of the judgment without protecting the EEOC's interests as a judgment creditor. In its responsive brief, Robertson-Cheatham disavows its earlier claims of financial distress and asserts without citation to the record that it can easily satisfy the judgment because it possesses assets worth millions of dollars. See Appellee Br. at 4-5 & n.1. Not only is this claim entirely unsubstantiated but, because the record is devoid of information regarding Robertson-Cheatham's liabilities, it is also inadequate. For the reasons stated here and in the EEOC's opening brief, the EEOC asks this Court to reject Robertson-Cheatham's arguments and to reverse the district court's judgment. A. Robertson-Cheatham's insurance policy does not guarantee payment of the judgment because Robertson-Cheatham has not earmarked the insurance funds for that purpose. Robertson-Cheatham's contention that its insurance policy guarantees payment of the judgment is incorrect because the district court did not require Robertson-Cheatham to earmark the insurance funds for that purpose. Compare Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794, 799 (7th Cir. 1986) (ordering judgment debtor not to make any cash transfer to its parent company unless it obtained the parent's agreement to be bound on the judgment to the extent of any cash transferred). The evidence shows that Robertson-Cheatham drew on the insurance policy to pay for its trial expenses. (R. 121, Notice, App. at 39-40.) The district court did nothing to prevent it from also drawing on the insurance policy to cover the costs of appeal. If it so chooses, Robertson- Cheatham could consume the entire balance of the insurance policy in litigation. Whether or not it is doing so (and Robertson-Cheatham does not deny in its brief that it is, see Appellee Br. at 6), the district court's failure to freeze the funds violated the court's obligation "to ensure that the judgment creditor's position is secured." Peacock v. Thomas, 516 U.S. 349, 359 (1996). B. Robertson-Cheatham did not inform the district court that it has assets worth millions of dollars and, even if this new claim is true, its assets are no guarantee of payment when Robertson-Cheatham has disclosed nothing about its liabilities. Contrary to Robertson-Cheatham's assertion, it never told the district court that it has assets worth millions of dollars, and it never advised the district court about its "property, buildings, equipment and inventory." Appellee Br. at 4-5 n.1. Rather, as the EEOC detailed in its opening brief, Robertson-Cheatham argued time and again that it was in financial distress. See Opening Br. at 11-12. When the district court directly asked for a net worth statement or a statement of assets and liabilities, Robertson-Cheatham said that it did not have one. (Bench Conf., Tr. Vol. III at 194, App. at 49.) The district court correctly observed that without such a statement, the jury could not get an accurate picture of Robertson-Cheatham's financial situation. (Id. at 194, 201-02, App. at 49-51.) At the time of trial, Robertson-Cheatham sought to benefit from portraying itself as financially stressed. See Opening Br. at 11-12. Now it claims to be worth "millions." Appellee Br. at 4-5 n.1. Robertson-Cheatham's new and unsupported argument that the district court knew of its alleged wealth ignores its earlier admission that the court knew nothing of its liabilities. In the absence of complete financial information, the district court could not properly conclude that Robertson-Cheatham's "ability to pay the judgment is so plain that the cost of a bond would be a waste of money." Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1989). C. Contrary to Robertson-Cheatham's assertion, tax requirements will increase, not decrease, the amount of money that Robertson-Cheatham owes. Robertson-Cheatham is under the misimpression that the charging party's tax obligations will somehow decrease the amount of money that Robertson- Cheatham owes. See Appellee Br. at 6, 8. This is not the case. As this Court has already held, "Backpay awards should not be reduced by the amount of income and social security taxes which would have been deducted from the wages the claimant would have received but for discrimination." Rasimas v. Michigan Dep't of Mental Health, 714 F.2d 614, 627 (6th Cir. 1983); see also EEOC v. Kentucky State Police Dep't, 80 F.3d 1086, 1100 (6th Cir. 1996). The employer is responsible for withholding appropriate taxes and paying them to the government. Rev. Rul. 55-203, 1955-1 C.B. 114, 1955 WL 9596 (IRS RRU 1955); see also Gerbec v. United States, 164 F.3d 1015, 1018 & n.4 (6th Cir. 1999) (plaintiffs paid taxes on backpay through employer withholding). The employer must, in addition, pay its own share of payroll taxes. See United States v. Cleveland Indians Baseball Co., 532 U.S. 200, 206-07 (2001) (employer as well as employee must pay FICA taxes on backpay); 26 U.S.C. 3111(a), 3111(b), 3301. Far from increasing Robertson-Cheatham's disposable funds, therefore, tax liability will add to Robertson-Cheatham's financial obligations. Employer taxes make it less likely, not more likely, that Robertson-Cheatham will be able to satisfy the judgment following appeal. CONCLUSION Robertson-Cheatham has provided no evidence that funds exist now or will exist in the future to pay the judgment following appeal. Its brief contains grand promises but no citations to the record. For the reasons stated here and in the EEOC's opening brief, the EEOC respectfully requests that this Court reverse the district court's order granting a stay of execution of the judgment without requiring the posting of a supersedeas bond. Respectfully submitted, ERIC S. DREIBAND General Counsel ___________________________ CAROLYN L. WHEELER GAIL S. COLEMAN Acting Associate General Counsel Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 April 21, 2004 (202) 663-4055 CERTIFICATE OF SERVICE I hereby declare that I filed the original plus six copies of the foregoing, signed reply brief with the Court this 21st day of April, 2004, by first-class mail, postage pre-paid. I further declare that I served two copies of the foregoing reply brief this 21st day of April, 2004, by first-class mail, postage pre-paid, to the following counsel of record: Charles R. Ray 211 Third Avenue, North Nashville, TN 37219 ___________________________ GAIL S. COLEMAN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., Room 7034 Washington, D.C. 20507 (202) 663-4055